Egypt partners with Google to promote 'unmatched diversity' tourism campaign    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Taiwan GDP surges on tech demand    World Bank: Global commodity prices to fall 17% by '26    Germany among EU's priciest labour markets – official data    UNFPA Egypt, Bayer sign agreement to promote reproductive health    Egypt to boost marine protection with new tech partnership    France's harmonised inflation eases slightly in April    Eygpt's El-Sherbiny directs new cities to brace for adverse weather    CBE governor meets Beijing delegation to discuss economic, financial cooperation    Egypt's investment authority GAFI hosts forum with China to link business, innovation leaders    Cabinet approves establishment of national medical tourism council to boost healthcare sector    Egypt's Gypto Pharma, US Dawa Pharmaceuticals sign strategic alliance    Egypt's Foreign Minister calls new Somali counterpart, reaffirms support    "5,000 Years of Civilizational Dialogue" theme for Korea-Egypt 30th anniversary event    Egypt's Al-Sisi, Angola's Lourenço discuss ties, African security in Cairo talks    Egypt's Al-Mashat urges lower borrowing costs, more debt swaps at UN forum    Two new recycling projects launched in Egypt with EGP 1.7bn investment    Egypt's ambassador to Palestine congratulates Al-Sheikh on new senior state role    Egypt pleads before ICJ over Israel's obligations in occupied Palestine    Sudan conflict, bilateral ties dominate talks between Al-Sisi, Al-Burhan in Cairo    Cairo's Madinaty and Katameya Dunes Golf Courses set to host 2025 Pan Arab Golf Championship from May 7-10    Egypt's Ministry of Health launches trachoma elimination campaign in 7 governorates    EHA explores strategic partnership with Türkiye's Modest Group    Between Women Filmmakers' Caravan opens 5th round of Film Consultancy Programme for Arab filmmakers    Fourth Cairo Photo Week set for May, expanding across 14 Downtown locations    Egypt's PM follows up on Julius Nyerere dam project in Tanzania    Ancient military commander's tomb unearthed in Ismailia    Egypt's FM inspects Julius Nyerere Dam project in Tanzania    Egypt's FM praises ties with Tanzania    Egypt to host global celebration for Grand Egyptian Museum opening on July 3    Ancient Egyptian royal tomb unearthed in Sohag    Egypt hosts World Aquatics Open Water Swimming World Cup in Somabay for 3rd consecutive year    Egyptian Minister praises Nile Basin consultations, voices GERD concerns    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Lebanon's finance dilemma
Published in Ahram Online on 22 - 09 - 2020

Political and religious figures in Lebanon issued statements this week reflecting the difficulties the country is experiencing in forming a new government.
Such developments coincided with an explosion in the southern Lebanese village of Ain Qana on Tuesday. The Iran-backed, Shia Hizbullah groups has a grip on southern Lebanon, and the politico-security implications of the blast—though resulting in no casualties so far—are yet to be seen, especially after further details about it are revealed.
Newly-appointed Prime Minister Mustafa Adib said that “Lebanon doesn't have the luxury to waste time amid the unprecedented crises it is going through,” adding that he would cooperate with Lebanese President Michel Aoun in finalising the new cabinet lineup.
Adib, a former diplomat, believes that Lebanon needs a new government to “halt the ongoing collapse and start work to get the country out of its present crisis.”
In a statement that drew the attention of most regional and international media outlets, Aoun said that Lebanon was heading “to hell, of course.” Aoun, a Christian, and an ally of the Lebanese Shia Hizbullah Movement, warned that the “entrenchment of positions” had made “no solution seem imminent.”
Even Patriarch Bechara Boutros Al-Rai, the country's senior Christian cleric and leader of the Lebanese Maronite Church, stepped in by indirectly criticising the insistence of Shia political forces in the country in choosing a Shia figure for finance minister, which represents the main reason for Adib's failure to create a new coalition government.
“In what capacity does a sect demand a certain ministry as if it were its own and obstruct the formation of the government until it achieves its goals and so causes political paralysis,” Al-Rai demanded.
He noted that the Taif Agreement, which ended the country's civil war in 1990, did not stipulate that specific ministers should be members of specific sects. Lebanese Sunni leader Saad Al-Hariri and Druze leader Walid Jumblatt strongly backed Al-Rai's position and opposed that of Hizbullah and its Shia ally the Amal Movement.
On Twitter, Al-Hariri, a former prime minister, said that “rejecting the idea of switching the control of ministries was frustrating” as it served as the “last chance to save Lebanon and the Lebanese people.”
