A Bundle Of English Reports, News and Editorials For November 28-29/2019 Addressing the On Going Mass Demonstrations & Sit In-ins In Iranian Occupied Lebanon in its 43th Day
Compiled By: Elias Bejjani
November 28-29/2019
Tites For The Latest English LCCC Lebanese & Lebanese Related News published on November 28-29/2019
Germany could ban the entirety of Hezbollah next week
Crisis-hit Lebanon faces petrol station strike
Bassil Says Bloc Signed Draft Law for Tracking Bank Transfers
Arab League Says Ready to Help Solve Lebanon Crisis
Aoun to Preside over Financial Meeting Friday
Khatib Chances Reportedly Surge as He Says Hariri Talks Not Negative
Lebanon Pays Back $1.5 Billion Eurobond amid Economic Crisis
Job Losses and Pay Cuts as Lebanon’s Economy Crumbles
Exchange Shops Suspend Work Friday in Latest Lebanon Strikes
Qassem Condemns Violence ‘by Any Side’, Disavows Attacks on Protesters
Report: AMAL Says Ain el-Rummaneh-Shiyyah Incidents Not Partisan
Oil Trader Sues BankMed in U.S. Court
Lebanese parliamentary panel to approve 2020 budget this year, committee head says
The Latest English LCCC Lebanese & Lebanese Related News published on November 28-29/2019
Germany could ban the entirety of Hezbollah next week
Jamie Prentis/The National/November 28/ 2019
Political wing of Iran-backed group has not been proscribed by European Union
Germany is expected to designate the entirety of Hezbollah as a terrorist organisation in a move that would extend restrictions on all activities of the Lebanese militant group. The European Union has proscribed Hezbollah’s military wing but not its political arm despite its widespread anti-Semitism.Der Spiegel reported that the foreign, justice and interior ministries had agreed on the move, which could be officially announced next week. Germany has previously regarded dealing with Hezbollah’s political faction as necessary because of its influence on Lebanon’s government. Hezbollah is accused of plotting and carrying out terror attacks across the globe. Iran has been widely criticised for its long-standing backing of the group. In September, the US ambassador to Germany urged the German government to ban Hezbollah. “The EU maintains an artificial differentiation between the military and political arm of Hezbollah,” Richard Grenell said. He described it as “Iran’s most-violent terrorist representatives”. If enforced, the designation would put Hezbollah on a par with ISIS and ban the flying of its flag. Earlier this year Britain proscribed the entirety of Hezbollah because of “its attempts to destabilise the fragile situation in the Middle East,” the-then interior minister Sajid Javid said. We are no longer able to distinguish between their already banned military wing and the political party,” he added.
Crisis-hit Lebanon faces petrol station strike
Reuters, BeirutThursday, 28 November 2019
Petrol stations in Lebanon will begin an open-ended strike on Thursday nationwide, a union representative said on Wednesday amid the country’s worst economic crisis in decades. Protests since October 17 have pulled Lebanon deeper into economic crisis, worsening a hard currency crunch that has hit importers and raised fears of price hikes and shortages. In a statement carried on state news agency NNA, the petrol stations union said it was striking because of losses incurred from being forced to purchase dollars on a parallel market, the primary source of hard currency in economic hard times. Petrol stations must collect payments from customers in Lebanese pounds but pay private fuel importers in dollars. The cost of dollars on the parallel market has surged since the start of protests, hovering currently at about 40 percent more than the official pegged rate, set at 1507.5 Lebanese pounds since 1997. There were queues at some petrol stations in Beirut late on Wednesday but the situation remained relatively calm.The central bank said last month that it would prioritize foreign currency reserves for fuel, medicine and wheat, but buyers tapping the facility are still required to supply 15 percent of their own dollar needs.
Lebanon’s energy ministry sets guidelines for gasoline price levels. The ministry said it would test a state tender for gasoline next month after fuel distributors threatened to raise prices. The Lebanese Economic Bodies, a private sector group that includes industrialists and bankers, called off a separate three-day strike that was also to start on Thursday, citing tough economic conditions and the need for employees to collect end-of-month salaries.
