U.S. Sanctions in Lebanon: Misdirected and Shortsighted?

On August 29, 2019, the U.S. imposed sanctions on the Lebanese Jammal Trust Bank, and its subsidiaries, for purportedly providing financial support to Hezbollah. Iran backed Hezbollah is classified as a terrorist group by the U.S., despite it constituting a legitimate political party in Lebanon, with 12 seats in parliament. While the U.S. Treasury Department claims that the bank is giving money to members of Hezbollah, fighters and suicide bombers’ families, the sanctions are nothing more than a thinly veiled attack on Iran. Moreover, these sanctions exemplify the dangerously shortsighted U.S. foreign policy in the Middle East. Rather than weakening Hezbollah, thereby hurting Iran, these sanctions serve only to further worsen Lebanon’s current financial crisis. The Jammal Trust Bank, unable to wield a challenge against the imposition of sanctions, has closed down since sanctions were imposed, depriving it of access to US dollars. Well established in the rural community, it had approximately 80,000 thousand, mostly Shiite, customers. These rural customers, many of them farmers, now no longer have easy access to a bank since in some cases, Jammal Bank was the only available bank in the smaller towns and villages. The forced closure of the Jammal Trust Bank, therefore, primarily harms innocent Lebanese and further weakens the Lebanese economy. 

Economic growth in Lebanon is stalled, due to political turmoil, corruption, and years of war in Syria. Additionally, Lebanon holds some of the largest debt in the world, as it owes over 150 percent of its GDP. As a result, U.S. sanctions only further destabilise Lebanon, an American ally in the region. This instability further weakens the ability of the Lebanese government to maintain control over a divided country and increases the chances of sectarian divisions again fracturing Lebanese society. Recently, protesters successfully blocked roads in Beirut, shutting down the city in many areas, and in cities across Lebanon to demonstrate against corruption and a worsening economy. Unrest and dissatisfaction in Lebanon is growing as many Lebanese, both college educated and unskilled laborers, are unable to find jobs. From boasting a once thriving downtown, rebuilt after the civil war, Beirut is now filled with closed stores and businesses and frustration with the government’s inability to address the dire economic situation is growing. 

Significantly, Lebanon also hosts the highest concentration per capita of refugees in the world, with 30 percent of its population comprised of refugees. As evidenced by its political and economic struggles, Lebanon is ill equipped to host such a disproportionate amount of refugees and its weak infrastructure is greatly strained by the millions of refugees in the country. Syrian refugees work in unskilled, and seasonal jobs including agriculture and construction. Lack of governmental oversight over these workers encourages exploitation of refugees who often work for very low wages. Moreover, many Lebanese who would normally work as unskilled laborers feel threatened by the growing refugee competition in the unskilled labor market. This competition for jobs and resources in a weakened economy has led to increased unrest and instability in Lebanon and the Lebanese government is without the cash and resources to help either its own citizens or the refugee population. Impoverished and vulnerable, without protection from the Lebanese government, Syrian refugees face severe economic exploitation. To help their families and without government support, many Syrian children work rather than go to school. 

Lebanon’s fragile and weakened economy cannot sustain the large influx of Syrian refugees, especially given the already large Palestinian refugee population. While recognizing that state spending on integrating refugees would help those vulnerable communities, many Lebanese fear that integration efforts would incentivize Syrian refugees to stay, further increasing competition for scarce unskilled jobs. 

Therefore, the already vulnerable refugees’ security is increasingly jeopardized by Lebanon’s economic instability, which is further exacerbated by the U.S. sanctions placed on Lebanese banks. Because they reduce opportunities for poorer, underserved communities to seek out financial resources, these sanctions are far more dangerous and debilitating to refugees and average Lebanese citizens than they are to Iran. Iranian interests in Lebanon benefit from a weakened Lebanese government that is increasingly unable to address the needs of all its citizens as well as those of  the enormous refugee population. Economic unrest in Lebanon that threatens its large refugee population will have global ramifications and worsen the current global refugee crisis.  

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