The leader of Lebanon's Sunni Muslim Future Movement, Al-Hariri has a history of tensions with Hizbullah. He resigned as prime minister in October 2019 amid protests against all the country's political forces due to the deterioration in social and economic conditions in Lebanon.
Al-Hariri, who enjoys good relations with many Western and Arab states, then refused to lead a new cabinet following disagreements with Hizbullah. Hizbullah and Aoun backed Hassan Diab, who was in power when August's port blast in Beirut took place, as the country's new prime minister at the head of a coalition government in December 2019.
Al-Hariri's Future Movement, the strongly anti-Hizbullah Christian Lebanese Forces Party, and Jumblatt's Progressive Socialist Party did not join this government, however, and Diab's coalition faced strong opposition from the Gulf countries and the United States, mainly because it enjoyed the support of Hizbullah.
Following the Beirut explosion, many countries offered their financial backing to Lebanon. But quick reforms were demanded by the United States, the European Union and others in return of maintaining their financial support.
Jumblatt believes that French President Emmanuel Macron's initiative for Lebanon, involving returning to talks with the International Monetary Fund (IMF) over new financial packages in return for a new government, could be the “last opportunity” for the economically-suffering state.
“It appears that some did not understand or did not want to understand that the French initiative is the last opportunity to save Lebanon and to prevent its disappearance, as the [French] foreign minister said clearly,” Jumblatt tweeted.
Imad Salamey, a professor of political science at the Lebanese American University, told Al-Ahram Weekly that ending the crisis would depend on what kind of guarantees and assurances were given to the different parties joining the government.
If, for instance, the Shia ministers in the government were handpicked by Hizbullah and Amal to constitute with other allies at least a one-third stake in the government including major ministries, then the choice for the Finance Ministry would no longer be so crucial.
“Alternatively, the prime minister may need to provide assurances whereby any appointed non-Shia minister of finance would consult and guarantee the tacit approval of Shia ministers or the Shia speaker of parliament in signing legislation or decrees. Hence, I think the sticking point remains of whether the March 8 camp that controls the parliamentary majority will accept a government dominated by a parliamentary minority while being backed by France and the Western states,” Salamey said.
He noted that the French initiative and US pressures appeared to be undermining Christian support for Hizbullah, which enjoys a parliamentary majority, including that of Aoun.
Sarah El-Richani, a professor of mass communications at the American University in Cairo, referred to the regional context, specifically the recent US sanctions on Hizbullah figures and companies linked to it. He argued that Hizbullah and Amal's insistence on the “strategic” Finance Ministry was likely being used as a “bargaining chip to ease US pressure on Hizbullah”.
“It [the United States] is also pressuring France and other European countries to deem it a terrorist organisation. This ‘new' insistence on this ministry could also be linked to impending sanctions on Iran. Easing the pressure on Hizbullah and Iran would probably see the resolution of the impasse in Lebanon,” she explained.
Earlier in September, Kassem Hachem, a key figure in speaker Nabih Berri's bloc in parliament, was reported as saying by Reuters that Berri had insisted that Lebanon's new finance minister be Shia, as has been the case previously due to Lebanon's sectarian power-sharing system.
Hachem said that Berri, the Amal leader and Hizbullah's major ally, had expressed his stance in a phone conversation with Macron. Berri refused to join Adib's government due to “domestic problems”.
Steve Hanke, a professor of economics at Johns Hopkins University in the US, said that the “epicentre” of Lebanon's economic crisis was a currency crisis that “has spawned the first hyperinflation that's ever been experienced in the Middle East region.”
“This occurred in July, when I measured the monthly inflation rate at over 50 per cent per month for 30 consecutive days. Therefore, the first problem that must be solved before Lebanon can establish stability and proceed with numerous necessary reforms is the institution of a currency reform that smashes inflation. To do this, a new finance minister must embrace and install a currency board system,” Hanke said.
Believing that Hizbullah “does not possess the economic vision that is required for a first step to stabilise the economy,” Hanke argued that a currency board system be instituted as the “only way for Lebanon to unlock foreign assistance, which is waiting for reform, and that would, in fact, stabilise the economy.”
The Lebanese crisis is linked to severely deteriorating social and economic conditions. The Beirut explosions left 200 people dead, 6,000 injured, and 300,000 homeless, and came against the background of the country's long-running rubbish crisis, continuous power cuts, and increases in the prices of basic goods.
*A version of this article appears in print in the 24 September, 2020 edition of Al-Ahram Weekly


Clic here to read the story from its source.