EU-Lebanon Relations: Development and External Actors

by Yannis Liveris, Member of the International Relations & Foreign Affairs Research Team

Introduction
Lebanon’s post-civil war reconstruction has required huge costs, making the country the third most indebted in the world after Japan and Greece (167% debt to GDP ratio). The economic situation is fueled by staggering unemployment, while 41% of the population is currently living under the poverty line. The Syrian crisis, the Beirut blast (4/8/2020) and COVID-19 have deteriorated the quality of life even more. (Cook, S., 2021).  Lebanon, therefore, is in urgent need of EU assistance and long-term European initiatives for its economic recovery.

The EU aims to promote stability in the region, according to the revised European Neighborhood Policy (ENP) and simultaneously there are member states of the EU who have decided to follow a more unilateral approach to the area. The analysis of this topic is of paramount importance, as it fills certain gaps by reviewing the role of external actors in Lebanon and re-examines the EU’s approach in the Southern Neighborhood. The article will categorize the external players between those who try to pressure Lebanon for structural changes and those with strong linkages to local sectoral actors blocking these changes. The main research question raised in this analysis is: “What are the strategic objectives of the EU regarding the economic and social situation in Lebanon and how do external players affect the policy formulation of the country?”  It will also raise the important question: “does this interference lead to a thick or thin implementation of EU norms in Lebanon?” In order to support the theoretical background, some case studies will be used, such as the Macron Initiative (a French roadmap to pressure the political leaders of Lebanon for reforms in order to unlock foreign aid) and Iran’s interference, through the Lebanese armed group, Hezbollah.

Theoretical Background
The Lebanese government has had to sign off on a series of reforms including improving public productivity and performance, due to suggestions made by the WB and the IMF. Lebanon could, also, potentially unlock funds from the EU, if it had undergone necessary sectoral and structural reforms, in order to enhance the country’s political stability and socio-economic development. This external pressure recalls the Neo-Institutional Theory (Meyer & Rowan, 1977, Di Maggio & Powell, 1983), which examines socio-economic and political phenomena. According to this theory, structural change is inevitable when endogenous and exogenous characteristics shape a new field of dynamics, which pressures all actors to adapt to the new circumstances.

Another theory that comes into the context of the EU-Lebanon relationship is the EU’s Normative Power (Manners, 2002). Normative Power is interpreted as an actor’s ability to formulate normative principles in the international arena. By evaluating the effectiveness of EU’s normative power in the Southern Neighborhood and specifically in Lebanon, we can come to conclusions as for how thick or thin the implementation of norms is in the region (Larsen, H., 2014). Lebanon’s political setting allows for sectoral actors, with strong linkages to regional players, to have access to the decision-making process (Dandashly, A. & Kourtelis C., 2020).  This certainly means that the political stage is influenced by external dynamics at the expense of crucial economic, social and democratic reforms, thus making headway for a thin implementation of norms.

EU-Lebanon Relations
The EU and Lebanon are strategic partners cooperating closely on key issues, such as socio-economic development and joint challenges that exacerbate the instability in the region, such as the Syrian crisis (European Commission, 2018). Their comprehensive partnership is guided by the Association Agreement (2006), which promotes common values and interests, such as human rights, free movement of goods, political and security dialogue, and social, economic and cultural cooperation. The European Neighbourhood Policy (ENP) review of 2015 and EU’s Global Strategy of 2016 for foreign and security policy created a new agenda for the Southern Neighborhood (Λιαργκόβας Π. & Παπαγεωργίου Χ., 2018), Furthermore, they emphasized on the stabilisation and resilience building of the EU’s neighborhood by boosting economic growth.

In 2016, the EU and Lebanon adopted a renewed framework with partnership priorities until 2020 (renewed until end of 2021). The Priorities focus on governance and the rule of law, fostering growth and job opportunities, security and countering terrorism, migration and mobility (European Commission 2021). The EU supports the development of effective and independent public institutions in Lebanon and encourages cooperation with Civil Society Organisations (CSOs). A main goal of EU-Lebanon’s cooperation is the implementation of economic and structural reforms, in order to reach the crucial targets set by the Government’s Capital Investment Plan (European External Action Service, 2021).  

