China in Lebanon: A Mirage of Help

Lebanese flag floating
Image credit: Guillaume Piolle / Wikimedia Commons

Chinese aid in Lebanon should be conditional or else it will fragment the society even more.

China accounts for 40% of Lebanon’s imports, amounting to $2 billion per year. The economy, which once grew at 9%, has now reached a standstill. The country’s elites are indifferent, and political parties are self-centred that focus on short-term gains. Lebanon used to be a friendly Gulf country that enjoyed political and economic autonomy from the United States.

However, with time, the remittances were cut off, and the Gulf Cooperation Council placed travel bans on Lebanon. Saudi Arabia also cancelled a $4 billion investment programme aimed at bolstering Lebanese national security.

The management of the Beirut port by Hezbollah is another factor impeding tax collection and duty charges. It neither pays any taxes nor gives the government access to them. Hezbollah leader Hassan Nasrallah was seen threatening the United States over its continued political pressure on IMF loans. He went on to say that Lebanon is happy to have China as a new investor who is not looking for a return on their investment.

The US administration was outraged by this comment, but the Lebanon Prime Minister invited the Chinese ambassador to talk more about renewable energy, cars, and transportation. Lebanon has already received a $10 billion loan from the IMF, which is past due. The USA designating Hezbollah as a terrorist group and then walking out of the Iran-US nuclear deal has left few choices for Lebanon to call for other actors — where China is more than ready.

Chinese Donations and Infrastructure

With its involvement in Lebanon, China has a dual goal. The first is the extension of its Belt and Road Initiative, to which Lebanon will contribute more importance. Second, China has begun intervening in Middle Eastern political arenas in order to portray itself as a challenger to US hegemony. China’s emergence as a global competitor to the United States is undeniable.

 In August of 2020, Beirut was struck by a deadly explosion that displaced approximately 300,000 inhabitants and killed approximately 150 people. On one side, where Lebanese government officials were hiding their faces, Chinese peacekeepers quickly organised themselves and began rescue operations. In addition, to prevent any more mishaps, China has ordered safety inspection projects in Lebanon. 

Chinese businessmen have paid covert visits, attempting to gauge the state of the economy. They began investing in power grids and highway development. Railways are an essential part of a country’s infrastructure. China began operating railways linking Beirut and Tripoli in 2019. It was further linked to Damascus in Syria. It is important to remember that it creates jobs. China, on the other hand, needs to connect roads and railways in order to realise its BRI vision. Hariri’s government showed signs of cooperation and FDI inflows in this region, with China being the best choice.

President Xi Jinping proposed a “oil and gas plus model” in 2018, promising to offer $126 million in financial assistance to the Middle East. Xi wants to support renewable energy while still adhering to a strict non-interference policy. This policy is a major contributor to the escalation of violence in conflict-ridden societies.

Long term possible threats

Chinese assistance to Lebanon comes with roses and thorns. As an external player, it does not feel the need to address the masses but tap the political elites who give nod for everything. The Chinese bag of tricks includes donation diplomacy, which has recently provided Lebanon with Covid-19 vaccines, sanitation supplies, and medical expertise. The loans are usually interest-free, yet ask for the raw materials and political influence in return. It is a common pattern visible in Nigeria, the Philippines, and Jordan. 

Lebanon is a pluralistic society in which several different religions coexist. The Maronite Christians want France and the United States to interfere because they don’t trust Chinese investments. A mass migration of Maronites is expected in Lebanon, according to international forecasts.

COMPLANT stands for Chinese National Complete Plant Import & Export Corporation. In 1996, it signed an MOU with the Lebanese government to include a 50 million Yuan interest-free loan. China, unexpectedly, requested Lebanese items such as olive oil, wine, canned nuts, dried fruits, and fruit jams. They are to be given from 2006 to 2011.

These goods are the foundation of Lebanese exports to China in exchange for loans. Although it is not a bad deal, these products and edibles have the potential to boost the Lebanese economy as exports.

Way forward

The question is neither about the donations nor about the party that extends its helping hand. The question is about addressing the root causes that nobody wishes to address. The Trump administration might have left the Middle East on a rough note but, it does not mean that now it’s China’s turn to exploit what is left. 

It is time to strengthen the Lebanon Armed Forces and equip them to fight at the borders with Syrian troops. Hezbollah is powerful today, but tomorrow there may be a strong opposition demanding social welfare initiatives.

Lebanon is not yet a failed state. The internal and external factors need to push the government for working better. With Joe Biden taking the charge, one can expect a change of wind. Lebanon not only needs pressure but diplomacy to put it on the right track. It needs to initiate some confidence-building measures so that Hezbollah can’t convince the masses as per its wish. In addition, the international community should encourage Lebanon to reform, but assistance should still be conditional.

 The views and opinions expressed in this article are those of the author.