In Crisis-Hit Lebanon, Paris and Washington at Odds over Hezbollah

Hezbollah supporters in the southern Lebanese region of Marjeyoun on the border with Israel on May 25. (AFP)
Hezbollah supporters in the southern Lebanese region of Marjeyoun on the border with Israel on May 25. (AFP)
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In Crisis-Hit Lebanon, Paris and Washington at Odds over Hezbollah

Hezbollah supporters in the southern Lebanese region of Marjeyoun on the border with Israel on May 25. (AFP)
Hezbollah supporters in the southern Lebanese region of Marjeyoun on the border with Israel on May 25. (AFP)

When it comes to Lebanon, the US and France have similar outlooks, but one major point of difference involves the Hezbollah movement -- shunned by Washington but tolerated by a pragmatic Parisian leadership.

While the United States seeks to isolate and curb the influence of the Iran-backed group it has designated a "terrorist" organization and punished with sanctions, France recognizes it as a key political actor whose cooperation is needed to lift Lebanon out of crisis.

Lebanon's government stepped down last month amid popular anger over a massive blast at Beirut's port on August 4 that killed 191 people, wounded thousands and ravaged large parts of the capital.

Both Western powers have agreed Lebanon needs a cabinet different from its predecessors to tackle urgent reforms, but all consensus seems to end there.

"France's approach tends to be more realistic," analyst Karim Bitar told AFP.

"France views Lebanon as it is, while the (US President Donald) Trump administration tends to view Lebanon as it would like it to be."

The US view is that Hezbollah -- the only group not to have disarmed after the 1975-1990 civil war -- holds excessive influence in Lebanon, "which needs to be contained", Bitar said.

But Paris recognizes "Hezbollah in Lebanon is a major political actor, that it has a wide captive constituency in Lebanon's Shiite community, that it is here to stay," he added.

Two facets of Hezbollah
The United States has been following closely as French President Emmanuel Macron twice visited Lebanon since August 4 to press for political change and reforms to unlock financial aid.

During his last trip, the French leader differentiated between two facets of Hezbollah -- one "terrorist", and the other, a political party "elected by the people" to parliament and allied with the Lebanese president's party that could not be excluded from talks.

Hezbollah chief Hassan Nasrallah has been notably positive about Macron's visits, not labelling them as "foreign interference" as he might have done for such a move by the US.

The party’s parliamentary bloc leader, Mohammad Raad, was among lawmakers who met Macron before he said all sides had agreed to form a new government within a fortnight.

France, which has outlined a roadmap for reforms for the next government, "wants to maintain a channel of dialogue with Hezbollah in order to prevent the destabilization of Lebanon", Bitar said.

Paris views itself as "an honest broker" to do this in a time when tensions are at a peak between Washington and Tehran.

Observers say France is one of the only Western powers to have maintained direct contact with Hezbollah, pointing to the role of the current French ambassador, who formerly held the same post in Tehran.

"There has always been direct contact between Paris and Hezbollah," an Arab diplomat in Beirut told AFP.

And as Washington is caught up in preparing for the US presidential polls, it appears to be giving France some leeway on Lebanon.

"The Americans have set as a condition that Hezbollah not take part in the (next) government, but they could turn a blind eye to them remaining if there were a deal and reforms," the diplomat said.

Hezbollah 'cannot be trusted'
US Assistant Secretary for Near Eastern Affairs David Schenker, also visiting Lebanon last week, told Lebanese newspaper An-Nahar that the US appreciated the French initiative, but differed on a few details, including that Hezbollah was not a legitimate political organization but a "terrorist" group.

He did not meet with key political figures, instead seeing army chief Joseph Aoun, lawmakers who resigned after the port blast, civil society activists and Shiite figures opposed to Hezbollah.

One such Shiite figure told AFP that Schenker said during their meeting that Hezbollah "cannot be trusted" to lead reforms.

"Hezbollah has been given ample opportunity since 2005 to really involve itself in the state and has not changed its behavior," the source reported Schenker as saying.

The United States has demanded Hezbollah lay down its weapons, but also echoed the call of a political minority in Lebanon that the country be "neutral", meaning that it break ties with Iran and distance itself from the region's conflicts.

Most Lebanese political sides, however, have accepted that the party is a military force to contend with and a political actor present in all branches of state, which, with its allies, currently dominates parliament.

Responding to US Secretary of State Mike Pompeo calling for Hezbollah's weapons to be dealt with as a priority, Druze leader Walid Jumblatt in a televised interview last week responded that the solution would come through politics.

"Let Pompeo forget the rockets for now. That matter will be solved through politics when the time is right," he said.



Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
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Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo

