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Lebanese PM-designate: Cabinet needed to restore trust, hope

The economic and financial crisis roiling Lebanon is the gravest threat to its stability since the 15-year civil war ended in 1990.

AP

Lebanese Prime Minister-Designate Saad Hariri, speaks to journalists after his meeting with Lebanese President Michel Aoun, at the Presidential Palace in Baabda, east of Beirut, Lebanon on March 18, 2021.

Lebanon’s prime minister-designate has said that a government that could restart talks with the International Monetary Fund was the main way to halt the country’s rapid economic collapse, adding there was still opportunity to form such a Cabinet.

Saad Hariri spoke on Thursday, a day after trading barbs with President Michel Aoun over who is to blame for the five-month delay in forming the Cabinet, while the country unravels.

The economic and financial crisis roiling Lebanon is the gravest threat to its stability since the 15-year civil war ended in 1990.

Hariri was tasked by Aoun to form a Cabinet in October after he was named by a majority of lawmakers.

He held an hour-long meeting with the president on Thursday, a day after Aoun urged him to form a government immediately or step aside.

Hariri in turn challenged the president to step down, saying Aoun had rejected multiple proposals over the past five months.

Talks with IMF

On Thursday, Hariri said there was still an opportunity for a government to be formed and said he would meet again with Aoun on Monday.

He said a government is necessary to restart talks with the IMF to restructure Lebanon’s debts and to restore confidence of the world community.

Talks with the IMF last year failed to reach a deal.

"We are really looking at the abyss, seeing it very clearly, and I think it's either now or never," Mohanad Hage Ali of the Carnegie Middle East Center said, alluding to the protracted failure to form a viable new government able to launch reforms.

He added that major political parties, including Aoun's ally, the Iran-backed Hezbollah movement, were re-evaluating their positions as delays worsen the economy's free-fall and unrest grows.

Public anger

Pharmacies went on strike and petrol stations rationed scarce fuel on Thursday across Lebanon as public anger over the country's accelerating economic collapse.

Ali Obaid, a Beirut pharmacist, said he could no longer keep up with expenses. "Pharmacies will close permanently if this continues," he said.

Comments that subsidies — including on fuel, wheat and medicine — may soon end have also triggered panic buying.

Cars lined up outside gas stations earlier this week, and scenes of brawls over subsidised goods at supermarkets have heightened fears among Lebanese over their most basic needs.

The sharp descent of the pound sent protesters into the streets this month, blocking roads in anger at an entrenched political elite that has dominated since the civil war.

New approach

French President Emmanuel Macron said a new approach was needed to deal with the Lebanese crisis.

Macron, who visited the country — a former French protectorate — twice last year, has been pushing Lebanese politicians to break the stalemate over forming a government.

“We will have to, in the coming weeks ... change the approach, the methods,” he said on Thursday, without elaborating. “We must do everything to avoid the collapse of the country and therefore accelerate the formation of a new government and the needed reforms.”

Politicians have since late 2019 failed to agree on a rescue plan to unlock foreign cash, which Lebanon desperately needs.

A French diplomat said on Wednesday that France, which has led aid efforts to its former colony, and its partners will seek to ramp up pressure on Lebanese politicians in the coming months.

Lebanese crisis

Lebanon’s local currency has been in a free fall since late 2019, losing over 90 percent of its value. The government defaulted on its foreign debt last year and nearly half the population has been pushed into poverty and unemployment.

Prices of basic goods have increased and inflation has soared. Banks have imposed informal controls on people’s savings, and the Central Bank’s foreign reserves have shrunk in a country dependent on imports.

The outgoing government resigned last August, following a massive explosion at Beirut’s port that killed 211 people, wounded more than 6,000 and damaged entire neighbourhoods in the capital.