Since 2016, the once-significant financial support of Gulf Arab countries for Lebanon has slowed to a trickle. Between 2003 and 2015, 76 percent of foreign direct investment in Lebanon came from the Gulf states. Over the past decade, remittances averaged about 20 percent of Lebanon’s GDP annually—with an estimated 60 percent coming from the Gulf countries. And between 2006 and 2008, Saudi Arabia and Kuwait—in response to reconstruction needs following Israel’s war on Lebanon—deposited $2.5 billion in Lebanon’s central bank. Those factors showed Lebanon’s high level of dependence on Gulf political support and financial inflows.
Gulf support nearly ceased by 2016, however, triggered by a decline in oil prices in 2014 and the growing polarization between Saudi Arabia and Iran, who previously coexisted as influencers in Lebanon, albeit uneasily. In 2016, Saudi Arabia halted a $3 billion package to the Lebanese army and another $1 billion for the internal security forces.
While the decline in oil prices shrank the Gulf states’ fiscal space for support, the key impetus for these decisions was political. With the onset of the Syrian uprising in 2012 and Iran’s military and financial support for the Syrian regime of Bashar al-Assad, tensions rose between Iran and Arab countries in the Gulf led by Saudi Arabia. Lebanese Hezbollah combatants were deployed to Syria to fight alongside the Syrian military, while the party’s political and security roles in Lebanon visibly increased.
From the perspective of the Gulf states, Lebanon looked increasingly like an Iranian outpost. The negative fallout was best embodied in a 2017 episode when then Lebanese prime minister Saad al-Hariri resigned while on a visit to Saudi Arabia and for several days appeared to be unreachable. He was finally able to return to Lebanon due to international—specifically French—efforts. Gulf support for Lebanon, however, has remained at its nadir. This was evident in the modest levels of Gulf pledges at the CEDRE conference of 2018, held to bolster Lebanon’s economy.
Lebanon’s economic collapse in October 2019 triggered new calls for the Arab Gulf states to provide financial aid to Lebanon. However, given even greater tightening of Gulf fiscal capacities as a result of the coronavirus pandemic, as well as continuing tensions between Arab states and Iran, this support is unlikely to be forthcoming.