Until recently aerospace engineer Pedro Monteiro figured he'd join many of his peers moving from Portugal to its richer European neighbors in the quest for a better-paid job once he completes his master's degree in Lisbon.
But tax breaks proposed by Portugal's government for young workers - up to a temporary 100% income tax exemption in some cases - plus help with housing are making him think twice.
"Previous governments left young people behind," said Monteiro, 23, who is studying engineering and industrial management at the Higher Technical Institute in the Portuguese capital. "The country needs us and we want to stay but we need to see signs from the government that they are implementing policies that will help."
Monteiro cites in particular the cost of buying or renting a home amid a housing crisis aggravated by the arrival of wealthy foreigners lured by easy residency rights and tax breaks, Reuters said.
He is doubtful the government's new measures will be enough.
"Some of my friends are now working abroad and earn substantially more money... and have better career development opportunities," he said. "I'm a little bit skeptical concerning my job opportunities here in Portugal."
Portugal is the latest country in Europe to seek to tackle a brain drain holding back its economy. Tax breaks for young workers in the budget currently going through parliament will take effect next year and could benefit as many as 400,000 young people at an annual cost of 525 million euros.
Talent flight to wealthier countries of the north is a problem Portugal shares with several others in southern and central Europe, as workers take advantage of freedom of movement rules within the trade bloc. Countries including Italy have tried other schemes to counter the flight, with mixed results.
By exacerbating regional labor shortages and depriving poorer countries of tax revenues, it is yet another hurdle for the EU as it tries to improve its ebbing economic growth while addressing population decline and lagging labor productivity.
Donald Trump's victory in US elections this month raises the stakes, with the risk of across-the-board trade tariffs on European exports of at least 10% - a move that economists say could turn Europe's anaemic growth into outright recession.
About 2.3 million people born in Portugal, or 23% of its population, currently live abroad, according to Portugal's Emigration Observatory. That includes 850,000 Portuguese nationals aged 15-39, or about 30% of young Portuguese and 12.6% of its working-age population.
More concerning still is that about 40% of 50,000 people who graduate from universities or technical colleges emigrate each year, according to a study by Business Roundtable Portugal and Deloitte based on official statistics, costing Portugal billions of euros in lost income tax revenue and social security contributions.
DEMOGRAPHIC HELL
"This is not a country for young people," said Pedro Ginjeira do Nascimento, executive director of Business Roundtable Portugal, which represents 43 of the largest companies in the nation of 10 million people. "Portugal is experiencing a true demographic hell because the country is unable to create conditions to retain and attract young talent."
Internal migration within the EU is partly driven by the disparity in wages between its member states. Some economic migrants also say they are looking for better benefits such as pensions and healthcare and less rigid, hierarchichal structures that give more responsibility to those in junior roles.
Concerns are mounting over the long-term viability of Europe's economic model with its rapidly ageing population and failure to win substantial shares of high-growth markets of the future, from tech to renewable energy.
Presenting a raft of reform proposals aimed at boosting local innovation and investment, former European Central Bank chief Mario Draghi said in September the region faced a "slow agony" of decline if it did not compete more effectively.
Eszter Czovek, 45, and her husband are moving from Hungary to Austria, where workers earn an average 40.9 euros ($29.95) per hour compared to 12.8 euros per hour in Hungary, the largest wage gap between neighboring countries in the EU.
The number of Hungarians living in Austria increased to 107,264 by the beginning of 2024 from just 14,151 when Hungary joined the EU.
Czovek's husband, who works in construction, was offered a job in Austria, while she has worked in media and accounting at various multinationals. She cited better pay, pensions, work conditions and healthcare as motives for moving. She also mentioned her concern over the political situation in Hungary, which she fears might join Britain in leaving the EU.
"There was a change of regime here in 1989 and 30 years later we are still waiting for the miracle that will see us catch up with Austria," Czovek said of the revolution over three decades ago that ended communist rule in Hungary.
Since Brexit, the Netherlands has replaced Britain as a preferred destination for Portuguese talent while Germany and Scandinavian countries are also popular.
Many Europeans still head to the United States in search of better jobs - about 4.7 million were living there in 2022, according to the Washington-based Migration Policy Institute, which nonetheless notes a long-term decline since the 1960s.
In 2023, 4,892 Portuguese emigrated to the Netherlands, surpassing Britain for the first time, which in 2019 received 24,500 Portuguese.
At home, they face the eighth-highest tax burden in the Organization for Economic Co-operation and Development (OECD) even as house prices rose 186% and rents by 94% since 2015, according to property specialists Confidencial Imobiliario.
A single person in Portugal without children earned an average of 16,943 euros after tax in 2023 compared to 45,429 euros in the Netherlands, according to Eurostat.
Portugal will offer under 35s earning up to 28,000 euros a year a 100% tax exemption during their first year of work, gradually reducing the benefit to a 25% deduction between the eighth and tenth years.
Young people would also be exempted from transaction taxes and stamp duty when buying their first home as well as access to loans guaranteed by the state and rent subsidies.
"We are designing a solid package that tries to solve the main reasons why the young leave," Cabinet Minister Antonio Leitao Amaro said in an interview with Reuters.
'THINGS WON'T CHANGE'
Leitao Amaro said he did not know for sure if the tax breaks would work but that his government, which came into office in April, had to try something new.
"If we don't act ambitiously, things won't change and Portugal will continue down this path," he said.
The Italian government has already found that tax breaks used as incentives are costly and open to fraud.
In January, Italy abruptly curtailed its own scheme that was costing 1.3 billion euros in lost tax revenue, even as it lured tech workers such as Alessandra Mariani back home.
Before 2024, returners were offered a 70% tax break for five years, extendable for another five years in certain circumstances. Now, it plans to offer a slimmed-down scheme targeting specific skills after it attracted only 1,200 teachers or researchers - areas where Italy has a particular shortage.
Mariani said the incentives were key to persuading her to return to Milan in 2021 by allowing her to maintain the same standard of living she enjoyed in London.
"Had the opportunity been the same without the scheme, I would not have done it at all," said Mariani, now working at the Italian arm of the same large tech company.
With her tax breaks poised to be phased out by 2026 unless she buys a house or has a child, Mariani faces a drop in salary and she said she's once again eyeing the exit door.