The main challenges of the new Lebanese government – .

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The main challenges of the new Lebanese government – .


Beyrouth (AFP)

Lebanon’s new government, approved by parliament after more than a year of political stalemate, has its work cut out for it as it seeks to save the country from its worst economic crisis.

Fuel and medicine are scarce, power outages last most of the day, more than three in four people have fallen below the poverty line, and many who can leave the country.

Here’s a look at the most pressing issues for Prime Minister Najib Mikati and his 24-member cabinet, and the biggest hurdles ahead.

What are the main priorities?

The new government, approved by parliament on Monday, is in desperate need of getting Lebanon out of what the World Bank has called one of the world’s worst economic crises since the 1850s.

A woman leaves a bakery with a bag of bread as people wait their turn, in the Nabaa neighborhood, on the southern outskirts of the Lebanese capital Beirut, on August 13, amid a wave of shortages of prime produce need ANWAR AMRO AFP / File

The Lebanese pound has lost almost 90 percent of its value against the dollar on the black market, inflation has skyrocketed and people’s savings are trapped in banks.

With the fall in foreign exchange reserves, the cash-strapped state is struggling to maintain subsidies on basic commodities.

Gasoline and medicine have become scarce, and the state provides barely two hours of electricity a day.

“The government’s first priority will really be to stem the collapse,” said Maha Yahya, director of the Carnegie Middle East Center.

Subsidies must be removed and a social safety net put in place to lessen the blow to the most vulnerable, she said.

To do this, analysts say, the cabinet will have to relaunch talks with the International Monetary Fund to unlock billions of dollars in financial aid.


Lebanese drivers line up outside a closed gas station in Beirut’s Hamra district on August 20 ANWAR AMRO AFP / File

Lebanon, after defaulting on its debt in March 2020 for the first time in its history, began talks with the IMF, but these quickly hit a wall amid disputes over who should bear the brunt losses.

What are the biggest obstacles?

The international community has demanded sweeping reforms and a forensic audit of the country’s central bank before any financial assistance is disbursed.

Pharmacist sits on stretcher holding protest sign reading
A pharmacist sits on a stretcher holding a protest sign that reads ‘no gas = no ambulance’ in Beirut on August 16 ANWAR AMRO AFP / File

The previous government announced a rescue roadmap in 2020 that included reforming the power sector, restructuring the banking sector and lifting the official dollar peg.

But these measures have yet to be implemented.

As for the central bank’s audit, it has also stalled, with the central bank saying it was unable to provide the audit firm with some of the documents required due to bank secrecy rules.

Financial expert Mike Azar said reform of the commercial banking sector and the central bank, as well as restructuring of the public sector, would be key to any deal with the IMF.

“There is nothing to be done apart from these two major restructurings,” he told AFP.

Families mourn those killed in the August 4, 2020 explosion in the port of Beirut that left more than 200 dead and devastated large areas of the city
Families mourn those killed in the August 4, 2020 explosion in the port of Beirut that left more than 200 dead and devastated large areas of the city ANWAR AMRO AFP / File

But the traditional ruling class that has dominated politics in Lebanon since the 1975-1990 civil war was likely to be reluctant.

“Public sector restructuring has an impact on political parties because it is the main source of funding” for their patronage system, he said. “How would they accept this?

Although some of Mikati’s 24 new cabinet ministers are technocrats, all have been backed by at least one of the many competing Lebanese political parties.

Yahya said crafting a medium to long-term bailout for the country would be a “major challenge” as the new government lacked political consensus.

“This government was formed with the status quo mentality, so everyone there represents one political leadership or another,” she said.

Lebanese wait to fill their gas cylinders in the southern city of Sidon on August 10
Lebanese wait to fill their gas cylinders in the southern city of Sidon on August 10 Mahmoud ZAYYAT AFP / File

This means that political parties “can use ministers in government to block any reform they see as undermining their interests or unpopular on the streets.”

Will there be new elections?

Mikati has pledged to hold the legislative elections scheduled for May 2022 on time.

Lebanon was rocked in 2019 by protests calling for an overhaul of the entire political class, and some activists see the elections as a chance to wipe out an old guard they deem incompetent and corrupt.

Just like during the 1975-1990 civil war, hundreds of Lebanese families emigrate to escape the miseries of everyday life.
Just like during the 1975-1990 civil war, hundreds of Lebanese families emigrate to escape the miseries of everyday life. ANWAR AMRO AFP / File

But analyst Michel Doueihy said the political parties in power since the end of the civil war are desperate to cling to power.

The “traditional ruling class is trying through this government to catch its breath” and restore some credibility as the next legislative elections approach, he told AFP.

He said their tactics might even include postponing the election.

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