Bassil Says Bloc Signed Draft Law for Tracking Bank Transfers
Naharnet/November 28/2019
Free Patriotic Movement chief Jebran Bassil on Thrusday announced that the MPs of the Strong Lebanon bloc have signed a draft law on tracking the movement of bank transfers. The draft law is “aimed at modifying the jurisdiction of the Special Investigation Commission,” Bassil said at a press conference, referring to a body affiliated with the central bank. “It can be quicker and more effective and it might yield instant results,” Bassil noted. He added: “When we lifted our bank secrecy as MPs and ministers, we communicated with Central Bank Governor Riad Salameh and the Special Investigation Commission to demand that secrecy be lifted off the movement of our bank transfers and this is where the idea of this law came from.” “As a result of its work and investigations, this (new) commission would issue its rulings, slap sanctions and recover funds to the treasury without any excuse about any immunity and the result will be the recovery of the stolen funds,” Bassil explained. “This law would show how much political forces are committed (to fighting corruption) and we hope it will be approved quickly,” the FPM chief said, noting that the protests that have been rocking the country since October 17 are “a key catalyst in the fight against corruption.” As for the issue of forming a new government, Bassil said he will comment “next week.”“The Strong Lebanon bloc will have a stance very soon,” he added.
Arab League Says Ready to Help Solve Lebanon Crisis
Beirut- Asharq Al-Awsat/Thursday, 28 November, 2019
The Arab League expressed its willingness to help Lebanon solve its political stalemate, after weeks of mass protests and amid the country´s worst financial crisis in decades. The office of Lebanon´s president, Michel Aoun, said he discussed the situation Thursday with the visiting Arab League assistant secretary-general, Hossam Zaki. Lebanon´s prime minister, Saad Hariri, resigned late last month in response to nationwide protests that erupted on Oct. 17. They´re targeting the country´s entire political class. Protesters have resorted to road closures and other tactics in an effort to pressure politicians into responding to their demands for a new government. Aoun has not set a date for binding consultations with heads of parliamentary blocs to name a new premier. Political factions remain deadlocked over the new Cabinet´s composition.
Aoun to Preside over Financial Meeting Friday
Naharnet/November 28/2019
A financial meeting will be held Friday at the presidential palace in Baabda, the Presidency announced on Thursday. The meeting will be chaired by President Michel Aoun and attended by the caretaker ministers of finance, economy and investment, the central bank governor, the head of the Association of Banks, the head of the committee overseeing banks, and caretaker Prime Minister Saad Hariri’s financial adviser Nadim al-Munla. The Presidency said the meeting will tackle the financial situations in the country. The meeting comes as Lebanon grapples with widespread anti-government protests since October 17, a free-falling economy, and an escalating liquidity crisis. The dollar exchange rate in the parallel market has shot up from the pegged rate of 1,507 pounds to the greenback to around 2,250. Fear of financial collapse caused a capital flight and some $800 million appear to have left the country from October 15 to November 7, a period during which the banks were mostly closed.
Khatib Chances Reportedly Surge as He Says Hariri Talks Not Negative
Naharnet/November 28/2019
The chances of the engineer Samir Khatib to lead the new government have surged and the picture will become clearer over the coming few hours, which might witness a complete agreement over the shape of the government and its premier, LBCI television reported Thursday. Khatib himself meanwhile issued a statement about his meeting on Wednesday with caretaker Prime Minister Saad Hariri. “Some media outlets have circulated reports suggesting that the meeting that was held yesterday was negative… Engineer Khatib stresses that he sensed from PM Hariri complete support and responsiveness,” his office said.
