Lebanon accepts new government to fight economic collapse

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  • Mikati said he would seek further talks with the IMF
  • A new government after a year of political stalemate
  • Economist sees difficult path for Mikati
  • The crisis is worse since the civil war in Lebanon
  • C. responsible for the bank to take the finance portfolio

BEIRUT, Sept. 10 (Reuters) – Lebanese leaders on Friday agreed on a new government headed by Sunni Muslim tycoon Najib Mikati after a year of wrangling over government seats that exacerbated a devastating economic collapse, paving the way for a resumption of talks with the IMF.

The breakthrough follows a wave of contacts from France that has spearheaded efforts to get Lebanon’s unruly leaders to agree on a cabinet and begin reforms since the catastrophic explosion of the port of Beirut the year last, senior Lebanese political sources said.

The French foreign ministry made no immediate comment.

In televised comments, Mikati’s eyes filled with tears and his voice broke as he described the hardships and emigration inflicted by the crisis, which has plunged three-quarters of the population into poverty.

The biggest threat to Lebanon’s stability since the 1975-90 civil war, the crisis reached a critical point last month when fuel shortages crippled much of the country, triggering numerous security incidents, adding to Western worry and warnings of the worst to come unless something is done.

To get foreign aid, the government must succeed where its predecessors failed to adopt reforms to tackle the root causes of the crisis, including state corruption.

This might not last long: parliamentary elections are scheduled for next spring and Mikati has said they should take place on time.

Mikati and President Michel Aoun, a Maronite Christian, signed the decree establishing the government in the presence of Nabih Berri, speaker of the Shiite Muslim parliament.

Mikati said the politics of division must be put aside and that he cannot enter talks with the International Monetary Fund just to meet opposition at home.

He pledged to seek the support of Arab countries, a number of which have avoided Lebanon due to the considerable influence exerted in Beirut by Hezbollah, a heavily armed and Iranian-backed Shiite Islamist group, which is allied with Aoun.

Addressing daily challenges, he described how mothers were forced to cut back on milk production for their children.

“If a mother’s oldest son leaves the country and she has tears in her eyes, she cannot buy the Panadol pill,” he said, referring to the drug shortages.

But Lebanon could no longer afford to subsidize goods such as imported fuel because the country did not have enough hard currency reserves, he said.

Aoun said the government was the best that could be accepted and able to act.

DIFFICULT TASK

Like the outgoing cabinet of Prime Minister Hassan Diab, the new cabinet includes ministers with technical expertise who are not political figures but have been appointed by the main parties.

The Diab government has not implemented any of the major reforms sought by foreign donors, a task complicated by resistance from key players in Lebanon’s sectarian and factional politics.

“I think (Mikati) has a 50-50 chance of accomplishing anything. Whether you look at it in terms of a program with the IMF or aid from Arab countries,” said economist Toufic Gaspard, who has advised the IMF and the Lebanon Ministry of Finance.

Obtaining the support of Arab states such as Saudi Arabia would depend on confronting the influence of Hezbollah, while securing an IMF program would require reforms that previous governments have failed to achieve. enforce.

“It is a very delicate political game. It is not going to be easy,” he said.

Youssef Khalil, senior central bank official and assistant to Governor Riad Salameh, has been appointed Minister of Finance.

Hezbollah, which is designated as a terrorist group by the United States, has appointed two of the 24 ministers.

The crisis, which peaked at the end of 2019, stems from decades of state corruption and unsustainable funding.

Mikati was the third prime minister designate to attempt to form the government since Diab resigned after the port explosion.

Mikati was appointed after Saad al-Hariri, a former prime minister, abandoned his efforts.

Hariri traded responsibility for the failure with Aoun, whose political opponents accused Aoun and his political party of seeking an effective veto in the new government by demanding a third of the seats. Aoun has repeatedly denied this.

Mikati told Lebanese media on Friday that the government did not have a blocking third party.

Writing by Tom Perry; Edited by Andrew Heavens, William Maclean

Our standards: Thomson Reuters Trust Principles.



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