Lebanon: Military Pressure for Change
The formation of the cabinet, the war with Syrian jihadis, and the country's future.
Commercial Summary: The nation state experiment for Lebanon, Iraq, Syria and Jordan has been a failure, with Trump trying to expand Israel’s borders and Erdogan Turkey’s. This places enormous pressure on Lebanon’s new cabinet. The cabinet will attempt to implement necessary reforms in the electricity, telecoms and banking sectors, and to reach an IMF agreement. Past precedent suggests that, given its internal divisions and upcoming elections in 2026, it will become paralysed, but, this time, the Shi’a ability to resist reform is much lower considering the military threats from Syria and Israel, making the cabinet’s success more likely. Hezbollah is very unlikely to resume combat operations against Israel except in response to extreme Israeli provocations.
Several rapid developments are underway in Lebanon.
The formation of a new cabinet, which again includes Hezbollah representatives, on 8 February.
Continuing Israeli airstrikes on Hezbollah positions several times per week (ongoing).
Israel is pressuring Hezbollah over its refusal to disarm, even though local reports indicate that it has been handing over its positions south of the River Litani to the Lebanese Army, in partial compliance with the ceasefire.
The ceasefire has been extended to 18 February, with Israel remaining in a number of positions to secure the Galilee Panhandle, which Hezbollah had planned to occupy before its command structure was decimated.
Attacks by Hayat Tahrir al-Sham and other Syrian jihadis against Lebanese villages and communities in Syrian territories in the Hermel - Homs border region in north Lebanon (ongoing).
The targeted Lebanese allies of Hezbollah, who are reportedly involved in weapons, drugs, and fuel smuggling.
That region is the main supply route for Hezbollah and Iran from Syria. This route is now fully closed off for Hezbollah.
Some of the Sunni jihadi attacks “coincided” with limited Israeli airstrikes south of Hermel, highlighting that Hezbollah is risking a two-front conflict.
The picture that emerges is one that we warned about right after the fall of Assad: a change in the borders in the Middle East that favours Turkey.
We had expected the Turks to focus on Eastern Syria and Northern Iraq, leaving Lebanon for much later, given that the former two provinces contained enormous oil wealth that could help alleviate Turkey’s balance of payments problem. (Once again, we relearn the lesson that politics is NOT based on rational, material considerations, which is something those saying China will not annex Taiwan should remember). Likely reflecting US, Turkish and Israeli coordination, Turkish proxies are targeting Lebanon first, to weaken Iran and to cement Turkish-American relations.
Commercial Implications:
It is worth recalling that we are in the midst of the final collapse of the Sykes- Picot borders, as the Syrian, Iraqi, and Lebanese nation prove to be failed experiments .
Trump is trying to redraw the region’s borders by expanding Israel. Erdogan is trying to redraw them by expanding Turkey. Lebanon, Syria, Iraq and Jordan are going to be casualties of these changes.
In an extreme but very plausible scenario, Syrian jihadis would advance as per the green arrow, above, from Tal Kalakh through the Sunni towns Fnaidik, Halba and Miniyeh to Lebanon’s Tripoli. Historically, Lebanon’s Tripoli was Syria’s Homs’ main port.
This would separate Lebanon’s Shi’a from Syria’s Alawites, who are in the coastal mountains of Syria. Israel and the West would be able to deal with these communities separately and turn them into dependencies.
Given these threats, the Lebanese cabinet - and Hezbollah - will have no choice but to comply with US demands.
As such, we expect the Lebanese cabinet to attempt to implement the following policies: