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Tough Yet Steady Recovery for Lebanon Government
Middle East & Africa

Tough Yet Steady Recovery for Lebanon Government

Institute of International Finance (IIF) suggested that a new Lebanese government has taken office after a 13-month political deadlock, but the road to economic recovery is expected to be rough with the new cabinet.

Since it has to prove that it can provide the political stability that will allow implementing tough reforms and conditions demanded by international institutional donors. It came at a time when Lebanon has already been in a deep political and financial crisis with its central bank has nearly depleted its dollar reserves leading to shortages in the country dependent on imports.

Depositors have been frozen out of their accounts, inflation is in triple digits and poverty has deepened. Garbis Iranian, who is Chief Economist, MENA at the IIF mentioned that it is hoped that the new cabinet, headed by Najib Mikati and apparently supported by more than 70 percent of lawmakers in the parliament, will arrest the further deterioration in the economy and lay the foundation for economic recovery.

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Lebanon’s new government hiked petrol prices by nearly 38 percent two days back in an effort to dial back subsidies and reduce crippling gasoline shortages. The withdrawal by the US has helped them to increase their currency by 30 percent than before. Talking about Lebanon’s economy and its gas prices, it should be noted that Lebanon’s economic crisis has pushed millions into poverty.

This especially got worsened over the summer due to insufficient supplies of gasoline. Petrol stations opened for limited hours, and drivers would queue for hours at a time to partially top up their vehicles. Arguments between frustrated drivers sometimes turned into violent and armed confrontations.

However, the new government has begun to make amendments by signing a new contract with restructuring consultancy Alvarez & Marsal (A&M) to carry out a forensic audit of the central bank.

Middle Eastern Nations Come To Rescue Lebanon From Energy Crises
Middle East & Africa

Middle Eastern Nations Come To Rescue Lebanon From Energy Crises

As the world tries to find its balance post a Covid-19 disbalance, energy needs are on the increase in the Middle East. This time, three nations have come to the rescue of Lebanon that has been reeling under economic and financial instability for the longest time.

Despite its attempts to resurrect itself from loans, it has been desperately caught in an energy crisis. Egypt, Jordan along Syria met with Lebanon’s energy ministers to chalk out a plan to supply Egyptian natural gas to Lebanon amid the ongoing fuel and electricity crisis at a meeting in Jordan recently.

Egypt might just need to revamp its transport infrastructure to help to be able to supply fuel to Lebanon, according to their energy minister. With this development, Lebanon can look forward to receiving enough Egyptian gas to generate 450 megawatts of electricity, according to the crisis-weary country’s energy minister.

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Egypt is also struggling to get its water resources in shape caught in the midst of the Renaissance Dam controversy with Ethiopia. There were also discussions over getting Jordanian electricity supply to Lebanon via Syria. This might be tricky due to the Syrian unstable political roadmap. There is a clear understanding that each nation involved in helping Lebanon would be responsible for bearing the costs incurred to ensure gas transit to Lebanon safely.

It is no surprise that the United States has been seen to have mediated talks with Egypt and Jordan over a plan to ease Lebanon’s power crisis. This has seen primary use of environmentally friendly modes of energy use, Egyptian gas that will be used to generate power in Jordan to be transmitted via Syria.

The decision has come through after a top-level Lebanese delegation visited Damascus recently. Here, the US-backed plan has been able to pave a way forward for Lebanon to bring an end to its dark days.

With the state floundering, the heavily armed Lebanese pro-Iranian Hezbollah group that is the country’s most powerful political entity, in August has already announced it was importing fuel oil from Iran, saying it aims to ease the crisis. The US has thus levied sanctions on Damascus. Officials say away would have to work around this to get the natural gas project going. But this can further undermine the authority of the state and exposed Lebanon to the risk of US sanctions.

Najib Mikati is named as the Lebanon’s next prime minister
Middle East & Africa

Najib Mikati is named as the Lebanon’s next prime minister

Najib Mikati is a billionaire businessman who was appointed as the new Prime Minister for Lebanon. His resignation came after the binding parliamentary consultations with President Michel Aoun. Mikati has run after receiving 72 votes, along with former ambassador Nawaf Salam receiving just one vote. Forty-two MPs voted blank, and three MPs did not vote at all.

