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New hope for Lebanon? Near collapse, can a new government save the country?

posted on: Sep 15, 2021

New hope for Lebanon? Near collapse, can new government save the country?
Beirut, Lebanon-was once known as “The Paris of the Middle East”–now in a state of disrepair awaiting return to its former fame Photo Pinterest

By: John Mason / Arab America Contributing Writer

Lebanon faces major challenges as it nears an economic meltdown. As the country slips into chaos, suffering from recent fuel shortages and a blackout, it has managed to get a new Prime Minister and government. This recent news at least suggests some progress following a year of political deadlock and a chance for bringing the country back from chaos and collapse to something like its once formidable self.


Lebanon’s precarious position and challenges it faces


Lebanon has recently been described as “one of the planet’s worst economic crises since the 1850s.” Extreme as this sounds, it is a serious assessment by the World Bank, according to a recent Agence France Presse release.

Signs of the country’s decline are a 90% loss of value in the Lebanese pound on the black market, a soaring inflation rate, and a fall in its foreign currency reserves. The government can barely support its subsidies of basic goods. It is very difficult for the people to buy gasoline and medicine and residents have available to them a mere two hours of electricity a day. Poverty has now struck almost 80% of the population.

Remedies to meet the severe economic problems faced by the Lebanese must begin with the new government’s recommencement of talks with the International Monetary Fund (IMF) in order to release billions of dollars in assistance. Lebanon had already defaulted on an earlier IMF loan and discussions with the IMF about responsibility for the losses ended badly, putting the country in a difficult position for a new loan.

All kinds of structural issues face the new government. First, the central banks must undergo a forensic audit before new monies are lent. According to broadly agreed upon analyses, reform must be enacted in the electricity sector in addition to the commercial banking sector, as well as the entire public sector. Many such reforms have huge implications for Lebanon’s political parties and the accompanying patronage system.

New hope for Lebanon? Near collapse, can new government save the country?
Beirut and the rest of the country during the past few years have been suffering through pain and poverty Photo Middle East Eye

New government has opportunity to pull Lebanon back from the precipice of disaster


A new prime minister was just announced to head a new government after almost a year long stalemate among Lebanese political factions. Najib Milati was named on Friday to fill the void of governing Lebanon. He is a billionaire telecom magnate, who has been directed to keep the Lebanese people from falling more deeply into the economic void. In his new role, Milati delivered a passionate speech in pleading with the Lebanese people to unite in pulling the country out of its precarious situation.


The new prime minister became emotional in addressing the people about the seriousness of their plight. According to the New York Times, Mikati, “Appearing to choke up, [he] mentioned mothers who couldn’t find basic painkillers or baby formula, fathers who couldn’t explain to their children why so many of their peers had fled the country, and workers who had lost their savings in insolvent banks and whose salaries were now worth a fraction of what they were just two years ago.”


Mikati has sewn together a cabinet of 24 members representing major political parties and a few outsiders. Only one woman was selected to sit in this new cabinet. In addition to soliciting funds from the IMF, Mikati noted he would seek aid from Arab countries. A certain level of fatigue has affected such donors, however, as their earlier donations have dissolved amidst Lebanon’s continued dysfunction.

New hope for Lebanon? Near collapse, can new government save the country?
New Prime Minister Nijab Mikati, a telecom billionaire with long government experience–thought to be a good choice to lead Lebanon back from the precipice of corruption and chaos Photo LaPresse

Lebanese and their new government face stark realities


In addition to the work with IMF to secure a new tranche of funding and the enactment of significant reform across Lebanon’s sectors, the new government must prepare the way for new elections. The government must be ready to face the possibility of seeing newly elected members in parliament who might alter the hold of the old political parties, who are mostly blamed for the country’s corruption and economic decline.


While some old faces showed up in the new cabinet, others were appointed for their expertise. As reported by the UPI news service, some of the fresh faces include: “Youssef Khalil, a senior central bank official, who was appointed finance minister; Abdallah Bou Habib, Lebanon’s former ambassador in Washington, as foreign minister; and Dr. Firas Abiad, director of the government-run Rafik Hariri University hospital in Beirut, who was praised for leading the fight against COVID-19, as health minister.

New hope for Lebanon? Near collapse, can new government save the country?
Lebanon’s meetings with the International Monetary Fund are critical to helping it dig out of the economic and financial chaos Photo the961.com


In an interview with UPI, economic and banking expert, Nicolas Chikhani, told the UPI news service that “The country is almost collapsing at all levels: financial, institutional, judicial and social…and soon on the security level.” Chikhani further noted, “The country is in so bad a shape that you need top experts that know the problems and implement solutions immediately to save the country.”


In addition to earlier-mentioned required actions of the new government, including reforming the monetary sector, getting an IMF agreement, and doing a forensic audit of the financial sector, it must give the poor classes substantial economic relief, provide a stable security environment, and, finally, organize general elections that are seen as fair and transparent.


Pointing out the dangers of Lebanon’s situation to all of its citizens, including even for the Shia’ military force Hizbollah, an interview with UPI also noted that “the political class has reimposed itself and scored an important victory” over the corrupt ruling elite. Thus, this is exactly the moment when Lebanon could stave off the negative forces of the past and emerge as a positive version of its once formidable self.


Sources:


“The main challenges facing Lebanon’s new government,” Lebanon News (Agence France Presse), 9/12/2021


“Lebanon Gets New Prime Minister Amid Economic Meltdown,” New York Times, 9/10/2021


“Lebanon forms new government in effort to slow nation’s collapse,” UPI, 9/10/ 2021


John Mason, PhD., who focuses on Arab culture, society, and history, is the author of LEFT-HANDED IN AN ISLAMIC WORLD: An Anthropologist’s Journey into the Middle East, New Academia Publishing, 2017. He did fieldwork in an east Libyan Saharan oasis and has taught at the University of Libya-Benghazi, Rennselaer Polytechnic Institute in New York, and the American University in Cairo. John served with the United Nations as an advisor in Tripoli, Libya, and consulted extensively on socioeconomic and political development for USAID, the UN, and the World Bank in 65 countries.


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