R 121410Z JUL 95
FM AMEMBASSY BEIRUT
TO SECSTATE WASHDC 8207
INFO IRAN COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 BEIRUT 002676 
 
 
E.0.12356:DECL:07/12/00 
TAGS: PGOV PTER ECON LE
SUBJECT:  HIZBALLAH AND HARIRI STRIKE A DEAL 
 
¶1.  CONFIDENTIAL - ENTIRE TEXT. 
 
¶2.  SUMMARY AND COMMENT.  PM HARIRI, SPEAKER BIRRI, 
AND SHI'A SPIRITUAL LEADER SHAMS AD-DIN MET JULY 11 
AND RESOLVED DIFFERENCES OVER THE DISTRIBUTION OF TWO 
SHI'A-RESERVED SEATS ON THE BOARD OF THE SOUTHERN 
SUBURBS REDEVELOPMENT SCHEME, ELYSSAR.  A HIZBALLAH 
AND BIRRI MAN WILL TAKE THE TWO SEATS, AND FADLALLAH 
AND SHAMS AD-DIN EACH WILL WITHDRAW HIS CANDIDATE. 
THIS DECISION -- STILL TO BE RATIFIED BY THE CABINET 
ON JULY 13 -- COMPLETES THE YEARS-LONG TRANSFORMATION 
OF HIZBALLAH'S ATTITUDE TOWARD HARIRI'S SWEEPING 
DEVELOPMENT PLANS IN THE SUBURBS FROM OPEN HOSTILITY 
TO ACCOMMODATION.  WHILE THE NATURE OF THIS ODD AND 
LIMITED ALLIANCE OF HARIRI AND HIZBALLAH WILL TAKE 
TIME TO CLARIFY, HIZBALLAH'S DECISION TO JOIN THE 
BOARD SUGGESTS A REALIZATION THAT IN FUTURE IT CAN 
WORK WITH, NOT AGAINST THE STATE TO RETAIN ITS GAINS 
IN THE SOUTHERN SUBURBS.  END SUMMARY AND COMMENT. 
 
¶3.  PM RAFIQ HARIRI, PARLIAMENTARY SPEAKER NABIH 
BERRI, AND SHI'A SPIRITUAL LEADER MUHAMMAD MAHDI 
SHAMS AD-DIN GATHERED LATE JULY 11.  THEY TOLD THE 
PRESS THAT THE TALKS CENTERED ON THE SITUATION IN THE 
SOUTH.  HOWEVER, ACCORDING TO MUHAMMAD SAMMAK, A KEY 
AIDE TO HARIRI AND CONFIDANT OF SHAMS AD-DIN, THE 
REAL TOPIC WAS A DISPUTE OVER ELYSSAR, THE 
CORPORATION BEING FORMED TO DEVELOP PARTS OF THE 
SOUTHERN SUBURBS. 
 
¶4.  THE DISPUTE INVOLVED THE NOMINATION OF FOUR 
CANDIDATES FOR TWO RESERVED SHI'A SEATS ON THE BOARD 
OF DIRECTORS.  BERRI, SHAMS AD-DIN, HIZBALLAH 
SPIRITUAL GUIDE MUHAMMAD HUSAYN FADLALLAH, AND 
HIZBALLAH EACH PROPOSED A NAME.  AFTER LENGTHY 
GRIDLOCK, FADLALLAH AND HIZBALLAH AGREED THIS WEEK TO 
PROPOSE A SINGLE CANDIDATE (THAT THEY TOOK SO LONG TO 
AGREE REFLECTS THE DIVISION BETWEEN FADLALLAH AND THE 
LEADERSHIP OF THE PARTY).  ON THE LLTH, SHAMS AD-DIN 
AGREED TO WITHDRAW HIS PREFERRED CANDIDATE IN FAVOR 
OF BERRI'S. 
 
¶5.  THERE WAS LITTLE APPARENT CONTROVERSY OVER THE 
OTHER SEATS, WHICH ARE RESERVED FOR TWO SUNNIS, ONE 
MARONITE, AND ONE GREEK CATHOLIC.  THE CABINET IS 
EXPECTED TO APPROVE THE RESULTS OF HARIRI'S BACK-ROOM 
NEGOTIATIONS ON JULY 13. 
 
¶6.  THESE DEVELOPMENTS REFLECT A MARKED 
TRANSFORMATION IN THE ATTITUDES OF HARIRI AND 
HIZBALLAH TO EACH OTHER, AND IN HIZBALLAH'S VIEW OF 
THE FUTURE.  WHEN IN THE WINTER OF 1992 HARIRI FIRST 
UNVEILED THE ELYSSAR CONCEPT -- MODELED ON THE 
EQUALLY CONTROVERSIAL SOLIDERE COMPANY SET UP TO 
REDEVELOP DOWNTOWN BEIRUT -- HIZBALLAH RAISED 
STRIDENT OBJECTIONS IN THE STREETS, MOSQUES, AND 
PARLIAMENT. 
 
