Search ForexCrunch

Indictments against Hezbollah members are due any day now, by the special tribunal for Lebanon, investigating the murder of Rafik Hariri. Yet again, tensions are getting higher as Hassan Nasrallah threatens to bring a “new era” in Lebanon – a hint towards a full takeover of the country.

The son of murdered Rafik Hariri, Saad Hariri, is the current prime minister. He intends to hold a government meeting this Wednesday, after many weeks without meetings. There are many efforts to defuse the tensions. The fear is that the internal tensions in Lebanon will escalate into a war between Hezbollah and Israel, and that’s already very messy.

And speaking about Israel, a recent Wikileaks cable shows that defense minister Elias Murr told the Americans what Hezbollah sites should be bombed, and that Israel should avoid hitting Christian sites. According to the report, Murr instructed the chief of staff at the time, Michel Suleiman an instruction not to interfere when Israel attacks. Elias Murr is close to prime minister Hariri. Suleiman is now the president.

Needless to say, this only adds to tensions within  Lebanon. In case the internal conflict turns into a regional war, oil prices will rise, and so will safe haven currencies such as the dollar, yen and Swiss franc. The Australian dollar, kiwi euro and pound will drop.

The Canadian dollar enjoys higher oil prices, but is vulnerable to risk aversive trading, so in such a case, it probably will remain in the same place.