Hezbollah and the IMF: Rhetoric over practice

Hezbollah and the IMF: Rhetoric over practice
Hezbollah's pro-poor populist rhetoric has often conflicted with its political strategies and proposed economic policies.
5 min read
27 May, 2020
Hezbollah has often promoted itself as being a 'movement for the poor'. [Getty]

In light of the recent developments between the International Monetary Fund (IMF) and Lebanon's so-called technocratic cabinet, Hezbollah leader Hassan Nasrallah portrayed a certain degree of flexibility about seeking a rescue deal from the IMF, suggesting however that it be dealt with "responsibility and caution". 

Given the harsh economic circumstances encompassing price hikes, the drying up of dollar reserves, and skyrocketing unemployment, the country's dire need to pay for necessary imports has pushed it to officially request assistance from the IMF. 

Despite recurrent warnings from local economists concerning the direct consequences of an IMF-sponsored plan, especially with regards to issues of feasibility and what it may entail for the country's most vulnerable social groups, Lebanon's Hezbollah-backed government initiated talks with the IMF on 15 May. 

As Hezbollah has often promoted its image of being a "movement for the poor", especially with regards to the social services it provides, the party risks coming under fire for its support for a harsh bailout package.

While questions and concerns have been raised by Hezbollah's support base with regards to these developments, the party has historically utilised a poor and inconsistent populist discourse pertinent to socio-economic policy to complement its wider political and regional project.

Read more: Germany's ban on Hezbollah: A double-edged sword

Populism in crisis 

"We do not accept succumbing to the International Monetary Fund," said Naim Qassim, Hezbollah's deputy leader on 25 February. 

Despite clarifying that the party does not necessarily oppose mere consultations from the IMF, it initially grounded its opposition to the IMF-sponsored bailout by classifying it as an "imperialist force". 

However, with the country drained of dollar currency, the policy limitations facing the cabinet seem to have pushed the party in a more accommodating direction. 

"Our position is not absolute, but relates to the nature of the conditions - we do not accept being put under the Fund's mandate. Authority belongs solely to the Lebanese government," said Hezbollah Secretary General Hassan Nasrallah a month later.  

Although opposition to some socio-economic measures, such as an increase in VAT, was very tacitly brought up by the party, Nasrallah primarily raised concerns about ways in which the Fund may "breach the country's sovereignty". 

This specifically relates to ways decisions are made in the IMF, with the United States enjoying a 16.52 percent voting share and effectively having veto power. 

As Hezbollah has often promoted its image of being a 'movement for the poor', the party risks coming under fire for its support for a harsh bailout package

In early May, Nasrallah unambiguously confirmed his support for the cabinet's decision to reach out for assistance from the IMF. This comes in a wider context where Iran, Hezbollah's main patron, attempts to seek a loan from the Fund itself as it faces punishing US sanctions. 

In the same statement, given local resistance to an IMF plan, Nasrallah further cautioned against policies which may affect the country's poor. 

Nevertheless, many in the country have grown sceptical of such statements given the party's relatively hostile response to the popular uprising which began on 17 October. 

He proceeded to praise the cabinet's financial "rescue" plan, which constitutes procedures tailored to the Fund's preferences, such as excessive privatisation, an increase in VAT on unspecified goods, and cautiously liberating the currency peg. 

A history of rhetoric over practice 

While doubts surrounding Hezbollah's self-proclaimed support for the poor and disenfranchised predominantly surfaced following popular protests on 17 October, the party's "pro-poor" populist rhetoric has conflicted with its political strategies and proposed economic policies for more than a decade.

Read more: How Tripoli emerged as the epicentre of Lebanon's national

In 2007, a sit-in organized by Hezbollah and its allies, including the Free Patriotic Movement (FPM), accused the pro-US Siniora-led government of "corruption" and demanded veto power in the cabinet. 

"During the 2006-2008 protests against the Siniora government, Hezbollah and [FPM leader] Michel Aoun tried to co-opt the demonstrations which called for halting austerity and cuts to wages," Geneva-based researcher and author Joseph Daher told The New Arab.

Instead of responding to the neoliberal and unsustainable propositions of the government and international donor conferences with a progressive alternative, the party fixated on vague references to mismanagement and attacked underlying "political conditions".

Increasingly referring to geopolitical schemes against its military wing, these conflicts climaxed when the party gradually took over sections of West Beirut starting on 7 May 2008, when a general strike was announced by worker unions in response to low wages. 

"They gradually transformed the struggle into one that is solely limited to opposing politically the March 14 government and uninterested in a bottom-up socio-economic dimension and challenging the sectarian system as a whole," Daher continued.

"This is demonstrated by the fact that these neoliberal policies were not challenged in the various national unity governments following the conflict of May 7, 2008."

Daher refers to Hezbollah's direct support for the premiership of billionaire tycoon and monopolist Najib Mikati in 2011. A year later, it sided with other sectarian parties against proposals to increase wages by then-Minister of Labour Charbel Nahhas.

Doubts surrounding Hezbollah's self-proclaimed support for the poor and disenfranchised surfaced following popular protests on 17 October

Following the election victory of Hezbollah ally FPM leader Michel Aoun, the internal dynamics within the ruling class tilted in favor of the party and its allies. Many have however argued that since then, little had changed in terms of altering Lebanon's unjust and unproductive economic model.  

"While Hezbollah has often raised concerns about an increase in VAT, it has historically remained in line with the IMF's worldview and vision, or has not opposed its policies in any radical way," said Daher. 

"Whether it concerns pushing for austerity measures, refraining from assisting small farmers, cutting down on state assets, or supporting the privatization of the country's state-run electricity company EdL, there is little-to-no contradiction between the party's policies and IMF prescriptions," he continued.

Read more: Lebanon's uphill corruption battle against an 'untouchable

Furthermore, during Aoun's mandate, the party proceeded to support the re-appointment of controversial Central Bank governor Riad Salamé, who, according to Hannes Baumann's study on Lebanon's post-war neoliberal model, "formalised the policy of over-borrowing in an effort to prop up the Lebanese currency."

In truth, the supposedly "pro-poor", "anti-corruption" and "good governance" signifiers used by the party against the pro-US Siniora-led government 13 years ago practically entailed sustaining the unjust and unfair economic schemes which mirror that of conventional international financial institutions.

With that said, as Hezbollah has long utilised a pragmatic and accommodating strategy to safeguard its military and geopolitical standing, its latest interactions with the IMF could possibly reassert and complete the disconnect developed between its goals and the interests of vulnerable social groups in the midst of the country's crisis. 

Karim Safieddine is a political writer based in Lebanon

Follow him on Twitter: @AnarkoFairuzism