Doubts in the desert

Summary: Saad Hariri’s decision to suspend his resignation represents a further blow to the credibility of Crown Prince Mohammad bin Salman.

Saad Al Hariri is back at work, for now at least, saving Lebanon from a dangerous political vacuum. Speaking on Saturday at the Higher Islamic Council, the official body for Lebanon’s Sunni Muslims, he warned Hezbollah against interfering in regional conflicts, saying he postponed his resignation to discuss ways to disassociate Lebanon from wars in neighbouring countries. “We are targeted in the region and if we do not act wisely, we will drag the country into chaos,” Hariri said.

“The postponement [of resignation] at the request of President Michel Aoun was to give an opportunity to discuss and negotiate our principal demands to make Lebanon neutral and keep it away from the conflicts and the wars in the region, and to implement the policy of disassociation … and commit to the Taif Agreement,” Hariri said in a statement released by the prime minister’s office.

“Where do we go from here?” the NYT quoted Nadim Munla, senior adviser to Mr. Hariri, as saying. “Everybody is monitoring Iran and Hezbollah, and I really believe that the ball is in their court.”

We are grateful to Alastair Newton for the commentary below on the fallout from the Hariri affair.  Alastair worked as a professional political analyst in the City of London from 2005 to 2015. Prior to that he spent 20 years as a career diplomat with the British Diplomatic Service.

Doubts in the desert

It is almost exactly a month ago that hundreds of senior investors gathered together in Riyadh for the so-called ‘Davos in the Desert’ to be wooed — and, it seems, wowed — by Saudi Arabia’s Crown Prince Mohammad bin Salman (MbS). However, just a few days later investor confidence took a significant knock when dozens of senior Saudis, including many from the business community, were arrested on corruption charges.

Yet more — and wider — questions were raised over MbS’s judgment when, on 4 November, Lebanese Prime Minister Saad Hariri, summoned unexpectedly to Riyadh, announced that he was resigning, seemingly under Saudi duress (his denials notwithstanding).

Saad Hariri with King Salman in Al Yamama Palace Library on Nov 6

In such circumstances, no-one should be particularly surprised that on 22 November — Lebanon’s 74th Independence Day (which may or may not have been a coincidence) — Mr Hariri, safely back in Beirut, announced that he was suspending his resignation following a meeting with President Michel Aoun. After all, all major political players in Lebanon had rejected the move — including, notably, Sheikh Hassan Nasrallah, the leader of Hizbollah, the immediate target of MbS’s pressuring of Mr Hariri as he wades ever deeper into the regional struggle with Iran. Furthermore, public opinion in Lebanon was and remains strongly in support of Mr Hariri’s continuing in office. Indeed, as Gareth Browne opined in The Daily Beast, Mr Hariri’s recent sojourn in Saudi Arabia, whether it was enforced or voluntary, “has done incredible things for his popularity” at home, a sentiment which was undoubtedly reinforced when he spoke as follows to a large crowd gathered outside his downtown residence on the afternoon of the 22nd:

“I am going to stay and continue here with you, we are here at the front lines, defending Lebanon, its stability and its Arabism. We have nothing which is more precious than Lebanon. Our slogan will always be ‘Lebanon first’”.

As for wider support, it is clear that Mr Hariri enjoys considerable backing from the Europeans, particularly France’s President Emmanuel Macron whose intervention may well have been pivotal in getting the Lebanese Prime Minister back to Beirut, as well as the US government (if, not necessarily, President Donald Trump personally — see below).

Pulling all this together, it is hard to avoid seeing the resignation of Mr Hariri as other than the latest in a string of MbS actions which The Economist (subscriber access only) recently described as follows:

“…[MbS’s] ambition too often turns to rashness. He led an Arab coalition into an unwinnable war in Yemen…. He also sought to isolate Qatar…succeeding only in wrecking the Gulf Cooperation Council and pushing Qatar towards Iran.”

I would personally add to this list, in addition (as The Economist article made clear) to the corruption-related arrests coming so soon after the ‘Davos in the Desert’ event, his Vision2030 as it was originally conceived and announced last year on which, to date, there has been significantly more row-back than progress.

Furthermore, it is clearly the case that none of these actions — including the resignation of Mr Hariri which has achieved the otherwise almost impossible feat of unifying and consolidating the Lebanese political establishment as a whole (for now at least) — has resulted in the outcome for which one can reasonably assume MbS was aiming.

At this stage it is not at all clear how MbS will react to what looks very much like another personal setback, Mr Hariri’s call for Lebanon (for which read ‘Hizbollah’) to live up to the country’s stated policy of neutrality on regional disputes and conflicts notwithstanding. Certainly, there is a real risk that he will seek to arm-twist Mr Hariri further, using the latter’s business interests in Saudi Arabia as leverage. And he may well also double down on Lebanon at large by looking to inflict more economic damage (in addition to his already ordering Saudi tourists in Lebanon to return home) by, eg, withdrawing deposits on which many Lebanese banks depend and/or kicking out around 400,000 Lebanese nationals who work in the Gulf and account for a large proportion of the remittances which make up around 20% of the country’s GDP.

There was hope that after a lengthy hiatus with no government in situ, Mr Aoun’s swearing in as President last year would prove to be a major step forward for Lebanon not only politically but also economically — especially with an eye to the potential boon of offshore oil and gas fields. This is very badly needed as is underlined by the fact that national debt stands at around 145% of GDP, with 1.5 million Syrian refugees (in a country of just 4.3 million) adding a further major economic burden. However, the economic recovery remains at risk especially if Saudi Arabia tightens the screw further — and even more especially in the (not unlikely) event that MbS persuades the very supportive Mr Trump to impose further sanctions on Hizbollah which would inevitably damage the Lebanese economy as a whole. And further deterioration in the economy could inflame the country’s deep-rooted political tensions.

Worse still, MbS may possibly be looking to persuade Israel to strike a major blow against Hizbollah and, therefore, Iran. As we reported on 21 November:

“In what Reuters described as ‘a first disclosure by a senior official from either country of long-rumoured secret dealings’ the Israeli energy minister Yuval Steinitz said on 19 November that there were covert contacts over Iran.”

However, acknowledging that Riyadh and Tel Aviv do have a common interest in Iran to discuss, I nevertheless concur with David Gardner’s view, expressed in an Financial Times article published on 23 November (subscriber access only), as follows:

“…if…MbS wants to use Israel to push back against Iran, his record in foreign policy so far speaks of more frustration than achievement — bets he expects reluctant allies to cover…. Mr Trump’s son-in-law, Jared Kushner, is clearly trying to bond Saudis and Israelis together against Iran. But there are limits to such an alliance. And Israel will work to its own timetable and goals.”

In sum, whatever transpires next in Beirut — or, indeed, in Riyadh — these latest developments in the Hariri saga will cast further doubt in the minds of policymakers and investors alike, in my view, over MbS’s judgment and his ability to deliver on his self-set objectives to the point where the number who share Mr Trump’s “great confidence” in the Crown Prince is likely rapidly eroding.

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