Lebanon Pays Back $1.5 Billion Eurobond amid Economic Crisis
Associated Press/Naharnet/November 28/2019
Lebanon paid back a Eurobond worth $1.5 billion that was scheduled to mature Thursday, a Finance Ministry official said, pacifying concerns of a first-ever default on its debt amid the worst financial crisis in three decades. The tiny Mediterranean country’s economic emergency has ignited nationwide protests against widespread corruption and mismanagement, bringing the country to a standstill for over a month. The protests were initially sparked by new taxes, but have snowballed into calls for the entire political elite to step aside. Prime Minister Saad Hariri resigned in late October, meeting a key demand of the protesters. But that has plunged the country into further uncertainty, with no clear path to resolving its economic and political problems. The Eurobond announcement came as a top Arab League official arrived in Lebanon, expressing readiness to help the country solve its political stalemate.
The repayment was being widely watched in Lebanon, which has one of the highest debt ratios in the world, standing at $86 billion or 150% of the GDP. There were concerns that Lebanon, which always paid back its debt on time, might default. Lebanon has in recent weeks imposed unprecedented capital controls. The Finance Ministry official, who spoke on condition of anonymity in line with regulations, gave no further details about the repayment. Local media reported that the payment was made from the reserves of the Central Bank.
“This is a positive message to international ratings agencies and lenders that Lebanon did not default in the past and will not default in 2020,” said economist Ghazi Wazni. He added that Eurobonds worth $2.5 billion are scheduled to mature next year, the first payments will come in March and it will be worth $1.3 billion. Earlier this month, international ratings agency Standard & Poor’s downgraded Lebanon’s credit rating to ‘CCC/C’ from ‘B-/B’.
The agency said the outlook for Lebanon was negative and “reflects the risk to the sovereign’s creditworthiness from rising financial and monetary pressures tied to widespread protests and the resignation of the government.” Earlier this year, Fitch Ratings downgraded Lebanon’s long-term foreign currency issuer default rating to CCC from B- while Moody’s downgraded Lebanon’s issuer ratings to Caa1 from B3 while changing the outlook to stable from negative. The office of President Michel Aoun said he discussed political and economic conditions with visiting Arab League assistant secretary general, Hossam Zaki. Aoun has not set a date for binding consultations with heads of parliamentary blocs to name a new premier. Hariri, who was Aoun’s and Hizbullah’s favorite to lead a new Cabinet, withdrew his candidacy on Tuesday.
Politicians have failed to agree on the shape and form of a new government. Hariri had insisted on heading a government of technocrats, while his opponents, including Hizbullah, want a Cabinet made up of both experts and politicians. Meanwhile, the protesters are demanding that the country’s ruling elite be replaced, blaming them for failures in years that followed the 1975-90 civil war. The protests have remained overwhelmingly peaceful, resorting to road closures and other tactics in an effort to pressure politicians into responding to their demands.
But in recent days, scuffles broke out in Beirut and other areas between protesters and Aoun and Hizbullah supporters, leaving dozens of people injured. As tempers flare, there are real concerns Lebanon could be sliding toward a prolonged period of instability.
“The current situation cannot take conditions and counter-conditions. We should all work together to get out of the crisis in what serves the interest of the Lebanese people,” Aoun said in comments released by his office Thursday. He added that Arab support “should be translated into actual steps regarding assistance to improve the deteriorating economic conditions.”
Zaki told reporters said there must be solution for the Cabinet formation crisis, adding that “it is important so that Lebanon avoids negative effects on its economic conditions and civil peace.” Scores of Lebanese businesses have closed in recent months and thousands of employees were either laid off or are getting half their salaries amid the crisis. Local banks have imposed capital controls worsening the economic conditions amid a liquidity crisis and shortage in U.S. dollars. Since 1997, the Central Bank has kept the pound stable at 1,507 to the dollar thanks to heavy borrowing at high interest rates but on the black market, the price of the dollar reached in recent days 2,100 Lebanese liras, a 40 percent over the official price.The private sector had planned a strike Thursday but later suspended it while gas stations started an open-ended strike protesting dollar shortages to cover their imports. Exchange shops will also hold a one-day strike on Saturday to protest charges by some that accuse them of being behind the rise of the dollar against the local currency. Later on Thursday, hundreds of protesters held a sit-in outside the Central Bank in Beirut’s Hamra area blaming bank governor Riad Salameh’s policies for worsening economic and financial conditions in the country.