This news came just after 11 days of resignation by Saad Hariri who was the previous prime minister. After nine months of political deadlock and dispute with President Aoun and his son-in-law MP Gebran Bassil, the entire issue escalated. Mikati said in a statement that with the cooperation of the president, they will form a government according to the French initiative. French President Emanuel Macron referred to a road map of economic and structural reforms while introducing to Lebanon.

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If there is a situation when Mikati succeeded to form a government then this would be his third stint as Lebanon’s prime minister. Although in 2005, he took a brief position as a prime minister in April and thereafter, headed a full-fledged government in 2011 for three years.

Since the economy of Lebanon continues to crumble with half the population living below the poverty line, their local currency lost more than 90 per cent of its value. The country has been without a full-fledged government for almost one year and is still struggling to reform its economy to unlock international aid. Mikati received votes from significant political parties of Lebanon and it also included support from Future Movement which was led by former Prime Minister Saad Hariri. It was also noted that no matter how decent, powerful, and influential the prime minister, within the political system and the ruling elite, he will not be able to do anything in the country. Amidst this situation, Joanna Wronecka, who is a UN Special Coordinator for Lebanon wished Mikati success, speed, and support of all political parties in swiftly forming a government. He mentioned that there is no more time to lose.

Lebanon is ‘days away from social explosion, PM Diab warns
Middle East & Africa

Lebanon is ‘days away from social explosion, PM Diab warns

Speaking about the economic crisis in the country, caretaker Lebanese PM Hassan Diab announced that Lebanon is just a few days away from the social explosion. Diab has called on the international community to help the country. The World Bank has called Lebanon’s crisis one of the worst depressions of modern history. As the country’s economic disaster worsens, meeting with ambassadors and diplomats meet to discuss the dark fate alone.

Diab appealed to the public administration and influencers to spread the message for regional and international leaders to help rescue Lebanon from a crisis that has seen the local currency lose 90 per cent of its value and left 77 per cent of households without enough food, according to the United Nations. Lebanon’s population now spend hours in long lines at gas stations trying to buy fuel, as residents struggle with power outages of up to 22 hours a day and severe medical shortages.

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Diab mentioned to the ambassadors that he is calling on kings, princes, presidents and leaders of our friendly countries, and I am calling on the United Nations and all international organizations to help rescue Lebanon from its demise. He further added that Lebanese were running out of patience and linking Lebanon’s assistance to the formation of a new government has become a threat to the lives of the Lebanese and the Lebanese entity. The newly formed cabinet could re-start talks with the International Monetary Fund, however, this will take time to entail obligations on the next government that it may not endorse.

The World Bank has called Lebanon’s crisis one of the worst depressions of modern history. The currency has lost more than 90 per cent of its value and more than half of the population has been propelled into poverty. Anger over fuel shortages has spilt into fights at petrol stations and the prime minister appeared to be a warning of the prospect of more unrest.

The European Union’s foreign policy chief told Lebanon’s leaders last month they were to blame for the political and economic crisis and some could face sanctions if they continue to obstruct steps to form a new government and implement reform. 

Lebanon Lives On Borrowed Time Without Funds To Import Medical Aid Towards Covid Recovery
Middle East & Africa

Lebanon Lives On Borrowed Time Without Funds To Import Medical Aid Towards Covid Recovery

Lebanon’s central bank has been without hard cash for the longest time now.  It is, therefore, no surprise that the country which was once known for its medical infrastructure and services is bootstrapped to meet its own medical expenses. 

Above all, the Central Bank seems to have declared that it does not have enough reserves to pay off for medical supplies. 

Medical supplies to the tune of $1.3 billion are needed in the country. Currently, the Central Bank says it is having to hold onto its mandatory reserves and would not like to dip into them to meet this demand. 

 Lebanon has been using its own cash to import medical equipment on subsidized rates; something that the bank now feels cannot go on anymore. 

Lebanon has been using subsidized wheat, and other commodities like fuel to carry on its limping economy amidst the Covid-19 outbreak since 2020. The bank even turned down the request of the caretaker health minister Hamad Hasan.

