Hezbollah, America, and the race to supply Lebanon with power

21-08-2021 12:57 PM

BY Christophe Abi-Nassif, Jessica Obeid

Amid typical governmental absenteeism, Hezbollah’s Secretary-General Hassan Nasrallah announced on Aug. 19 that the party had secured fuel shipments from Iran. He asserted that the first of many fuel tankers would set sail to Lebanon that same day. Hours later, U.S. ambassador to Lebanon Dorothy Shea declared that the U.S. was working closely with Egypt, Jordan, and the World Bank to find solutions to Lebanon’s crippling fuel shortages. Shea’s comments imply a U.S. willingness to loosen Caesar Act restrictions that would otherwise prevent Lebanon from importing natural gas and electricity through Syria from Egypt and Jordan respectively. The two announcements have been in the making for weeks, but both come at a time when Lebanon’s physical and human infrastructure is crumbling in the absence of essential fuel supplies and energy sources.

By striking first, Nasrallah has forced the United States into reactive diplomacy mode and left Washington with two inconvenient and awkward options. Because of the magnitude of Lebanon’s humanitarian disaster and the Lebanese government’s inability to get its act together to resolve the fuel shortages, the U.S. may choose to overlook the alleged fuel imports. Regardless of whether the ships dock in Lebanon (serious) or Syria (less serious), this option risks making the U.S. seem inconsistent and in violation of its own rules of imposing sanctions on countries that deal with Iran. Alternatively, Washington could press forward with imposing sanctions on Lebanon. By doing so, however, it would reinforce the conspiracy theory, espoused by Hezbollah and embraced by the Free Patriotic Movement, that Lebanon’s woes are a direct result of a U.S.-led economic embargo on the country. The two options assume that events such as Israeli military action or sabotage — factors that Nasrallah warned against as part of Hezbollah’s deterrence equation — will not take place.

Either way, Hezbollah will market the incoming fuel shipments as well as any U.S. reaction or lack thereof as a resounding anti-imperialist success to both its own supporters and those of its allies. The billions of dollars of Syria-bound smuggling that took place over the past few years and that contributed to Lebanon’s current predicament suddenly won’t matter. On the other end of the political spectrum, and in line with the notorious notion of selective Lebanese sovereignty, Hezbollah’s domestic opponents will denounce such flagrant reliance on Iran and the risks that come with it, regardless of how badly the country needs the fuel. They will, however, choose to continue to disregard Israeli aggression or deny and minimize the control that foreign actors such as Saudi Arabia have over them both financially and physically.

At the end of the day, Lebanon’s political establishment is innately talented at turning crises into opportunities. This week’s Iranian and American proposals will very quickly be leveraged by subservient political parties to exchange blame, appease supporters, and double down on external bets. More dangerously, and in the criminal absence of strong Lebanese diplomacy that treats foreign players for what they are — foreign — Hezbollah’s move will push the Lebanese further into East-West axis politics and corner them into relying on clientelist and sectarian enclaves.

The Iranian and American proposals come against the backdrop of the Lebanese power sector’s reliance on temporary solutions to avoid a total blackout. Last June, Lebanon signed an agreement with Iraq whereby Baghdad offered to supply heavy fuel oil in exchange for medical and consulting services. The fuel, which is inadequate for use in Lebanon’s power plants, would be swapped through an undisclosed third party for fuel with lower sulfur content. The details and payment model of the deal have to date not been revealed and the fuel ships are yet to dock on Lebanese shores.

Even if the Iranian fuel ship dispatch is serious and manages to bypass the political and diplomatic bottlenecks, the details and logistics have not been announced. Moreover, the fuel would only cover a few days of the country’s needs, or the needs of specific regions under the influence of Hezbollah for a longer period of time. This will be particularly inefficient because the incoming Iranian shipments will likely supply diesel for generators instead of fuel for power plants. Relying on generators would prove costlier, more unsustainable, and would remain at the mercy of Lebanon’s generator mafias and clientelist networks.

Under the American proposal, for Jordan to sell electricity to Lebanon, it has to wheel power through Syria on the Arab interconnection grid. The interconnection with Syria through the Lebanese Ksara substation requires reinforcement. The current electricity exchange capacity stands at 160 MW but could be expanded to reach an upper limit of 400-500 MW if Jordan has enough selling capacity and willingness to do so. Strengthening this Lebanon-Syria interconnection will take a few months, but it is achievable. Negotiations are currently underway with the World Bank to secure funding. It’s a step in the right direction despite falling short of meeting Lebanon’s power supply gap, which currently exceeds 1,500 MW and continues to grow. In past years, Jordan, which runs an electricity generation surplus, has expressed its willingness to sell power to Lebanon. But Syria’s rejection to wheel it — in addition to domestic Lebanese conflicts of interest — had prevented this proposal from materializing, allegedly because of low wheeling fees.

Similarly, imports of gas could take place through the Arab Gas Pipeline, which extends from Egypt to northern Lebanon through Jordan and Syria. The World Bank would also provide payment guarantees for the gas project, which would save millions of dollars spent annually on imports of more expensive and polluting heavy fuel oil. With some rehabilitation work, almost half of Lebanon’s available generation capacity can run on gas, which remains an underexploited power generation source. Two key problematics to bear in mind are the condition of the pipeline on the Syrian side, which has suffered damage during the conflict there, as well as the risk of Damascus cutting off access to gas in the event of a dispute with Beirut, in Lebanon's own version of the Russia-Ukraine gas fights.

Although quick fixes could mitigate the immediate and deadly collapse of the fuel supply in critical sectors such as health care and water provision, these will not permanently solve Lebanon’s power sector woes. They may in fact feed into government inaction, complacency, and the erroneous assumption that foreign countries should and will save Lebanon. The sources of fuel and electricity are not as much of a problem as the shrinking foreign currency reserves amid total government inaction nearly 18 months into the country’s first default. But Lebanon would still face significant power supply gaps and technical and non-technical losses years into the future, meaning Beirut would need to import large volumes of fuel for the remaining power plants and for diesel generators that continue to partially fill these gaps.

Without a strong and credible government to once and for all implement sustainable power sector reforms and negotiate a financial package with the IMF, the Lebanese pound will continue its freefall and Lebanese citizens will be unable to afford the very few hours of power supply that remain. Along the way, Lebanon will continue to be used as both collateral and a testing ground, stuck between Hezbollah’s drive to move the country Eastward and the West’s attempts to contain Iran's growing influence in the region.


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