Lebanon President asks former PM Saad Hariri to form new government

BEIRUT (BLOOMBERG) – Mr Saad Hariri returned as prime minister on Thursday (Oct 22) a year after stepping down in the face of nationwide protests, his promise to implement a French plan to salvage the collapsing economy complicated by his failure to secure broad support.

Mr Hariri received 65 parliamentary votes out of 118, giving him the mandate to form his fourth government after Lebanon’s political establishment failed to agree on a strong alternative to lead the country out of its deepest economic and political crisis since the 1975-1990 civil war.

But his record, and failure to win the backing of the two main Christian parties, will hinder Mr Hariri’s mission and his return is unpopular with tens of thousands of Lebanese who filled the streets last year demanding the removal of a political class they blame for the country’s ills.

“Today, we are going back to square one and so we ask: Where is the change?” billionaire businessman Fouad Makhzoumi, one of the lawmakers who chose not to nominate Mr Hariri, told reporters.

The 50-year-old son of assassinated former premier Rafiq Hariri resigned after weeks of protest in October 2019 as leader of a national unity government that had represented most of the parties in power but was paralysed by divisions, unable to take the painful measures needed to avert a financial collapse years in the making.

Mr Hariri was succeeded by Mr Hassan Diab, an academic supported by Iranian-backed Hizbollah and its allies.

Mr Diab took the key step of defaulting on the country’s US$30 billion (S$40.7 billion) international debt, but failed to build the political consensus required to secure a bailout from the International Monetary Fund and restore investor confidence.

The banking and debt crisis, which has triggered triple-digit inflation, wiped out life savings and plunged the middle class into poverty, was deepened by August’s devastating explosion at Beirut’s port.

Mr Diab resigned following the blast, which killed more than 200 people and caused as much as US$4.6 billion in physical damage.

Mr Mustafa Adib, a diplomat named to replace him, stepped aside after it quickly became clear he would not win political support for his Cabinet lineup, leaving the country in limbo.

A reform initiative proposed by French President Emmanuel Macron in the aftermath of the port disaster calls for a Cabinet of independent technocrats to carry out fiscal reforms, seal the IMF deal, pass anti-corruption laws and audit the central bank.

More on this topic

The French President has threatened officials with sanctions if they fail to form a new government.

That’s a step already taken by the US. The Trump administration sanctioned two former Lebanese government ministers last month for providing material support to Hizbollah, an armed group, and engaging in corruption, the first such move against high-level individuals in the country.

Legislators who voted to bring back Mr Hariri said he was the only person capable of implementing the French initiative and unlocking billions of dollars in international aid, but stabilising Lebanon is a fraught task.

“To the Lebanese in despair, I say: I am determined to deliver on my promise to end the collapse in our economy, society and security, to rebuild what the blast at the port destroyed and to form a government quickly,” Mr Hariri said after accepting the job.

“Time is running out and this is our beloved country’s last chance.”

Under Lebanon’s sectarian power-sharing system, the prime minister must be a Sunni Muslim, the president a Maronite Christian and the Speaker of Parliament a Shi’ite, a complex arrangement where any number of groups can play spoiler.

Speaker Nabih Berri, one of the country’s most influential politicians and a close ally of Hizbollah, has supported Mr Hariri’s return ever since he resigned, as he brings a wider Sunni support base.

Two major Christian parties refused to back Mr Hariri, including the Free Patriotic Movement, which was founded by the President.

Its current leader, Mr Gebran Bassil, has said he did not want to repeat the failures of past governments under Mr Hariri.

More on this topic

Hizbollah refrained from naming Mr Hariri out of respect for its alliance with the Free Patriotic Movement, but has tacitly endorsed his return and pledged not to undermine his efforts to form a government.

Though all parties have accepted the French proposal and said the economic crisis should be a priority, they have failed to agree on an action plan and economic conditions have continued to worsen.

The IMF projects Lebanon’s economy will contract by as much as 25 per cent this year, causing widespread unemployment and rising poverty.

As the financial crisis has deepened, causing a dramatic depreciation in the Lebanese pound, the central bank has moved to ration its reserves, estimated at US$19 billion.

The central bank has subsidised the import of fuel, wheat and medicine as well as essential food items by providing dollars at an official exchange rate now defunct across much of the economy, but has warned that it will not be able to do so forever.

The end of subsidies raises the prospect of higher food prices and further social upheaval.

Source: Read Full Article