Growth and Socio-economic Development
This section will focus specifically on the EU approach concerning two crucial factors as expressed in the Single Support Framework (SSF) for EU Support to Lebanon: a) Promoting growth and job opportunities, b) Fostering local governance and socio-economic development.

i) Promoting Growth and Job Opportunities
The overall objective in this crucial area is the promotion of innovative actions such as social, cultural and creative entrepreneurship, while advocating for an operational business environment for investment, trade and job creation.

The EU-Lebanon cooperation, specifically, seeks to boost the efficiency of the private sector through an enhanced business environment; encouraging reforms; building the capacity of key economic institutions; and improving employability, particularly amongst youth. In addition, the partnership attempts to reinforce the trade potential of Lebanon by tackling systemic factors, including essential infrastructure, structural dimensions, including regulatory frameworks, and improving the competitiveness of Lebanese products in certain sectors (European External Action Service, 2016).

ii) Fostering Local Governance and Socio-economic Development
The overall objective in this area is the increased focus on decentralization reform and the promotion of an inclusive approach to socio-economic and institutional development at a local level. The EU’s approach supports the reinforcement of municipality networks and the engagement of civil society while favouring sustainable, innovative and energy sufficient solutions.

In order to achieve this objective, the EU’s strategy in the socio-economic context of the EU-Lebanon cooperation will strengthen the role of municipalities through participatory approaches involving CSO’s, the private sector and trade unions. Secondly, the EU will support the provision of technical and vocational skills in favour of local needs. Lastly, it will foster social cohesion and build up trust between communities, while promoting coordination between the central, regional and local level (European External Action Service, 2016).

Figure 1: Lebanon in economic crisis (source: IMF)


Even though the EU remains strongly committed to supporting long-term measures for ongoing economic development in Lebanon, it is still apparent that economic and social reforms are to be enforced in order to optimise future EU funds (Euneighbors.eu, 2021). External pressure from the International Community towards necessary reforms is met with the political inability to implement them and regional interference that exposes gaps in the Lebanese political system. Therefore, it is important to examine the role of international and regional players in the turbulent area, using as case studies the Macron Initiative and the influence of Iran in the political setting of Lebanon (Goulordava, K., 2018).

External Actors
The Beirut port explosion on August 4 sent shockwaves across the city causing unprecedented damage and leaving at least 160 dead and 6000 wounded. It was a consequence of deep-rooted corruption, negligence and political incompetence. Following angry protests about the political leaders’ mismanagement, Prime Minister Diab offered his government’s resignation six days later. French president Emmanuel Macron visited Beirut in the immediate aftermath of the blast announcing an initiative to help the Lebanese economy and later in August the French government set out a roadmap towards stability in Lebanon. In this part of the essay the dimensions of the Macron Initiative will be reviewed as well as the plan’s obstruction by the Iran-backed armed group Hezbollah (International Crisis Group, 2020).


Figure 2: Macron’s Visit to Beirut (source: The Arab Weekly)

i) France: The Macron Initiative
The roadmap document was transmitted to the Lebanese political leaders prior to Macron’s second visit to Beirut on September 1st. The French President argued that his initiative was not a blank check but a way to push the country on the reform track. The first requirement was that the next prime minister, Mustapha Adib, form a government backed by the political parties so that to avoid a power vacuum that would leave Lebanon to sink further into the crisis.

The five main sectors in need for attention were: a) humanitarian aid, b) local authorities’ response to COVID-19 pandemic, c) reconstruction after the Beirut port blast, d) early parliamentary elections, e) economic and political reforms. These reforms included: a) a capital control law, b) a complete audit of Lebanon’s Central Bank, the Banque du Liban, c) reform of the electricity sector, d) cancellation of the Salaata power plant project, e) judicial reform, f) implementation of an anti-corruption strategy, g) adoption of the draft public Procurement Law, h) resumption of the stalled negotiations with the IMF. Macron, also, agreed to hold meetings with the leaders of Lebanon’s sectarian power-sharing system (Aljazeera, 2021). He mentioned that this act would be the last chance for the Lebanese political leaders to drive the country away from the brink of collapse because if significant changes were not made, then Lebanon could no longer finance itself.

