Economy

Lebanon panel mulls Caesar Act repercussions

By Nohad Topalian in Beirut

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Lebanese soldiers stand guard in front of protestors as clashes erupt with Hizbullah supporters during a demonstration in central Beirut on June 6th. [Photo circulated online]

New US sanctions on the Syrian regime that came into force June 17th will have a detrimental effect on Lebanon unless Hizbullah and other factions break ties with the Syrian regime, experts told Al-Mashareq.

The Caesar Act penalises companies worldwide that deal with the regime of Bashar al-Assad, and blocks US reconstruction aid until perpetrators of abuses in Syria's war are brought to justice.

The first designations made under the Caesar Act target 39 people and entities, including al-Assad and his wife Asma, AFP reported.

The Lebanese government has formed a ministerial committee to study the repercussions of the sanctions on the economy, which is in free-fall.

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Protestors pour into the streets of Beirut to decry the collapse of the economy, as clashes erupt between supporters and opponents of Hizbullah on June 6th. [Photo circulated online]

And while Hizbullah chief Hassan Nasrallah condemned the Caesar Act, many Lebanese welcomed it, with the hashtag #Ahlan_bil_Caesar (Welcome Caesar) trending on Twitter.

'Break ties with Hizbullah'

Kataeb Party foreign affairs official Alain Hakim told Al-Mashareq the Caesar Act will "increase the pressure on Lebanon, and its cost will be very high".

It will affect bilateral trade between Lebanon and Syria, and also will impact smuggling operations through about 142 illegal crossings, which together deprive the state treasury of an annual $350 to $500 million, he said.

"The Lebanese government must break ties with the al-Assad regime and Hizbullah in view of the damage they have inflicted on Lebanon's economy", he said, adding that the sanctions will have serious repercussions for Lebanon.

"We refuse to deal with the current Syrian regime and the illegal economy that is directly sponsored by Hizbullah, and we are expressing this with the demonstrations," he said.

Popular protests in Lebanon have centered on the state of the economy, and "the primary cause of the suffering of the Lebanese, namely the existence of an illegal armed militia that operates under Iran's supervision", Hakim said.

Hizbullah not only threatens the state, he added, but also the foreign aid Lebanon hopes to receive.

With sanctions imposed on Hizbullah, he explained, Lebanon cannot attract investment or assistance from foreign countries or international financial institutions.

Increased pressure on Lebanon

"It will be weeks before it can be determined what repercussions the act will have on Bashar al-Assad's regime and official Lebanese-Syrian relations," said former Lebanese MP Fares Souaid.

This is because the Caesar Act extends to "official commercial relations between the two countries", he told Al-Mashareq.

The importance of this act lies in that it turned the tables on those who supported the regime in order to benefit from Syria's reconstruction, he said.

It will increase the pressure on Lebanon "on account of the fact that some actors continue to maintain ties with the Syrian regime and Hizbullah, without regard to the harm that this is causing to the economy and the state", Souaid said.

If those actors continue to maintain their ties with the regime and Hizbullah and do not comply with the new sanctions, "they would be subject to international sanctions and pressures", he said.

"Hizbullah's role as an agent for Iran in Syria, its actions in [Syria] and support of the regime's human rights violations, have brought and continue to bring serious harm upon Lebanon," Souaid said.

Foreign aid to Lebanon at stake

The Caesar Act will increase the pressure on Lebanon at a time when Syria is benefitting from Lebanon, with deals such as the monthly electricity contract, valued at $85 million, political analyst George Chaheen told Al-Mashareq.

"Will the actors loyal to the regime and Hizbullah disassociate themselves from them to alleviate the situation in Lebanon, which is reeling economically and financially and faces the threat of being denied foreign aid?" he asked.

There is growing concern among Lebanese leaders allied with the Syrian regime about the US sanctions, which names many officials for the first time, he said.

These concerns are "grave, and will be tied to how strictly the sanctions will be enforced", Chaheen said.

"In practice, the Caesar Act will have severe repercussions for Lebanon, which is already suffering from the sanctions imposed on Hizbullah, which itself is facing a serious crisis," he said.

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