Job Losses and Pay Cuts as Lebanon’s Economy Crumbles
Agence France Presse/November 28/2019
Weeks into a protest movement partly driven by a collapsing economy, Lebanese interior architect Laeticia Nicolas was called in by her boss and told she was fired. “There had been fewer and fewer projects for a year,” said the 28-year-old, who since October 17 has taken part in unprecedented anti-government protests sweeping the country. “Before the revolution began, they warned us they’d be paying just half our salaries in exchange for reducing working hours,” she said. But as the protests gained momentum, he downsized his team. Nicolas was informed of the bad news at the end of the month when she received her salary. “It’s not because of the revolution, but it may well have accelerated things,” she said. After years of political turmoil, the Lebanese economy is in a sharp downturn, banks have restricted access to dollars while prices have risen. Amid the crisis, thousands of Lebanese say their jobs are under threat. Activists have denounced what they call illegal lay-offs and urged the labor ministry to intervene.
Some people, like Nicolas, have lost their jobs altogether; others have been told to work part-time for a fraction of their original salary. A woman who asked to be identified as “Mary” was among those forced to take a pay cut. For 16 years she has been a saleswoman at an upper-end women’s clothing shop, and now she fears her job may be on the line. “Since the start of November we’ve been taking two extra days off a week,” said the 46-year-old, who asked that her real name not be used in order to protect her job.”They said they would have to pay us half our salaries.”
‘We fear the worst’
She said that she and around 20 colleagues did not object “because we fear the worst, and no one is going to risk losing their job in such circumstances.””It’s been bad for months. In recent days, the shop takings haven’t even been 50,000 Lebanese pounds,” or around 30 euros, Mary said. Economic growth in Lebanon has been battered by repeated political deadlock in recent years, compounded by the eight-year war in neighboring Syria. Successive cabinets have failed to implement desperately needed reforms to redress a floundering economy heavily reliant on tourism and services. The World Bank projected negative growth of 0.2 percent in Lebanon for 2019, but now warns the recession could be even worse. It has urged that a new cabinet be swiftly formed, after the government stepped down less than two weeks into the protests, to avoid more Lebanese becoming poor. Around a third of Lebanese live in poverty, and that figure could soon rise to half, according to the World Bank. Unemployment, already above 30 percent for young people, would also go up, it said. A group of Lebanese banks and private businesses also warned of bleak times ahead. “Thousands of companies are threatened with closure, and tens of thousands of employees and workers risk losing their jobs,” they said. The union of restaurant and bar owners has said 265 establishments have closed already, and that figure could reach 465 by the end of the year.
– Begging for payment –
In the month before the protests, banks began restricting access to dollars, sparking a greenback liquidity crisis. Bilal Dandashli, who heads a small road safety equipment company he founded in the 1990s, said he was struggling. “We can no longer import supplies from abroad,” he said. The Lebanese pound is pegged at around 1,500 pounds to the dollar, and both are used interchangeably in everyday transactions. But caps on dollar withdrawals have forced people to resort to moneychangers, sending the unofficial exchange rate soaring to more than 2,200. To make matters worse, Dandashli said customers were also not paying their debts. “It’s like begging for our own money,” he said. “One person owes me $20,000, and today he turns up with a check for $1,000. How are we supposed to continue like this?”Dandashli says he fears for the future of his 10 employees, whom he has continued to pay in full despite no work for two months. “I could hang on for another few months or close. But it would break my heart to see everything I’ve built up over the years collapse.”In the latest sign of things getting worse, petrol station owners began an open-ended strike on Thursday because of losses caused by the plunging pound against the dollar. Nicolas, the newly unemployed interior architect, is now applying for jobs and considering a proposal to work in Kuwait. “If travelling is the only option, I’ll have to take it,” she said through tears. “I’ll start over. Just not here, as here there is no hope.”
Exchange Shops Suspend Work Friday in Latest Lebanon Strikes
Naharnet/November 28/2019
The Syndicate of Money Exchange houses in Lebanon said they will go on strike on Friday in protest at accusations blaming them for the dollar crisis. “The accusations are “unrealistic” said the syndicate and “desperatly aim to blame us for the crisis, therefore we will go on strike on Friday.”
