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Lebanon's crisis complicated by Gulf rivalry | FT - Jan. 2019 |

Lebanon is used to thriving on the edge of a financial precipice but its current crisis is complicated by the interjection of Gulf rivalry.

Qatar has shown its support in dollars, 500m of them in a last-minute bond purchase, along with Sheikh Tamim bin Hamad Al Thani's presence at the Arab summit in Beirut, which no other Gulf leaders attended. Unwilling to be outdone, Saudi Arabia's finance minister verbally pledged support for Lebanon on the sidelines of the World Economic Forum in Davos.

Saudi Arabia, the UAE and Qatar increasingly see their roles as arbiters of regional politics, as well as a prime source of development finance. Gulf states are increasingly using direct financial support to expand their influence across the Middle East, the Horn of Africa and into Pakistan. The end goals of these direct central bank deposits and commitments of foreign investment are vague, as is the conditionality of their acceptance.

The rivalry between Saudi Arabia and the UAE on one side and Qatar on the other is bound to bring instability to Lebanon's already fragile politics and finances. Saudi Arabia has long been a source of external support to Lebanon in direct aid and loans, and through remittance flows, investments in construction and real estate and, until recently, a steady stream of Saudi visitors flush with cash on summer holidays.

Gulf money flowed into Egypt of Gen. al-Sisi to expand the Suez canal and industrial investments. Former president Morsi was from the Muslim Brotherhood and supported by the Obama/Clinton administration, Turkey of Erdogan and Qatar. Qatar money also flowed to Hamas which helped to oust former dictator Mubarak and freed Morsi through a violent jail break.

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by Oui (Oui) on Thu Aug 6th, 2020 at 09:08:53 AM EST

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