No progress on Cabi­net, Le­banon given ‘one week’

Crises pile up as gas sta­tions close, hospi­tals to strike, se­nior bank­ing of­fi­cials is­sue warn­ings

The Daily Star (Lebanon) - - FRONT PAGE - By Joseph Haboush

BEIRUT: De­spite a stern warn­ing by the World Bank Fri­day over the im­pact of political squab­bling on the dire eco­nomic and fi­nan­cial sit­u­a­tion in Le­banon, lead­ers have yet to make progress on the ur­gently needed for­ma­tion of a new Cabi­net.

Mean­while the crises piled up in­side the coun­try as some gas sta­tions closed early, hospi­tals an­nounced a strike for next week and se­nior bank­ing of­fi­cials cau­tioned against a fur­ther de­lay in a political break­through.

This has led a se­ri­ous drive by the in­ter­na­tional com­mu­nity to in­ter­vene and try to help as a top French of­fi­cial is set to visit Beirut next week.

The World Bank’s re­gional di­rec­tor Saroj Ku­mar Jha said the or­ga­ni­za­tion was “very con­cerned” that the de­lay in gov­ern­ment for­ma­tion “will im­pact the Le­banese poor peo­ple, mid­dle class.”

In an in­ter­view with the As­so­ci­ated Press, Jha stressed that “it is ex­tremely im­por­tant that there is a political so­lu­tion to the on­go­ing cri­sis and [that] we have a cred­i­ble gov­ern­ment in the of­fice, which can launch am­bi­tious bold re­forms for eco­nomic sta­bil­ity.”

The World Bank di­rec­tor also cited the re­cent down­grad­ing of sev­eral Le­banese banks show­ing “that the con­fi­dence in the Le­banese econ­omy is very sharply de­clin­ing.”

Jha said that a new gov­ern­ment should be formed “within a week” in or­der for Le­banon not to face more se­vere risks.

“If there is a gov­ern­ment within a week, first of all it will send a very pos­i­tive sig­nal to ev­ery­one. To the mar­kets, in­vestors, to the in­ter­na­tional com­mu­nity,” Jha told AP.

Ac­cord­ing to Jha, be­fore the protests the World Bank was pro­ject­ing 0.2 per­cent neg­a­tive growth in the lo­cal econ­omy. Now the “con­trac­tion in the coun­try’s econ­omy could be about 1 per­cent of the GDP, which is quite sub­stan­tial,” trans­lat­ing to around $600 mil­lion-700 mil­lion in eco­nomic losses per day.

Christophe Varno, re­spon­si­ble for France’s MENA af­fairs, is set to ar­rive in Le­banon Tues­day. “The French are afraid of a se­cu­rity in­ci­dent and don’t want this to hap­pen. They are ex­pected to bring pro­pos­als for find­ing a so­lu­tion,” a political source told The Daily Star.

“This trip was not sched­uled be­fore the re­cent events in Le­banon,” the source added. French Am­bas­sador to Le­banon Bruno Foucher met with Le­banon’s care­taker For­eign Minister Ge­bran Bas­sil Fri­day.

De­spite all the red flags be­ing raised, lit­tle progress was made Fri­day and no ma­jor meet­ings were held be­tween sides to deal with the des­ig­na­tion of a new prime minister.

Care­taker Prime Minister Saad Hariri is ex­pected to an­nounce his stance on whether he wants to re­turn as premier in the com­ing days.

Le­banese Forces leader Samir Geagea ac­cused Hezbol­lah of try­ing to form a gov­ern­ment that re­sem­bled the out­go­ing one, in­clud­ing by in­sist­ing on the in­clu­sion of Bas­sil. Geagea told Reuters that the LF would sup­port Hariri to form an in­de­pen­dent gov­ern­ment only.

But he noted that there had been no progress yet, adding: “It ap­pears to me that those con­cerned in the mat­ter are be­hav­ing as if noth­ing has hap­pened in Le­banon.”

Geagea also warned that fi­nan­cial dif­fi­cul­ties could lead “big un­rest in so­ci­ety.” “Imag­ine if peo­ple to­mor­row can no longer find fuel, or they find fuel but at high prices, or … they don’t find flour [or] they find it at high prices,” he said.

“I don’t know ex­actly what it would lead to. But in these cases, no­body can imag­ine any­more where things will go. We are in a very, very del­i­cate sit­u­a­tion,” he said.

Cen­tral Bank Gov. Riad Salameh met with Hariri at the lat­ter’s Down­town Beirut res­i­dence stress­ing the need for a new gov­ern­ment to be formed in or­der to re­store con­fi­dence in the coun­try. Salim Sfeir, the pres­i­dent of the As­so­ci­a­tion of Banks in Le­banon, also called for a new gov­ern­ment to be formed as soon as pos­si­ble.

An an­nounce­ment was made that banks would be closed from Satur­day to Mon­day, rais­ing fears over in­creased risks of with­draw­ing cash. How­ever, Sfeir told lo­cal TV chan­nels that this de­ci­sion was strictly due to the na­tional hol­i­day mark­ing the birth­day of the Prophet Mo­ham­mad. For his part, MTV quoted BDL sources as deny­ing any or­der to im­ple­ment cap­i­tal con­trols. Each bank is im­ple­ment­ing the pol­icy that it deems fit, the sources said.

Aoun later called a meet­ing with Salameh, Sfeir and other top bankers Satur­day in Baabda Palace to dis­cuss de­vel­op­ments.

As gas sta­tion own­ers and fuel im­porters warned of an up­com­ing fuel short­age cri­sis, care­taker En­ergy Minister Nada Bous­tani said the gov­ern­ment would im­port fuel di­rectly if needed.

“Gas sta­tion own­ers and fuel dis­trib­u­tors asked us to in­crease the prices of fuel, but we said no,” she said in tele­vised re­marks. Bous­tani stressed that the min­istry is the one that sets the prices.

But the min­istry is look­ing at ways to of­fer lines of credit to fuel im­porters, in co­op­er­a­tion with the Cen­tral Bank. “We are ready to help fuel im­porters, but we won’t ac­cept a price hike” Bous­tani said, be­fore as­sur­ing the pub­lic that a short­age of fuel isn’t ex­pected.

While fuel com­pa­nies are paid in pounds at the pump, im­porters must buy fuel from abroad in dol­lars and a short­age of dol­lars in the mar­ket has led to the out­cry.

School students protest in front of the Ed­u­ca­tion Min­istry in Beirut.

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