They denounced the price depreciation of dollar to the Lebanese pound as the country grapples with nationwide protests and an aggravating economic crisis. They appealed to the political and financial authorities to find quick solutions that contribute to reducing the decline in the exchange rate of the Lebanese pound. The Lebanese pound has been pegged to the greenback at around 1,500 for two decades and the currencies are used interchangeably in daily life. But amid a deepening economic crisis, banks have gradually been reducing access to dollars in recent months, forcing importers to resort to money changers offering a higher exchange rate and sparking price hikes. On the open market, the dollar has been selling for 2,000 pounds. On Wednesday, the Syndicate of Gas Station Owners declared an open-ended strike in protest at the ongoing dollar shortage crisis.
The Economic Committees, a grouping of Lebanon’s business leaders and owners of major firms, on Wednesday called off a strike they had called for Thursday, Friday and Saturday. The government stepped down less than two weeks into the nationwide demonstrations, but a new cabinet has not been formed.
Qassem Condemns Violence ‘by Any Side’, Disavows Attacks on Protesters
Naharnet/November 28/2019
Hizbullah deputy chief Sheikh Naim Qassem on Thursday said he condemns violence by any side following the latest incidents in the protest-hit country. “The right to assembly in squares and to demonstrating to raise the voice high and pressure officials is legitimate and must be protected, but road blocking and the obstruction of people’s lives is rejected, because citizens would be punishing other citizens instead of pressuring the ruling authorities,” Qassem said. Condemning “all forms of cursing, insults, assault and stone-throwing by any side,” Qassem noted that Hizbullah “has confronted sectarian and regional strife and sought to contain it on many occasions throughout its political history” and will remain ready to “face it and prevent it.”“Some have criticized us for failing to condemn some incidents, and this is deplorable, seeing as our stance is well-known. We support the right to peaceful and civilized expression and the right to political disagreement and we announce our stances bravely and clearly, but we can’t comment on every incident given the multitude and similarity of incidents, which are being repeated daily,” Hizbullah number two added. “Our stance is clear and this is enough… and everyone knows that we had nothing to do with all the incidents that involved chaos and attacks and we will maintain this stance,” Qassem went on to say. Supporters of Hizbullah and the AMAL Movement have recently attacked protesters in central Beirut, Tyre and Baalbek. They have also staged an angry rally in the southern Beirut suburb of Msharrafiyeh and engaged in stone-throwing skirmishes with residents of Ain el-Rummaneh.
Report: AMAL Says Ain el-Rummaneh-Shiyyah Incidents Not Partisan
Agence France PresseNaharnet/November 28/2019
The AMAL Movement of Speaker Nabih Berri asserted on Thursday that the latest clashes in Beirut suburbs of Ain el-Rummaneh and Shiyyah did not erupt between partisans of AMAL and the Lebanese Forces, asserting that “coexistence” is a red line, Saudi Asharq al-Awsat reported on Thursday.
“Incidents in Ain el-Rummaneh and Shiyyah were immediately contained and things returned to normalcy quickly,” an AMAL source told the daily on condition of anonymity. Adding that the part had played a role to “extinguish” the unrest because “coexistence is a red line.”
“What happened in Ain el-Rummaneh and Shiyyah was not at all a clash between AMAL and Lebanese Forces (partisans). It was a clash between two streets that had been addressed with wisdom and dialogue,” the source told the daily. In a move to assert solidarity between the two neighborhoods, Mothers and residents of Ain el-Rummaneh and Shiyyah on Wednesday marched together in a solidarity rally, following overnight unrest in the area. The gathering came at the invitation of Lebanese mothers and women who called for rejecting “all the scenes that the streets witnessed over the past two days” and denouncing “segregation and the return to the rhetoric of frontlines and war.”Overnight confrontations in several Lebanese regions, mostly fistfights and stone throwing, injured dozens of people. Stone-throwing clashes took place between young men from Shiyyah and the adjacent Ain el-Rummaneh and were quickly contained by the army. The trouble began after a video circulated on WhatsApp showing Ain el-Rummaneh residents insulting Hizbullah chief Sayyed Hassan Nasrallah. The clip was later shown to be several years old. Tensions regularly erupt in this area which saw the first clashes of the 1975-1990 civil war. A shooting in Ain el-Rummaneh in April 1975 triggered the 15-year war that killed nearly 150,000 people.
