mercoledì, Agosto 4

Lebanon: Does Hariri’s resignation really change anything? What has led to the country's downfall is an intricate and intertwined relationship between the government, the Lebanese central bank and banks in general. Saad Hariri's resignation is not a surprise and does not change the country's trajectory

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The country has witnessed revolutions, uprisings, civil wars… usually, these phenomena are so destructive that the only way to move beyond the breaking point is actually forward. Lebanon is moving backward. Small wins here and there, but generally, backward.

We had operating trains with railways and an established system – that’s gone. The whole world is moving into cryptocurrency and digital banking, we’re valuing and rewarding a cash system in a collapsing economy. The country is pushing its most valuable human resources to emigrate with no plans of return.

The Lebanese political elite has singlehandedly bankrupted the country.
It is important to outline the real problem before exploring the effect of the Prime Minister-designate Saad Hariri’s resignation.

What brought the country to ruin is an intricate and intertwined relationship between the government, the Lebanese central bank (Banque Du Liban – BDL), and the banks in general. The banks have funded the BDL for years, and in return, the BDL has funded

the government, including politicians and personal favors of unimaginable sums in dollars. It was directly pumping USD into most of the politicians’ pockets. Lebanon is an importer country par excellence so such dollars are vital for the country’s survival.

Corruption in Lebanon was always been a known fact to many of the analysts interviewed for this piece, but what became flagrant was how much such corruption had outgrown the amount of dollars that was coming into the country, whether generated by tourism (the main money-generating sector), remittances (the main source of dollars income to Lebanon) or the struggling local businesses (chained by taxes and bureaucracy).
Blaming one side to the country’s collapse is impossible – this relationship amongst the different

political, economic, and even social configurations has been predominant since Lebanon’s independence.

What is however essential to understand is that once the economic collapse took place, the political elite refused to repay for the losses, instead, they followed, according to economist Dan Azzi, a Darwinian strategy whereby they would equally divide the losses among all depositors. In simpler terms, they stole depositors’ money and now they’re having the same depositors pay for the losses by forbidding them to access their own money.

The reason why the government is not seeking the IMF or approving its bailout is that the latter will ask the country’s richest, those with the biggest bank accounts, to compensate and repay for the losses and thus fairly distribute a payback system. Instead, the Darwinian strategy is being followed.

The October 2019 uprising took place without a clear independent organization and unity, it soon turned into one of the political parties’ tools for self-sabotage. It did not fail completely though as it did flourish into results, specifically in the recent elections for different syndicates where the independent candidates won by a landslide against the known political parties.

The earth-shattering Beirut Port Explosion of August 4, 2020 happened, to further showcase the discrepancy between the government and the people, and highlight how inconsiderate and incompetent most of the current political elite is to the suffering of a whole nation.

Saad Hariri’s resignation does not come as a surprise and doesn’t truly change the trajectory that the country has been sliding into.

He was designated as PM without the Lebanese presidency’s blessing and has been trying for the past 9 months to form a government, to no avail. With a seemingly forced nomination, Hariri and the president did not see eye to eye on the government formation particularly when it came to naming the Christian candidates and the inclusion of a blocking third, which led to today’s resignation, due to ‘key differences’ with the president.

Lebanon is facing two currents right now. There is an ongoing internal political strife that is pitting the presidency and its political movement in direct confrontation with the Lebanese troika.

However, it’s second in place to the economic collapse. The priority for them now is to minimize the political elite’s economic losses, and then politics will come into place. Who heads the government is important to the Lebanese political parties, particularly to the presidency who would secure a government in line with its policies and agendas. However, the work of the cabinet will be limited in nature until the economic situation is resolved.

Now that Hariri is out of the picture, as per the constitution, the president will be calling for consultations to designate a new PM. The main consideration right now is of a financial nature. Once the loss registered by the banks reaches an acceptable level, the IMF will be welcomed, and the formation of the government will follow a faster pace. At that point, most of the political elite would have secured their accounts; we’ll be closer to the May 2022 parliamentary elections and the October 2022 presidential one. Who wins amongst the known political circle will be of no true relevance as all bets would have been made way before.

 

 

[Marita Kassis is managing editor of ‘Al-Monitor‘ Beirut. The views and opinions expressed in this article are the author’s own and do not necessarily represent those of ‘Al-Monitor‘]

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Sull'autore

Marita Kassis è managing editor di ‘Al Monitor’ di Beirut. I punti di vista e le opinioni espresse in questo articolo sono propri dell’Autore e non rappresentano necessariamente quelle di ‘Al Monitor’

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