Can Iran fill Lebanon's energy vacuum?

The energy crisis that has gripped Lebanon has triggered a political churning in the country — and the US and its allies find it distressing. 

Hezbollah leader Sayyed Hassan Nasrallah said on Tuesday that they have a plan to import oil and gas from Iran in order to fill Lebanon's energy vacuum.  

The statement rattled many Lebanon watchers, including the policy wonks in Washington, who over the years have grown edgy toward the rise of Hezbollah, a militant group that has set up its 'state within a state' in Lebanon. 

If Hezbollah succeeds in importing energy from Iran, it will be a major setback to the legitimacy of the Lebanese government led by Prime Minister-designate Saad al Hariri. 

The million-dollar question, however, is how feasible it is to import energy from Iran to Lebanon in light of the UN sanctions on Tehran. 

"It is entirely possible that Hezbollah could import oil from Iran, however, it would be at a stark risk that the US (and perhaps Israel) would seek to upset any transaction," Justin Dargin, the Middle East energy expert at the University of Oxford, told TRT World. 

"Even though the Biden administration indicated that it is ready to restart negotiations with Iran, US sanctions are still in effect. And, even if Hezbollah pays in Lebanese pounds (which has lost a significant amount of value) or attempts to import the fuel surreptitiously from Iran, these shipments could be monitored and halted," Dargin said.  

The years of economic mismanagement and endemic corruption has exacerbated the governance problems in Lebanon, allowing a sectarian force like Hezbollah to fill the power vacuum.  

Although the Bank of Lebanon is running low on US dollars, the main currency that is utilised for fuel purchases, Hezbollah can still find new ways to pursue its energy goals. 

"If the Lebanese government or private sector don’t have enough money to purchase Iranian oil, Iranians could sell the oil in Lebanese lira (or pound)," said a Tehran-based political analyst Professor Mohammad Marandi. 

Marandi, a member of the Iranian delegation that negotiated the 2015 nuclear deal with the US, told TRT World the Iran government and the Lebanese private sector are keen on working together to resolve Lebanon's energy crisis.  

He accused the US of fuelling the political and economic chaos in Lebanon by siding with the regimes that did not represent the aspirations of the Lebanese people.  

"They have created a disastrous situation and it is like a Ponzi scheme," Marandi said, "The Iranians would be more than willing to help Lebanon to get out of this difficult situation."

Some experts believe that the US wouldn't want to see Lebanon's security apparatus fall apart because of the energy issues, even though it means tolerating the political manoeuvring of Washington's avowed rival, Hezbollah. 

"My assumption here is that the US may allow indirect supply since they are not willing to see a total collapse in Beirut," said Lebanese professor Pierre al Khoury.

What went wrong?

Some populist decisions, corruption and economic mismanagement led to Lebanon's currency depreciation at least 10 times, resulting in the country defaulting on Eurobonds, according to Jihad el Hokayem, an economist and lecturer in oil and gas program at the Saint Joseph University in Beirut. 

“This political class has been robbing the country for decades,” Hokayem told TRT World. “Many basic goods are smuggled and piled up by politicians to use for next year’s election.”

Last year, the Lebanese energy minister Raymond Ghajar dispelled the notion of importing fuel from Iran, but since the government failed to come up with any solutions to resolve the looming energy crisis, the Iran option became a viable option. 

But for Natasha Hall, a senior fellow at Washington-based think tank, the Center for Strategic and International Studies, importing fuel to meet the energy demand will be a "band-aid solution."

"The reality is that these temporary deals won’t solve Lebanon’s underlying governance problems, which led to energy shortages prior to the recent economic crisis," Hall told TRT World. 

"It would help to smuggle oil to neighbouring Syria. Hezbollah is a key ally of Iran and the Assad government, which has been suffering from fuel shortages as well so Nasrallah certainly has an interest in promoting that band-aid solution."

According to Hall, Lebanon's energy deficit is not a "technical" but a political problem. 

"From a technical perspective, these problems are easily resolved. The country needed to build new thermal power plants, shift to cleaner natural gas, and expand renewable energy. But political bickering, corruption, and mismanagement has stopped this progress for years," she said.