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The country has been under siege for a long time, living on borrowed money and time. Its currency has been so weak that it has no value in the international market for any kind of trade. Lebanon’s hard currency reserves have dropped alarmingly from over $30 billion before the financial crisis hit in late 2019 to just over $15 billion in March.

To top it all, its own government has not been able to generate neither money, infrastructure nor employment, to help the economy get back on its feet. According to a formal media statement made by Hasan, almost 50 percent of the medication needed for consumption in various hospitals is awaiting procurement in different importer warehouses but payments are stuck. 

Lebanon continues to reel under debts. It is struggling to raise funds from potential donor states and institutions. It had been surviving on subsidies that will eventually run out end of this month.  Over long criticism has been the design and implementation of its subsidy system, which included long lists of non-basic items. It has been misused in using wasteful by traders and consumers.

Lebanon’s Foreign Minister steps down over remarks against Saudi, GCC states
Middle East & Africa

Lebanon’s Foreign Minister steps down over remarks against Saudi, GCC states

Lebanon’s caretaker foreign minister Charbel Wehbe on Wednesday stepped down from the post over his recent remarks about Saudi Arabia and other Gulf states. As per reports, he asked President Aoun to be relieved of his duties after his remarks led to strained ties between Lebanon and its GCC allies.

“In order for what I said not to be exploited to harm Lebanon and the Lebanese, I met with the president and requested that I be exempted from my duties as foreign minister,” Wehbi said after meeting Aoun.

This development has come hours after the governments of Saudi Arabia, Kuwait, and Bahrain summoned their respective Lebanese ambassadors to protest the derogatory remarks made by foreign minister Wehbe about the Kingdom and other Gulf states.

In a televised interview of Monday, the Lebanese foreign minister called a Saudi guest “Bedouin” and criticised Gulf nations for the rise of ISIS in Syria and Iraq.

“There is a second stage when ISIS (Daesh) came, and the countries of the people of love, friendship, and brotherhood brought them,” Wehbe said, as quoted by Arab News.

In response, the Saudi government summoned the Lebanese ambassador and handed over a memorandum as part of its official protest against the “offence” made by Charbel Wehbe.

A statement from the Saudi foreign ministry in this regard noted that such statements “violate the most basic diplomatic norms” and do not fit in the context of the historic relations between brotherly people across the region.

In addition, Kuwait summoned the Charge d’affaires of Lebanon to hand over the protest note while expressing strong condemnation and denunciation to the “profound offences” made by the foreign minister, a statement by Kuwait foreign ministry stated.

Bahrain foreign ministry issued a statement saying, “these comments contradict the basic diplomatic norms and are not compatible with the brotherly relations between the (Gulf) cooperation council’s countries and the brotherly Lebanese people.”

As per the state news agency WAM, the United Arab Emirates’ foreign ministry also summoned the Lebanese ambassador to the country to hand over an official protest note condemning the comments by Lebanon’s foreign minister.

“The Ministry of Foreign Affairs and International Cooperation has strongly decried the derogatory and racist statements made by caretaker Lebanese Foreign Minister, Charbel Wehbe, against the Kingdom of Saudi Arabia and other GCC (Gulf Cooperation Council) states,” a statement by the ministry said.

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Reportedly, Lebanese President Michel Aoun has distanced himself from his foreign minister, maintaining that Wehbe’s remarks express his personal opinion and not of the Lebanese state.

“The presidency considers that the foreign minister’s remarks express his personal opinion, and in no way reflect the position of the Lebanese state and its President General Michel Aoun, who is keen on rejecting any offence against friendly countries in general and Saudi Arabia and Gulf states in particular,” a statement by Aoun’s office noted.

Wehbe’s comments resulted in social media turmoil with backlash from officials from Lebanon and other Gulf states.

Lebanon’s Prime Minister-designate Saad Hariri also denounced the foreign minister’s remarks, saying that it was another round of “recklessness in foreign policy that the president and his allies have adopted, sabotaging the country’s interests with Arab states.”

Meanwhile, the six-nation Gulf Cooperation Council has demanded Wehbe to make a formal apology to all the states in the region.