Oil Trader Sues BankMed in U.S. Court
Agence France PresseNaharnet/November 28/2019
An international oil trader is suing a Lebanese bank in the United States over failing to release $1 billion in deposits, court documents showed, charges the banking institution denied on Thursday. IMMS has filed a suit against BankMed in the Supreme Court of the State of New York over the “brazen theft of more than $1 billion”, according to court documents dated November 22 and seen by AFP. The lawsuit comes as Lebanon grapples with widespread anti-government protests since October 17, a free-falling economy, and an escalating liquidity crisis. The oil trader, which is incorporated in Belize, said it asked to withdraw its money on November 8, and received no response for several days, according to the court documents. It said the bank on November 12 informed it was terminating overdraft and letter of credit facilities due to “the prevailing circumstances and to the material adverse change in the economic condition of Lebanon and the Lebanese financial markets”. BankMed on Thursday strongly denied the allegations. “The $1 billion deposit is a blocked deposit by instructions of IMMS maturing in about 2 years from now,” it said. “Between October 30 and November 12, 2019, BankMed discovered material breaches of contract and attempts by IMMS to direct funds due to BankMed overseas,” it said. “BankMed opposed such attempts by IMMS and took appropriate actions.” It said the banking contract was subject to Lebanese law and that it would submit its response to a court hearing in Beirut next month, without giving a specific date. BankMed is chaired by Mohammed Hariri, a cousin of outgoing Prime Minister Saad Hariri’s late father Rafik. Nazek Hariri, the widow of the embattled premier’s father, sits on the bank’s board of directors — as does the current interior minister, Raya al-Hassan. Since September, debt-saddled Lebanon has had a liquidity crisis, with banks rationing the withdrawal of dollars. The exchange rate in the parallel market has shot up from the pegged rate of 1,507 pounds to a dollar to more than 2,000.
Lebanese parliamentary panel to approve 2020 budget this year, committee head says
Arab News/November 28/2019
BEIRUT: The Lebanese parliament’s budget and finance committee will approve the 2020 budget by the end of the year and the next government must adopt it, committee head Ibrahim Kanaan said on Thursday.
Lebanon has been grappling with the worst economic conditions in decades, amid protests that prompted Prime Minister Saad Al-Hariri to resign on Oct. 29, leaving the country in politically deadlocked.
Kanaan said the committee must quickly finalize a budget needed to restore confidence in the country and take account of bruising economic conditions. “Before the end of next month, the holiday season … we will have finished the debate and approval of the 2020 budget,” Kanaan said in a televised news conference. “It is not possible for the new government not to adopt this budget because when this budget is approved it will become a law.”Kanaan said treasury revenues had been almost non-existent for the last 45 days, but assured Lebanese that public-sector salaries would be paid.
Lebanon is hoping to enact urgent economic reforms that can convince donors to disburse some $11 billion in aid pledged at a conference last year. Meanwhile, Lebanon paid back a Eurobond worth $1.5 billion that was scheduled to mature Thursday, a Finance Ministry official said, pacifying concerns of a first-ever default on its debt amid the worst financial crisis in three decades.
The tiny Mediterranean country’s economic emergency has ignited nationwide protests against widespread corruption and mismanagement, bringing the country to a standstill for over a month. The protests were initially sparked by new taxes, but have snowballed into calls for the entire political elite to step aside.
Prime Minister Saad Hariri resigned in late October, meeting a key demand of the protesters. But that has plunged the country into further uncertainty, with no clear path to resolving its economic and political problems. The Eurobond announcement came as a top Arab League official arrived in Lebanon, expressing readiness to help the country solve its political stalemate.
