Tuesday, May 26, 2009

Hizbollah tries to secure IMF funds by Roula Khalaf and Anna Fifield

Lebanon’s Hizbollah has held talks with the International Monetary Fund and the European Union as it seeks to secure continued financial support for Lebanon if the alliance it leads was to win next month’s parliamentary elections.

The discussions between the Shia militant group and donors take place amid intensifying concern in Beirut that a politically fragile, heavily indebted economy could come under severe strain if the current pro-western parliamentary majority was to lose the June 7 elections.

The Beirut government has benefited from the international support of Gulf states and western governments as it has sought to curb the powers of Hizbollah. Saudi Arabia in particular has been a backer of the government.

A victory by Hizbollah and its allies would be seen as a boost to Syria and Iran, the group’s backers. It could lead the US and other supporters of the current parliamentary majority to reconsider economic support for Lebanon. Washington considers Hizbollah a terrorist organisation but the group is seen by much of the Arab world as a resistance movement against Israel.

The pro-western coalition that dominates the government says it is confident it can maintain its parliamentary majority. But the race is tight, and a group of independents could decide which side is to form the next government.

Ali Fayad, a Hizbollah candidate who also heads the party’s think-tank, warned against punishing Lebanon economically if elections favoured the opposition.

He told the Financial Times his party was nonetheless considering the economic risks and discussing such prospects with the EU and the IMF.

The EU says it makes no distinction between Hizbollah and other parties in Lebanon, and will work with any democratically elected government. The EU has been providing about €60m ($84m) a year to Lebanon.

The IMF, with an assistance programme of $114m, also says it has met Hizbollah parliamentarians and officials from its economic think-tank as part of its normal work in Lebanon. But its financial assistance ends soon and another programme will depend on a decision by the fund’s executive board.

Washington has yet to make up its mind about Lebanon in the event of an opposition victory. But in recent weeks it has stressed the pivotal role played by Michel Suleiman, the Lebanese president, who belongs to neither camp.

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