Lebanon Watches As Syria Signs Energy Deals Over Disputed Waters
Middle East & Africa

Lebanon Watches As Syria Signs Energy Deals Over Disputed Waters

Syria is signing oil and gas exploration deals with Russian company in Mediterranean waters, a step that ideally should have seen retaliation from Lebanon. But Lebanese are not protesting as they previously claimed ownership on that patch in the Mediterranean waters.

There is an indication that the Lebanese have retreated due to a possible threat from the Iranian led Hezbollah that has been functioning in Lebanon for the longest time.

The two blocks to be explored under the new contract signed between Syria and the Russian company actually overlaps with Lebanese maritime areas for energy exploration along the country’s northern border. It could be possible that Iran is looking at moving closer to Russia for its future trade deals.  Both countries have always maintained good and friendly relations.

While Lebanon has had conflicts with Israel over disputed territories in the Mediterranean Sea, Hezbollah has not been as firm as it was in the case of Syrian investments.

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Ironically, Syria has been worn down and torn due to a long drawn civil war. But even then, the country is being able to call the shorts for Lebanon.  This is because, the Hezbollah as a political party still holds fray in the Lebanese  government and its ulterior motives precedes Lebanon’s national interests.

While Lebanon might have reasons to protest against Syria engaging into oil and natural gas exploration projects, it has not voiced its discontent openly. It could rope in the UN for the same. Another reason that Hezbollah is supporting Syria is because they continue to support the latter’s civil massacre. Hezbollah fighters still openly involve themselves in the Syrian civil war on behalf of the Assad regime. It is also no secret that Hezbollah advisers go to Yemen to help the Houthis, and Hezbollah operatives continue to carry out various terrorist plots in Cyprus, Georgia, Argentina, Southeast Asia and elsewhere.

Widespread protests in Lebanon as currency hits record low
Middle East & Africa

Widespread protests in Lebanon as currency hits record low

Hundreds of Lebanese took to the streets to protest the government as the local currency hit a record low

In an unprecedented development, protests broke out across several parts of Lebanon on Tuesday, after the local currency (Lebanese Pound) hit an all-time low. Amid the ongoing political crisis, the local currency hit a record low as the dollar traded at 10,000 Lebanese pounds on the black market on Tuesday. 

Hundreds of demonstrators took to the streets and chanted slogans across several cities in the country to protest the failure of politicians to rescue the collapsing economy. Protesters across Beirut, Tripoli, Sidon, and other cities blocked roads and highways, set tires on fire, and raised chants to demand the formation of a new government.

Responding to the situation, Lebanese President Michel Aoun took to Twitter and said that he had asked the Central Bank Governor to conduct an inquiry into the reasons behind the sudden fall in the local currency.

Politicians have not been able to agree on a new government since the resignation of Hassan Diab’s cabinet in the wake of the Beirut port blast on August 4, 2020. There have been no meetings or communication between Lebanese President Aoun and Prime Minister-designate Saad Hariri to resolve the deadlock over the formation of the new Cabinet in order to carry out the much-needed reforms. With Hariri holding on to his position to form a government of 18 ministers, the political crisis has entered its eighth month. 

At the same time, the government-led by caretaker Prime Minister Saad Hariri has not been able to negotiate a plan to allow foreign aid from the International Monetary Fund (IMF), World Bank and other donors to support the plummeting economy. Lebanon’s talks with IMF for a $10 billion economic bailout package in May 2020 were stalled due to differences in the two sides representing the government and the Lebanese banks.

Lebanon has been struggling with political instability since the resignation of Saad Hariri in October 2019 in the aftermath of widespread anti-government protests the corrupt ruling elite. Prolonging economic and financial deterioration has resulted in declining job opportunities, poverty and hunger among the most-affected sections of society. Lebanese population is grappling with increasing prices of basic consumer goods such as cereals and diapers.

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Last month, Lebanon launched its COVID-19 vaccination campaign with inoculation of healthcare workers and senior citizens with the aim of mitigating the unprecedented spike in Coronavirus cases.