The repayment was being widely watched in Lebanon, which has one of the highest debt ratios in the world, standing at $86 billion or 150% of the GDP. There were concerns that Lebanon, which always paid back its debt on time, might default. Lebanon has in recent weeks imposed unprecedented capital controls.The Finance Ministry official, who spoke on condition of anonymity in line with regulations, gave no further details about the repayment. Local media reported that the payment was made from the reserves of the Central Bank. The office of Lebanon’s president, Michel Aoun, said he discussed political and economic conditions with visiting Arab League assistant secretary general, Hossam Zaki. Aoun has not set a date for binding consultations with heads of parliamentary blocs to name a new premier. Hariri, who was Aoun’s and the militant group Hezbollah’s favorite to lead a new Cabinet, withdrew his candidacy on Tuesday.
Politicians have failed to agree on the shape and form of a new government. Hariri had insisted on heading a government of technocrats, while his opponents, including Hezbollah, want a Cabinet made up of both experts and politicians. Furthermore, the protesters are demanding that the country’s ruling elite be replaced, blaming them for failures in years that followed the 1975-90 civil war. The protests have remained overwhelmingly peaceful, resorting to road closures and other tactics in an effort to pressure politicians into responding to their demands. But in recent days, scuffles broke out in Beirut and other areas between protesters and Aoun and Hezbollah supporters, leaving dozens of people injured. As tempers flare, there are real concerns Lebanon could be sliding toward a prolonged period of instability. “The current situation cannot take conditions and counter-conditions. We should all work together to get out of the crisis in what serves the interest of the Lebanese people,” Aoun said in comments released by his office Thursday. He added that Arab support “should be translated into actual steps regarding assistance to improve the deteriorating economic conditions.”
Zaki told reporters said there must be solution for the Cabinet formation crisis, adding that “it is important so that Lebanon avoids negative effects on its economic conditions and civil peace.”
Scores of Lebanese businesses have closed in recent months and thousands of employees were either laid off or are getting half their salaries amid the crisis. Local banks have imposed capital controls worsening the economic conditions amid a liquidity crisis and shortage in US dollars.
Since 1997, the Central Bank has kept the pound stable at 1,507 to the dollar thanks to heavy borrowing at high interest rates but on the black market, the price of the dollar reached in recent days 2,100 pounds, a 40 percent over the official price. * with AP
Titles For The Latest Lebanese LCCC English analysis & editorials from miscellaneous sources published on November 28-29/2019
Germany could ban the entirety of Hezbollah next week/Jamie Prentis/The National/November 28/ 2019
Hezbollah Has Trapped Itself/Michael Young/Carnegie MEC/November 28/2019
Lebanon’s FPM, Hezbollah Hold Onto Hariri/Paula Astih/Asharq Al-Awsat/November 28/2019
Decision time: Lebanon faces significant debt crunch/Leila Molana-Allen/Al Jazeera/November 28/2019
Lebanon: Protesters cautious after clashes with sectarian groups/Leila Molana-Allen/Al Jazeera/November 28/2019
Lebanon pays $1.5bn debt to ease financial tension/Dana Khraiche/Bloomberg/November 28/2019
Experts urge IMF bailout to contain Lebanon’s financial crisis/Georgi Azar/Annahar/November 28/2019
The Latest Lebanese LCCC English analysis & editorials from miscellaneous sources published on November 28-29/2019
Germany could ban the entirety of Hezbollah next week
Jamie Prentis/The National/November 28/ 2019
Political wing of Iran-backed group has not been proscribed by European Union
Germany is expected to designate the entirety of Hezbollah as a terrorist organisation in a move that would extend restrictions on all activities of the Lebanese militant group. The European Union has proscribed Hezbollah’s military wing but not its political arm despite its widespread anti-Semitism.Der Spiegel reported that the foreign, justice and interior ministries had agreed on the move, which could be officially announced next week. Germany has previously regarded dealing with Hezbollah’s political faction as necessary because of its influence on Lebanon’s government. Hezbollah is accused of plotting and carrying out terror attacks across the globe. Iran has been widely criticised for its long-standing backing of the group. In September, the US ambassador to Germany urged the German government to ban Hezbollah. “The EU maintains an artificial differentiation between the military and political arm of Hezbollah,” Richard Grenell said. He described it as “Iran’s most-violent terrorist representatives”. If enforced, the designation would put Hezbollah on a par with ISIS and ban the flying of its flag. Earlier this year Britain proscribed the entirety of Hezbollah because of “its attempts to destabilise the fragile situation in the Middle East,” the-then interior minister Sajid Javid said. We are no longer able to distinguish between their already banned military wing and the political party,” he added.