¶7.  THE PARTY WHIPPED UP A FRENZY BY REMINDING ITS 
AUDIENCE OF AMIN GEMAYEL'S ATTEMPTS IN THE 80'S TO 
BULLDOZE THE SOUTHERN SUBURBS AND DISPLACE ITS 
CITIZENRY UNDER THE GUISE OF REDEVELOPMENT. 
HIZBALLAH PREYED ON THIS POPULAR FEAR AMONG THE SHI'A 
IN AN OBVIOUS PLOY TO KEEP THE STATE OUT OF THE 
SUBURBS, SO HIZBALLAH COULD REMAIN THE SOLE PROVIDER 
OF SERVICE AND SECURITY. 
 
¶8.  HARIRI, FOR HIS PART, WAS JUST AS DETERMINED TO 
CHALLENGE HIZBALLAH THROUGH HIS MASSIVE REAL ESTATE 
DEVELOPMENT SCHEMES, WHICH INTEND TO HARNESS PRIVATE 
CAPITAL TO THE DAUNTING TASK OF REBUILDING GREATER 
BEIRUT.  PARALYSIS RESULTED FROM THIS STANDOFF. 
 
¶9.  IN THE SUMMER OF 1995, HOWEVER, CHANGED 
CIRCUMSTANCES BORE FRUIT.  IN NEGOTIATIONS WITH 
HIZBALLAH, HARIRI AGREED THAT THE THOUSANDS OF 
SQUATTERS NOW SETTLED IN THE PROPOSED DEVELOPMENT 
ZONE -- HIZBALLAH SUPPORTERS, FOR THE MOST PART -- 
WOULD BE PERMITTED TO STAY PUT, AND THAT ELYSSAR 
WOULD REPLACE THEIR RAMSHACKLE HOUSING WITH NEW 
APARTMENTS IN KEEPING WITH THE RESORT-TOWN LOOK 
ENVISIONED BY ALYSSAR FOR THE ZONE.  THIS REMOVED THE 
PARTY'S RALLYING CRY AGAINST THE SCHEME. 
 
¶10.  WIDER POLITICAL CALCULATIONS, HOWEVER, PROBABLY 
ACCOUNT FOR THE PARTY'S WILLINGNESS TO JOIN TOGETHER 
WITH HARIRI IN DEVELOPING ONE OF ITS STRONGHOLDS. 
THE DECISION IS IN KEEPING WITH A PRAGMATIC CURRENT 
WITHIN THE PARTY WHICH WANTS TO READY HIZBALLAH FOR 
THE TRANSFORMATION FROM A MILITIA WHICH CHALLENGES 
THE STATE TO A SERVICE-ORIENTED PARTY WITH A PLACE 
INSIDE LEGITIMATE POLITICS.  IN SIGNING UP WITH 
ELYSSAR, HIZBALLAH MAY ALSO HAVE RECOGNIZED THE VALUE 
OF ASSOCIATION WITH THE NEXT LARGE SOURCE OF 
INVESTMENT IN THE SUBURBS, ON THE ASSUMPTION THAT THE 
IRANIAN CASH FLOW WHICH SUPPORTS HIZBALLAH'S SERVICE 
ACTIVITIES IN THE SUBURBS MAY SOON DIMINISH.  HARIRI 
GAINS THE SUPPORT OF THE MOST VOCAL ELEMENT IN THE 
SUBURBS, AND THUS PEACE FOR HIS LUCRATIVE PLAN. 
 

¶11.  THIS MUTUAL COZYING UP BY HARIRI AND HIZBALLAH 
COMES CHIEFLY AT THE EXPENSE OF SHI'A SPIRITUAL 
LEADER SHAMS AD-DIN.  WHILE SHAMS AD-DIN -- THE 
SUCCESSOR OF IMAM MUSA SADR AS HEAD OF THE HIGHER 
ISLAMIC SHI'A COUNCIL (HISC) -- WOULD BE THE STATE'S 
NATURAL ALLY IN SHI'A AFFAIRS, HIS SIMULTANEOUS FEUDS 
WITH BERRI AND HIZBALLAH PUT HIM AT A DISADVANTAGE. 
HE ALSO LACKS HIZBALLAH'S MUSCLE IN THE SUBURBS, SO 
DOES NOT NEED TO BE ACCOMMODATED.  IN THE LONG RUN, 
HOWEVER, THE SIDELINING OF SHAMS AD-DIN CAN ONLY 
ENCOURAGE A FURTHER RADICALIZATION OF SHI'A POLITICS, 
DOMINATED BY THE MILITIA-TYPE NETWORKS OF BERRI AND 
HIZBALLAH. 
 
SCHLICHER