International backing for Lebanon economy hinges on ‘reform’

‘No aid package ... no bailout,’ says US unless any new government ‘capable of reform’

Supporters of Lebanon’s Shia Hizbullah and Amal groups clash with riot police in central Beirut. Photograph: Getty

Supporters of Lebanon’s Shia Hizbullah and Amal groups clash with riot police in central Beirut. Photograph: Getty

 

Lebanon’s leaders have been told they will not receive international support of the country’s ailing economy until they form a government that can enact reforms.

A request for funds to pay for essential imports was made by caretaker prime minister Saad Hariri to the International Support Group for Lebanon at a meeting in Paris.

In response, however, US assistant secretary of state David Schenker said: “There’s no aid package, there is no bailout. Lebanon is not being saved from its financial mess.” He said ministers in any new government in Lebanon must be “capable of reform”.

Mr Schenker suggested the group – comprising France, the US, China, Saudi Arabia, Turkey, China and Egypt – could dispatch humanitarian aid to alleviate suffering but made no commitment on how much or when.

Mr Hariri thanked the group and called for the expeditious “formation of a harmonious and credible technocrat government” that could overcome Lebanon’s political and economic crisis.

Mr Hariri resigned as prime minister on October 29th in the face of mass protests against an entire political class seen as corrupt. He has remained in office in a caretaker capacity and is a candidate to take the post again when a new government is formed.

The International Support Group’s stand exerts pressure on President Michael Aoun and his Shia allies, Hizbullah and Amal, to capitulate to Mr Hariri. They had hoped for an urgent infusion of funds to buy them time as well as imports of food, fuel, and medicine.

Mr Aoun and his partners have insisted that defence, interior, finance and foreign affairs should be held by politicians and the rest by technocrats. This demand is rejected by hundreds of thousands of Lebanese, who vow to remain in the streets until politicians who have mismanaged and looted the country for decades have been ousted and the country’s sectarian powersharing model of governance has been replaced by a secular democratic system.

Amal leader Nabih Berri appears to have broken faith with Mr Aoun and Hizbullah by calling on rival political factions to realise the “gravity of the current situation and remove obstacles standing in the way of the cabinet [formation] process.”

Demands of the people

While protesters have remained peaceful when repeatedly attacked by Hizbullah and Amal thugs, banks, hospitals, and businessmen have exerted pressure on hold-out politicians to agree to the demands of the people.

Due to a shortage of US dollars, which had been in wide circulation, banks have restricted withdrawals and blocked foreign transfers. The Lebanese currency has lost 30 per cent of its value against the dollar.

Human Rights Watch has said hospitals may soon be unable to offer life-saving medical care due to the government’s failure to reimburse private and public hospitals for treatment under the national health plan and to shortages of medicines.

The Association of Lebanese Industrialists has warned that firms face “a fateful challenge related to deprivation of raw materials”. Industries have retained employees and intend to continue but scores of restaurants, cafes, and shops have laid off workers and many have closed.

Commenting on the historic nature of the ongoing mass rising, former Lebanese president Amin Gemayel said at a symposium in Cyprus that this is “the first time a Lebanese uprising is a national one. Lebanese are united in the fight against corruption and to establish [popular] sovereignty.”

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