The caretaker government has been facing increasing pressure to hold by-elections to fill the vacant positions in the parliament after eight MPs resigned and two died due to COVID-19. Meanwhile, parliamentary elections are slated take place in the crisis-hit country in next year.

World Bank Extends Financial Help To Lebanon Covid-19 Vaccine Plan
Middle East & Africa

World Bank Extends Financial Help To Lebanon Covid-19 Vaccine Plan

One of the poorer nations of the world, Lebanon is now getting a medical financial stimulus from the World Bank, official reports have confirmed. The World Bank has approved $34million to back the Lebanese Covid-19 vaccination drive. 

This is the first such huge outlay of funds by the bank. Previously, Lebanon has taken several loans from the bank to keep its economy from sinking. Since the pandemic broke out, the country has been struggling with the constant outbreaks and an unfortunate burn of a strategic port that led to a major scare and distrust amongst common people over the administration of the government. 

Funds have been reallocated from an existing Lebanon Health Resilient Project.  The Lebanese government has signed up for receiving the American Pfizer vaccine for 2.1 million doses. Lebanon already has a fractured medical system that has been losing its back over a surge in infection rates. 

According to the Lebanon Health Ministry, the vaccines will arrive by February.  These doses will be priced at $18 looking at Lebanon’s financial condition and the whole cost is covered under the World Bank financial assistance. 

Additionally, Lebanon would also receive another 2.7 million doses from the UN-led Covax program that caters to poorer countries like Lebanon, Yemen, Syria and Libya. These doses are expected to arrive no sooner than the mid of the year. These work on the mechanism of richer countries donating a percentage of their doses stocks to the poorer nations, once their own people are inoculated. 

Once known for its advanced medical services in the Middle East, Lebanon today stands to manage its falling bricks. There is a convergence of stresses on the health care system. There are many reasons for this. But the major reasons that stand out include lack of up-to-date infrastructure; lack of medical personnel due to high emigration rates among doctors; and difficulties in obtaining medical supplies due to the devaluation of the Lebanese currency and reduced imports. 

France urges Lebanon to form a new government without further delay
Middle East & Africa

France urges Lebanon to form a new government without further delay

France urges Lebanon to form a new government: The deadline for framing a new government in Lebanon was missed due to the pandemic and the Beirut Port blast. France has urged Lebanon to “accelerate the development of a new and effective government, acknowledged by every political group. A new government is needed to reform and give appropriate leadership amid strains, covid-19, and major economic crises. 

Patrick Durel, The adviser to president Macron for the issues of the Middle East and North Africa, held a series of conferences on Thursday and Friday, with authorities and the tops of the eight parliamentary coalitions, including the delegate of Hezbollah to form a new government asap.

In September, President Michel Aoun also said that the crisis-hit nation could be going to “hellfire” if a good and new administration was not framed soon, recommending it would require a miracle for that to occur now. 

The warning comes as the nation battles to contain an escalating economic and financial crisis that worsens the nation’s economic situation, just as worries of a surge in Covid cases and deaths impact Lebanon. 

The political standstill has subverted a French initiative drove by President Emmanuel Macron for a Lebanese administration of autonomous authorities to enact urgently to bring reform intended to deliver the nation from its ongoing crises. 

On Nov 16, Lebanon’s caretaker FM Ghazi Wazni stated that if the nation’s elite class kept on postponing the forming of the new government and we don’t get financial aid soon, it would be the end of Lebanon, he added.

Wazni backed Macron’s initiative, who promised global financial help to Lebanon in return for anti-corruption reform in the nation. Lawmakers presently haven’t able to propose any of them. 

“President Macron stated ‘we’ll provide you some oxygen, we’ll help you to come of this mess’, or else, this monetary and social situation will continue to intensify. The effect will be on the security, strength, and fate of the nation,” Wazni added. 

The negotiations with the International Monetary Fund (IMF) for financial aid were postponed thus, even though contact proceeds, Wazni added. 

However, for a long time, the PM assigned and Saad Hariri have been trying to negotiate with the political parties about how to divide ministries, but due to the pandemic and the port blast has hit the nation badly.

Critics state that despite public proclamations of help for Macron’s drive and reform, Lebanon’s government officials have returned to obtain as much influence as plausible.

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