RIYADH: Lebanon faces a pivotal moment in its history as President Joseph Aoun and Prime Minister Nawaf Salam take the reins of a country battered by years of economic crisis, political paralysis, and regional instability.

Upon taking office in January, ending a two-year political vacuum, Aoun pledged to prioritize reform and recovery, address the influence of the Iran-backed Hezbollah militia, revitalize the Lebanese economy, and pursue regional cooperation and stability.

Appearing on the Arab News current affairs program “Frankly Speaking,” Lebanese economist and political analyst Nadim Shehadi examined whether Aoun is likely to deliver on his pledges or if notions of Lebanon’s rebirth are overly optimistic.

“There is certainly a lot of optimism, not just because of local developments in Lebanon, but because of major regional ones and international developments,” Shehadi said.

“It looks like the international and regional forces are aligned to resolve the problems of the region as a whole, not just of Lebanon. And that’s the cause of the optimism, because a lot of the problems here depend on a regional solution in a way.”

One of the defining features of Aoun’s leadership is his outsider status. Unlike many of his predecessors, Aoun hails from the military rather than Lebanon’s entrenched political establishment — a fact that has bolstered hopes for meaningful change.

“The election of General Aoun, which came with international support, one of the significant features of this is that he’s from outside the political establishment,” Shehadi told “Frankly Speaking” host Katie Jensen.

“Same with the prime minister, who has also been brought in from outside the political establishment,” he added, referring to Salam’s background in the judiciary. “That’s another cause for optimism.”

However, optimism alone cannot solve Lebanon’s deep-seated problems. The country remains mired in economic turmoil, with widespread poverty and unemployment exacerbated by years of mismanagement and corruption.

The Lebanese pound has lost more than 90 percent of its value since the 2019 crash, plunging millions into hardship. This was compounded by the coronavirus pandemic, the Beirut port blast, and the war between Israel and Hezbollah.

When asked whether Hezbollah, which has dominated Lebanese political affairs for decades, could derail Lebanon’s reform and recovery efforts, Shehadi was unequivocal. “Absolutely. This is the main issue,” he said.

Hezbollah emerged from the Lebanese civil war of 1975-90 as a formidable military and political force, drawing on support from Lebanon’s Shiite community and the backing of Iran, which used it as a bulwark against Israel.

In solidarity with Hamas in Gaza, Hezbollah fought a year-long war with Israel that resulted in the gutting of the militia’s leadership, the loss of its once formidable arsenal, and the emptying of its coffers, leaving it unable to financially support its base.

Adding to its woes, the fall of the Bashar Assad regime in neighboring Syria deprived Hezbollah of a long-term ally, which had provided a land bridge for the delivery of weapons and funds from Iran via Iraq.

Despite its enfeebled state, which is reflected in its limited role in the new Lebanese government, Shehadi said Hezbollah’s continued grip on Lebanon’s Shiite community poses a significant challenge to Aoun’s aim of achieving national unity and progress.

“The question is not about the destruction of Hezbollah or of its infrastructure,” he said. “The question is the liberation of the community, of the Shiite community, from the grip of Hezbollah.”

He argued that Hezbollah’s Achilles’ heel lies within its own enabling environment — its constituency — which must decide to reject its agenda and integrate fully into Lebanese society. Shehadi said Hezbollah’s economic stranglehold on its community is a critical issue.

“Even the institutions of Hezbollah that are being targeted — the economic institutions of Hezbollah — the money is not Hezbollah’s money. The money is in large part that of the community, and that money has been hijacked by Hezbollah,” he said.

Addressing this issue requires a political solution rather than a military confrontation, he added.

Under the US-brokered ceasefire deal struck between Hezbollah and Israel last November, it was agreed that the militia would disarm, handing the monopoly on the use of force to the Lebanese Armed Forces.

In exchange for Israeli forces withdrawing from Lebanese territory, Hezbollah fighters were also required to retreat from Israel’s border to the Litani River — a key stipulation in the UN resolution that ended the 2006 Israel-Hezbollah war.

Little progress has been made on this front, leading to suggestions that the Lebanese army could be deployed to disarm Hezbollah by force. However, Shehadi dismissed this idea as both impractical and undesirable.

“No, I don’t think (Aoun) ever meant to say that either,” he said. “He never meant that the Lebanese army would clash with Hezbollah and disarm Hezbollah by force. That was never on the cards and will never be on the cards. And it’s not possible.”

Far from risking a replay of the Lebanese civil war, Shehadi said that rebuilding Lebanon would require a political agreement among all communities.

“Even if it was possible (to disarm Hezbollah by force), it’s not desirable because reconstituting the country, putting it back on track, includes a political agreement between all its components,” he said.

