Lebanese prime minister resigns

Ahram Online- Steve Hanke | September 29, 2020

Lebanon’s new premier Mustafa Adib resigned on 26 September after failing to form a new government amid disagreements between the country’s key political forces over who should lead the Finance Ministry.

“I excuse myself from continuing the task of forming a government,” Adib said after meeting Lebanese President Michel Aoun at Beirut’s Baabda Palace.

It took Adib, Lebanon’s former ambassador to Germany, almost one month to lose hope in being able to form a new government amid a political crisis on who should take the finance portfolio.

The European Union voiced its “disappointment and concern” at Adib’s resignation and urged the country’s political leaders to exert more efforts to form a new government.

EU Foreign Policy Chief Josep Borrell urged Lebanon’s political forces to “unite and do their utmost for the timely formation of a government that must be able to meet the legitimate needs and demands of the Lebanese people.”

He stressed that the Lebanese government should be “committed to addressing Lebanon’s acute and multiple challenges, notably its humanitarian, socio-economic and financial crises, the coronavirus pandemic and the reconstruction of Beirut” after the explosions in August.

French President Emmanuel Macron, whose initiative involving the re-start of talks with the International Monetary Fund (IMF) over new aid packages for Lebanon in return for a new government after August’s tragic blasts had served as the foundation of Adib’s efforts, accused Lebanon’s leaders of “collective betrayal” and said he was “ashamed” of them.

“They have decided to betray this commitment [to forming a government],” Macron told reporters, adding that he saw “that the Lebanese authorities and political forces chose to favour their partisan and individual interests to the detriment of the general interest of the country.”

“All of them have bet on the worst-case scenario for the sake of saving themselves, the interests of their family or their clan,” Macron said. “I therefore have decided to take note of this collective betrayal and the refusal of Lebanese officials to engage in good faith.”

He also warned that the Lebanese Shia group Hizbullah “should not think it is more powerful than it is,” calling on it to “show that it respects all the Lebanese” as it “has clearly shown the opposite.”

Shia political forces in Lebanon, mainly Hizbullah and the Amal Movement, had insisted on choosing a Shia figure for finance minister, opposed by many of the country’s other politicians and religious figures.

They included Sunni leader and former premier Saad Al-Hariri, Druze and Progressive Socialist Party leader Walid Jumblatt and leader of the Lebanese Maronite Church, Patriarch Bechara Boutros Al-Rai.

Imad Salamey, an associate professor of political science at the Lebanese American University, explained that Hizbullah and its allies enjoyed a parliamentary majority that even Aoun was part of.

“Therefore, unless Hizbullah is provided with a comfortable position in government, it will resist any changes to the status quo regardless of the negative repercussions awaiting the country as a whole,” Salamey said.

Lebanon is suffering economically, and Adib’s decision to quit is seemingly expanding it. The local currency saw an eight per cent drop against the US dollar and was trading at 8,200 pounds in the black market this week. Yet, the official rate is still only 1,507 pounds to the dollar.

The explosions at the Beirut port in August left 200 people dead, 6,000 injured and 300,000 homeless, and came against the background of Lebanon’s long-running rubbish crisis, continuous power cuts and increases in the prices of basic goods.

Even ahead of the blasts, the situation was deteriorating. The Lebanese pound had lost around 60 per cent of its value against the dollar, and the country had a debt-to-GDP ratio of more than 150 per cent. This meant exceptional increases in the prices of goods and services, in addition to huge losses for private businesses.

Steve Hanke, a professor of applied economics at the Johns Hopkins University in the US, told Al-Ahram Weekly that Lebanon needed a currency board system to “not only smash inflation and stabilise the economy, but also unlock a considerable amount of foreign assistance.”

He noted that this had happened in Bulgaria in 1997 amid hyperinflation levels reaching 242 per cent per month.

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Tags: Currency board, Hyperinflation, تضخم مفرط, مجلس نقد,