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Buy Now, Pay Later: Hezbollah Supermarket's Threat to Lebanon

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Poster of Hezbollah leader Sayyed Hassan Nasrallah, near Sidon
Poster of Hezbollah leader Sayyed Hassan Nasrallah, near SidonCredit: ALI HASHISHO / REUTERS

There has never been much in common between Rami Levy and Hassan Nasrallah – that is, until recently. Levy is Israel’s discount-supermarket king and the shopper’s friend; Nasrallah is the leader of Hezbollah and a sworn enemy of Israel.

But of late Nasrallah has become a sort of Lebanese Rami Levy: His militant group has opened a chain of discount supermarkets called Al-Sajjad. It’s part of a network of businesses that Hezbollah has operated for some time, including banks, pharmacies and home electronics stores, that is now expanding to become something of a one-stop shop for Lebanese consumers.

With the Lebanese economy in a freefall and lacking a functioning government, you might be wondering why Nasrallah thinks it’s a good time to be starting a business. But from Hezbollah’s perspective, a fantastic opportunity beckons, both financially and politically.

With foreign currency tight and the Lebanese pound’s value a fraction of what it once was, food prices have skyrocketed. Many supermarkets have closed for lack of goods. When the government runs out of money to pay subsidies, as it will since it’s doing nothing to solve the country’s problems, most Lebanese won’t have the money to buy much at all.

At Hezbollah supermarkets, however, media reports say the shelves are fully stocked. Shoppers who qualify for an Al-Sajjad customer-club card (criteria: monthly income of less than $125 and being a Shiite) can buy food at steeply discounted prices.

When the Lebanese economy finally collapses altogether, as seems to be its fate, Al-Sajjad could be the only grocery left standing. Hezbollah’s Shiite supporters will at least be spared the worst.

But how has Hezbollah been able to build a successful food-retail business at a time when the rest of Lebanon is coping with shortages?

Much the same way its Al-Qard al-Hasan Association, a quasi-bank, lets people take out dollar loans at a time when other banks have stopped lending altogether and depositors with dollar accounts can’t access them. Or the same way its chain of pharmacies is stocked with medicines and other supplies while competitors can’t fill prescriptions.

Hezbollah stocks its shelves and ATMs by smuggling goods and dollars into Lebanon. That explains why its stores are filled with brands made in Iran, Syria and Iraq and why it has access to so much precious U.S. currency. Hezbollah has long crossed back and forth over the porous Lebanon-Syria border to smuggle militants and arms in aid of Syrian President Bashar Assad. Last year it reportedly took this a step forward by establishing its own border crossing, thereby saving it the time and trouble of paying bribes to Syrian and Lebanese officials. 

The beneficiaries of Nasrallah’s stores and banks are grateful, according to media reports. Of course, Nasrallah is as much to blame for Lebanon’s woes as anyone,  perhaps more so since Hezbollah is by far the country’s most powerful faction. But when you’re struggling to feed a family, are you really going to ask yourself too many probing questions about what it means for the future of Lebanon?

Siren song of resistance economics

But if you do, the answer is pretty bleak. The general consensus is that barring a miracle Lebanon is on its way to becoming a failed state. Hezbollah is showing us how it will look when the day comes: The last remnants of the state and a national economy will disappear, but Lebanon won’t become a free-for-all.

In place of the government and the private sector, parties and militias will provide their supporters with everything from policing to banking services. Lebanon will resemble a medieval Europe of fiefdoms rather than a modern state.

Armed and financed by Iran, Hezbollah assumes correctly that it will be the most powerful lord in the land. But that doesn’t mean it will have the resources to actually control all of Lebanon or erect a “resistance economy” of the kind so beloved of its Iranian patron, Ayatollah Ali Khamenei.

A resistance economy, which Iran itself has put into place in the face of U.S. sanctions, aspires to create an autarky where everything (or at least almost everything) that the economy needs is produced locally. As an economic system, it’s a sure loser, but politically it holds an irresistible attraction to leaders who don’t want to surrender to American demands. Damn your iPhones, we’ll make our own?

Iran has been remarkably successful at creating a resistance economy, but it is a big country with natural resources, something of an industrial base and a government that is in control. That said, its success is mainly a political one:  Iran’s economy has shrunk since Trump slapped sanctions on it three years ago.

Hezbollah leaders have spoken about imitating the model by developing industry and supporting local agriculture.  But they lack the resources that Iran can leverage. Lebanon has no industry or oil, its domestic market is tiny, its infrastructure is primitive and as a failed state it won’t be able to provide basic services. Hezbollah can provide its followers with generators, but a power station?

As the most powerful actor in Lebanese politics, Hezbollah could be playing a constructive role in forming a government of technocrats and thereby win Western aid. Instead, it prefers to experiment with economic fantasies.

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