Shehadi expressed confidence that Hezbollah is unlikely to return to its previous position of strength due to growing dissatisfaction within its constituency. “I don’t think its own constituency would accept that,” he said.

In light of US-brokered normalization agreements between Israel and several Arab states, questions have arisen about whether Lebanon could follow suit under Aoun’s leadership. Shehadi said this is unlikely without first addressing the Palestinian question.

“I don’t think that normalization is possible without a solution to the Palestinian issue, especially not with Lebanon and also not with Saudi Arabia,” he said.

He pointed out that both countries adhere to the Arab Peace Initiative of 2002, which calls for the full Israeli withdrawal from the Palestinian occupied territories and a two-state solution before normalization can occur.

Instead, Shehadi suggested revisiting historical agreements like the May 1983 accord between Israel and Lebanon as a potential model for coexistence. “Lebanon can also look back to … the 17th of May Agreement … which I think is the best Lebanon can achieve with Israel,” he said.

Furthermore, domestic resistance to normalization remains strong due to Israel’s past military actions in Lebanon. “There are lots of issues that need to be resolved with Israel,” said Shehadi.

“Israel’s bombing of the country is not conducive to peace. It’s not a way of getting yourself loved, if you like, by the way they destroyed the villages and all that.

“So, there would be a resistance to normalization for internal reasons. And because we do not see Israel as being in a mood for peace.”

Lebanon's economic collapse in 2019 has left billions missing from banks and central reserves — a crisis that new central bank governor, Karim Souaid, must urgently address. Shehadi said that resolving these losses will be pivotal for Lebanon’s recovery.

“The biggest question is where are the losses going to go? There are billions of dollars that have disappeared from the banks and from the central banks. These are the depositors’ money and the banks’ money. And so the big question is who will bear the cost of that?

“The way you resolve this should also set the country on a path to recovery. And the binary view of this is that it is the state versus the banks, but in reality, Lebanon cannot survive without the banks and Lebanon cannot survive without the state.

“So, there’s going to be a middle ground, hopefully favoring the banking system, because I believe that the banking system is the main engine of the economy. The new governor has a huge job to do.”

While corruption is often cited as a primary cause of many of Lebanon’s problems, Shehadi challenged this narrative.

“This is a very dominant narrative about Lebanon, that it was years of corruption. What happened in Lebanon and the reason for the meltdown is not years of corruption,” he said.

“What happened is the result of years of the state and society being pounded, being battered, if you like, through assassinations, through declarations of war, through paralysis of government. 

“We’ve had three periods of between two to three years of total paralysis with no president, no government and parliament in any way. We’ve had 2 million Syrian refugees, which are a huge burden on the economy.

“We’ve had a constant state of war in the sense that every year Hezbollah declares war on Israel five times. And that paralyzes the economy. That cancels trips, cancels investment opportunities.

“So, all of that accumulated cost of the paralysis, the wars, is what brought the country down. It’s wrong to emphasize the corruption of the country as a reason for it.”

He added: “The rich political elite want stability. And the bankers want stability. The financiers want stability. Because they are very invested in the country. There has been a wrong narrative that has set in.”

Saudi Arabia has historically played a significant role in Lebanese affairs — a relationship Aoun sought to strengthen during his recent visit to Riyadh. However, challenges remain — most notably Riyadh’s travel ban on Saudis visiting Lebanon.

Shehadi expressed optimism about Saudi-Lebanese relations returning to normalcy. “I’m optimistic that this will come back,” he said.

“The normal state of affairs is good relations. What we had in the last probably 15 years was an exception. It was not a normal state of affairs. It’s not the default state of relations.”

He dismissed sectarian interpretations of Saudi support in Lebanon. “I don’t think it was ever that clear-cut, that they support a prime minister because the prime minister is Sunni,” he said.

“Saudi Arabia had allies in Lebanon and supported the country and had opponents from (different sects). I don’t think it was determined by sect or religion. I don’t think the Kingdom behaves that way.”

With Syrian President Ahmed Al-Sharaa signaling a shift toward respecting Lebanon’s sovereignty following the fall of Assad, questions arise about future Lebanese-Syrian relations. 

“The whole region is entering a new phase,” said Shehadi. “The phase we are getting out of, which we have been in for probably the last half century, was one which did not respect the sovereignty of individual countries in the region.

“It was one dominated by political parties that aimed to dominate their neighbors. Like the Ba’ath. I mean, the example is Saddam Hussein’s invasion of Kuwait, of course, and Syrian intervention in Lebanon and Syrian problems with Turkiye, with Jordan.

“We have an order which is changing. We’re entering a new order. And, hopefully, that order will be more in line with the original protocols that set up the Arab League in 1944, which was the Alexandria protocols, which enhanced cooperation between the Arab countries, both culturally and economically, but also respect for each other’s sovereignty.”