Since then, the Macron Initiative has faced a number of challenges with the biggest one being the role of Hezbollah and its allies. The armed group supported by Iran holds a significant block of seats in the Lebanese parliament and therefore has been designated by the French leader as the main obstructor to the roadmap and the formation of government.

ii) Iran and other Regional Actors
Εικόνα που περιέχει κείμενο, άτομο, πλήθος, υπαίθριος

Περιγραφή που δημιουργήθηκε αυτόματα

Figure 3: Hezbollah (source: Council on Foreign Relations)


Emmanuel Macron initially secured an agreement regarding his roadmap from the Lebanese political leaders, including Hezbollah. The armed group even conceded on three vital issues: a) the resignation of the Diab government, b) the formation of a government of technocrats, and c) the holding of early elections within a year. Paris also asked the United States, Iran and Saudi Arabia not to disrupt the French-backed process. This was an indication of the strategic and geopolitical influence Macron was trying to gain in Lebanon while reasserting France’s position in the Eastern Mediterranean (International Crisis Group, 2020).

Although, the U.S. had reaffirmed the need for reforms, Donald Trump’s policy for ‘maximum pressure’ against Iran has complicated the situation in Lebanon. Just after the agreement between Macron and the political leaders, the U.S. imposed sanctions against senior political figures allied with Hezbollah. A week later, a second instalment was announced against targeting companies linked to the party. Moreover, while the U.S. have supported the French initiative, they disagree with Macron’s initial approach to include Hezbollah in the negotiations. Therefore, U.S. officials, along with their counterparts from Saudi Arabia continued to ramp up their anti-Hezbollah rhetoric. This aggressive rhetoric led ultimately to the hardening of Hezbollah’s position, the failure of negotiations and the resignation of Adib’s government (Aljazeera, 2021).

The country’s political sectarianism and corruption have limited the positive impact of European assistance towards further socio-economic development and growth. Specifically, the three ruling political offices (president, speaker of parliament and prime minister) are divided among the three biggest communities (Maronite Christian, Shia Muslim and Sunni Muslim). This religious diversity makes Lebanon an easy target for interference from external powers (Robinson, K., 2021).

Figure 4: Lebanon, political representation (source: the Economist)
Recent Developments: from Cooperationto Brinkmanship?
Despite all the recent European initiatives, citizens frequently take to the streets of Beirut to protest against the fall in Lebanese pound currency and other economic hardships. On the other hand, politicians have failed to form a government numerous times, and after 11 months of crisis, Lebanon is on the brink of a financial collapse. Due to this fact, the European Union has begun drawing up sanctions on politicians linked with the current mismanagement. France has already imposed restrictions for certain Lebanese officials, blocking them from entering the country. Also, Germany is strongly in favour of the EU setting up sanctions, however the other group of member states still haven’t specified their policy on the matter.

The High Representative of the Union for Foreign Affairs and Security Policy/Vice President of the European Commission (HR/VP), Josep Borrell has stated that the EU is working on a “carrots and sticks” policy with diplomats suggesting that there would be an increased focus on the “sticks” this time. An indication that, definitely, depicts the frustration in European ranks and the tilt towards a more troubled relationship between the EU and its Middle East ally. In the meantime, the bloc is still undecided on how to approach the political arm of Hezbollah (Emmott, R. & Irish, J. 2021).

Conclusion
Reviewing the economic and financial crisis in Lebanon, it is apparent that the Neo-institutional theory can be applied that calls for institutional and structural change. European leaders have pushed for more reforms at the CEDRE international conference in 2018 and Macron has done the same in 2020 after the Beirut blast. Despite that, Lebanon is still on the verge of becoming a failed state, something that would exacerbate the instability in the Eastern Mediterranean (Chedrawi, C., 2019).  Therefore, the revised ENP in the Southern Neighborhood, that aims at stabilisation and resilience-building should be re-examined. Lebanon, as well as every country in the neighbourhood, require a more differentiated approach. EU cannot ignore the governance gaps that limit the ENP’s effectiveness. Regional interference and political instability have as a result a thin implementation of norms. The implementation of EU’s Normative Power ought to be conditional upon the differentiated status of each state. Lastly, EU should encourage collective action at a member state level to ensure common goals, while promoting more transparency in the context of the EU-Lebanon cooperation.

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