Following an explosion that erased a part of the capital, another explosion that left people burning to their demise, an economic crisis that resulted in 82% of the population living in poverty according to UNESCWA, and almost complete paralysis of the health, electricity, transportation, and tourism sectors, a new Lebanese government was announced on Friday, the 10th of September 2021, a year and a month after former Prime Minister Hassan Diab resigned.
If this new government indicates anything, it is the victory of the Central Bank and the Association of Banks in Lebanon and the survival of the ruling class that tailored the country’s collapse.
Void of a clear program to implement reforms and lacking harmony between its new ministers who were chosen at random according to their respective CVs and political inclinations, the new government is headed by multibillionaire Najib Mikati who is supposed to “save the country,” as he said during his speech on Friday. The question of how he will do that with the chosen ministers remains a mystery.
Masked by “technocrats” with shiny résumés including professors, medical doctors, lawyers, and engineers, the new government is divided between sects and political parties in a phenomenon that has become the norm in Lebanon. The Minister of Finance was chosen by the Head of Parliament, Nabih Berri, the Ministers of Justice, Defense, Water and Energy, were named by President Michel Aoun, former PM Saad Hariri picked the Minister of Health, and so on. Those divisions will inevitably obstruct the decision-making process as President Aoun controls the blocking third of the government, even though this was absurdly denied.
The 24-minister government is headed by Najib Mikati, the richest man in Lebanon. The Tripoilitan has had his fair share of corruption charges and has been a part of the ruling class since 1998 when he served as a Minister of Public Works and Transport. The new Prime Minister has been accused of making millions from subsidized housing loans along with his brother Taha Mikati with the support of Bank Audi. Naturally, all three sides denied the accusations and none of them was prosecuted legally.
Mikati is also very close to Central Bank Governor Riad Salameh and has confidently expressed that by stating that he would like to see the Governor as President, “based on his competency.” This same “competent” man kept on reassuring people that the Lebanese Lira was fine when it was heading towards its largest collapse yet, failed to introduce a capital control law when the crisis was still relatively at bay, purposely delayed BDL audits, and has been accused of money laundering and embezzlement from the Central Bank.
All eyes were on the new Finance Minister who is expected to “transform the country from a rentier state to a productive one” as prominent political figures had been repeating on media outlets for months. The name announced did not fail to disappoint. Even more, it was enough to show whose interests this government will be serving.
Youssef Al Khalil, the new Minister of Finance, has been serving as the Head of Financial Operations in the Central Bank for the past two decades. Al Khalil, who lectures at the American University of Beirut, helped Governor Riad Salameh with his financial engineering operations that ended up generating 6.5 billion dollars in revenue for Lebanese banks in 2016. The person who oversaw all of the Central Bank’s financial and monetary decisions for the past years will be taking the lead in supposedly restructuring the economy, forming a new financial plan, and negotiating with the International Monetary Fund (IMF).
Hence, anyone expecting this government to fairly distribute losses between the Central Bank and the banks, restructure the public debt, and force banks to return the colossal amounts of money gained through financial engineering will be let down. Instead, this government was formed to achieve the goals of the Association of Banks in Lebanon and make the citizen pay the price.
With that being said, this government can implement reforms before next year’s parliamentary elections. It can lay out a new structure for the different Lebanese sectors to make them productive ones. Whether it is the agricultural or industrial sectors, Mikati’s cabinet can come up with adequate plans to increase exports and encourage local production.
Those sectors have almost always generated some local revenue but have rarely helped in bringing hard currency into the country. They have been facing even more impediments lately due to extreme power outages and the near impossibility of finding fuel which forced a lot of factories to temporarily shut down. The new government will have to implement crucial and immediate reforms to fix the electricity sector, yet, with the newly announced Minister of Energy and Water, it is difficult to see that happening.
Walid Fayad, the new Minister of Energy and Water, belongs to the Free Patriotic Movement that has occupied this position for the past 12 years, spending wasting billions of dollars on failed deals, dysfunctional dams, and sketchy projects. Fayad served as Executive Vice President at Booz Allen Hamilton before getting fired for making a deal with a rival company that went against the interests of his own one. He is responsible for tackling one of the hardest tasks in the new government.
Having a look at just two ministers from Mikati’s government is enough to indicate who it will work for: not me, and not you. Rather, it will obey the banks first, and the political leaders that formed it second. As the purchasing power of the average Lebanese person decreases, his misery increases, and his days get harder, it is hard to be optimistic about a government taking the same road that got us here.
Edited by Hala El Shami