Event

On October 19, Lebanese intelligence Chief Wissam Hassan was killed in a car bomb in the capital Beirut. Hassan had been closely linked to the opposition anti-Syrian March 14 alliance of Saad Hariri, the country’s former PM and son of Rafik Hariri, who was himself killed by a car bomb when he was PM in 2005. Upon Hassan’s killing, tensions and violent clashes spread throughout the country. PM Najib Mikati submitted the resignation of his government, which is backed by  the Hezbollah, a  traditional ally  of Syria’s President Assad, to President Michel Suleiman. Suleiman has so far rejected the resignation, while intending to revive the country’s National Dialogue forum, reportedly seeking the formation of a national unity government.

Impact on country risk

It has long been feared that the Syrian civil war would affect Lebanese stability and complicate the functioning of the government, as we mentioned in September. The assassination of Hassan and the subsequent clashes demonstrate Lebanon’s continued susceptibility to the events in Syria. Taking into account the delicate sectarian and political constellation in Lebanon, which was itself hit by a fifteen year long civil war until 1990, the Syrian unrest will continue to weigh on political and social stability. While in theory, the National Dialogue could bring pro- and anti-Syrian political alliances closer together, Hassan’s assassination has probably further deepened the water between both groups, strongly reducing the chances of success for the formation of a national unity government. It goes without saying that it is a dramatic setting for tourism and investments, although, with good liquidity and a solid banking system, the country has of economic buffers to weather temporary political shocks.

Analyst: The Risk Management Team, r.cecchi@credendogroup.com