Lebanese Shia will rely on Hezbollah parallel economy

Significance

This promptly followed reports of a large explosion at a Hezbollah-linked fuel depot on a smuggling route across the Lebanon-Syria border, possibly targeted by Israeli planes.

Impacts

• Further French diplomatic intervention this month and the advent of US President Joe Biden could resolve the government formation crisis.
• There is little prospect of a genuinely reformist government that could implement real change and bring in large-scale aid.
• Once COVID-19 rules are lifted, recent student protests could spread and reinvigorate national demonstrations driven by rising hardship.
• US re-engagement with Iran could allow the latter to transfer more funds for Hezbollah to build its parallel economy.
• Lebanese living abroad will play an increasing role in funding key NGO food assistance programmes, as local leaders’ finances run short.