Lebanon has been at risk of getting sucked into the vortex of the ethno-sectarian war raging across its border with Syria. With the scars of its own civil war in 1975-90 still vivid, the country is divided on similar sectarian lines to Syria where, furthermore, the intervention of Hizbollah, the powerful Lebanese Shia paramilitary movement backed by Iran, has contributed decisively to keeping Bashar al-Assad’s regime in place.
Now, Lebanon’s fragile equilibrium is being rocked from a different quarter: US Treasury sanctions aimed at cutting Hizbollah off from financing channels abroad. This could put at risk Lebanon’s dollar-dependent banking system, and voluminous remittance flows from the Lebanese diaspora that feed an anaemic economy.
The US measures are not intended to undermine the stability of a country that hangs by a thread, but unintended consequences work just as well to produce state failure in the Middle East, as the US-led invasion of Iraq or Nato intervention in Libya attest.
Lebanon’s Hizbollah sanctions problem is a tangled story. The US Treasury, through its extraterritorially powerful Office of Foreign Assets Control (Ofac), has come up with a battery of regulations fleshing out the Hizbollah International Financing Prevention Act passed by Congress last December. This significantly adds to the list of sanctioned Hizbollah leaders, facilitators and front-companies. But most of all, it threatens any Lebanese bank that “knowingly engages” with any Hizbollah-related entity or individual with being cut off from the US banking system.
Source: https://next.ft.com/content/888c2e22-21cd-11e6-9d4d-c11776a5124d
