The June 7 vote is hotly contested and pits the so-called March 14 coalition - which leads the government - against an opposition that includes Hizbollah as well as a popular Christian party.

Hizbollah supporters with posters and flags of Sayyed Hassan Nasrallah, the group's leader, at a rally in Beirut

Hizbollah will probably have no more than a 10 per cent share in the next parliament, given that seats are allocated according to sectarian quotas. But if the opposition - known as March 8 - wins the elections, some countries might be reluctant to prop up an organisation that is seen as seeking to radicalise the country's foreign policy.

Lebanon's economy has so far escaped the brunt of the global financial crisis, thanks to tight banking regulations, but it is saddled with a debt that reaches more than 160 per cent of gross domestic product.

Repeated political crises have required Lebanon to seek sustained foreign support. In the summer of 2007, after a month-long Israeli offensive against Hizbollah, donors pledged $7.6bn (€5.4bn, £4.8bn) in aid, with Saudi Arabia providing $1bn. Many of the pledges, however, were made to lend political support to the March 14 alliance and help it confront Hizbollah.

In an interview with the Financial Times, Saad Hariri, the leader of the Future movement, the largest party in the March 14 coalition, raised doubts over the continued outside support for Lebanon if the Syria and Iran-backed Hizbollah and its allies won the election.

"If the international community thinks of helping [Lebanon], will it help an experienced political party that has pulled Lebanon from disaster to economic prosperity or will it trust an alliance like the 8th of March?" he said.

"We have an economic agenda and we believe that we can bring a lot of good things to Lebanon, whereas if the other party, the 8th of March, win?.?.?.?the economy of Lebanon is in question."

Walid Jumblatt, another leader of the parliamentary majority and the chief of the Druze minority, also warned that a March 8 victory "will have a huge impact on the economy".

"The Saudis? The Gulf? Who is going to support our economy? It is already very fragile, it is already $50bn in debt," he said.

Hizbollah officials acknowledge the economic risk and are trying to recruit Shia economists to advise the party. "We have to think about this scenario and evaluate it as one of the most dangerous for Lebanon," Ali Fayad, a Hizbollah candidate in the election who also runs its think-tank, told the FT.

Curtailing economic support to Lebanon would be "like playing with fire", he said. "We are one economic nation so any economic crisis will be a problem for all Lebanese people."

Hizbollah, he said, had discussed the country's economic future with the International Monetary Fund and the European Union.

EU officials say they would be willing to work with any democratically elected government in Lebanon. The EU has been providing about €60m ($84m, £53m) a year for the past three years, with an additional €10m this year for election and budget support.

The IMF, meanwhile, said consultations with Hizbollah were part of its normal work in Lebanon. The country agreed a programme with the IMF under the emergency post-conflict assistance in 2007. But the support is due to expire soon and IMF member states, led by the US, could block any future money. Hizbollah is listed as a terrorist organisation by the US.

On a visit to Beirut last week, Joe Biden, the US vice-president, said Washington would evaluate the shape of its assistance programmes - aid to the Lebanese army has totalled about $1bn in the past three years - based on "the shape of the new government".

In an apparent attempt to limit the economic damage, Hizbollah has said it would form a national unity government. But Mr Hariri says he has no intention of joining such a government.

"There is a sense in western capitals that they understand the opposition is not purely Hizbollah and that a knee-jerk reaction - isolation - doesn't work well. But they are in a dilemma," says Paul Salem, director of the Beirut-based Carnegie Middle East Centre.

"In the US, Congress will be very negative, but what will be more crucial is whether Saudi Arabia and other GCC [Gulf Co-operation Council] states switch [their attitude].

"Hizbollah knows this and says that it wants [the] Future [movement] in the government," says Mr Salem. "Future has contacts that could make life difficult - just as March 8 has military means."

By Anna Fifield and Roula Khalaf in Beirut

© Financial Times 2009

 

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