Hezbollah Has Trapped Itself
Michael Young/Carnegie MEC/November 28/2019
By trying to preserve a corrupt political order, the pro-Iranian party has become identified with it.
Since the start of the Lebanese uprising on October 17, Hezbollah has maneuvered itself into a terrible dilemma, one with potentially existential implications for the party.
Initially, Hezbollah understood that the widespread popular denunciation of the political class and its kleptocratic, poisonous management of Lebanon represented a threat to the system that had protected the party since 2005. However, its secretary general, Hassan Nasrallah, was careful not to take a sharp position against the protest movement, initially preferring to advise demonstrators to accept a gradual, institutional response to their grievances.
Nasrallah underestimated the lack of trust between the population and the political leadership. Moreover, demonstrators could see that the Hezbollah leader was only looking to buy time. When that effort failed, Nasrallah continued to push back against the protest movement, to no avail. He then engaged in a tactical rhetorical retreat, while deploying party militants to terrorize protestors. Again, this failed, heightening public criticism of Hezbollah, which was now seen as the main defender of a thoroughly discredited political order.
When caretaker prime minister Sa‘d al-Hariri resigned on October 29, he left the party hanging. Nasrallah had wanted Hariri to stay in office, but Hariri turned the tables, knowing this would lead to one of two outcomes: either he would be allowed to form a new government on his terms; or he would be prevented from doing so, forcing Hezbollah and its allies to form a government on their own while facing popular anger and a looming economic collapse.
Hariri maneuvered well. But last week, in the face of the refusal of Hezbollah and Michel Aoun’s and Gebran Bassil’s Free Patriotic Movement to allow him to establish a purely technocratic government—the demand of the protest movement—he withdrew from the race. By doing so, he again left Hezbollah in the lurch. The reason is that Hezbollah needs Hariri as prime minister. His presence would provide the party with valuable Sunni cover, while Hariri is also regarded as one of the few politicians with enough international credibility to bring money to Lebanon and act as an interlocutor with global financial institutions and investors.
In contrast, were Hezbollah to form a government of one political color with Aoun, Bassil, and the speaker of parliament, Nabih Berri, the consequences would be catastrophic. Such a government not only would be opposed by a majority of Lebanese, it would have no international weight and no latitude to negotiate a bailout for Lebanon. Worse, it is more than likely that the United States would consider such a government a Hezbollah operation, almost certainly opening up the party’s allies to U.S. economic sanctions.
Nor does Hezbollah have a military option to bring everyone into line. Even in Shi‘a areas the party has been loath to go too far in silencing protestors, and its ability to do so in Sunni, Christian, and Druze areas is nil. However, were it to try anything on that front, the country would descend into civil war. Hezbollah considers this the worst option of all, as it would neutralize the party as a proxy for Iran in the fight against Israel. So the most it has done is to deploy young thugs with its allies in the Amal movement to scare protestors. Except that the last time this happened the protestors fought back and Hezbollah and Amal came across looking like sectarian hoodlums. Soon, spokesmen for both parties were backtracking.
The latest idea for breaking out of the deadlock has been to propose that one Samir Khatib form a government. But that plan has been derailed reportedly because Hezbollah does not want a man who is largely unknown. Perhaps the party senses that Khatib won’t cut it with the protestors or even the Sunni community. He also doesn’t have the wherewithal to navigate Lebanon through the tidal wave of a financial breakdown, so that Hezbollah may still be looking to persuade Hariri to reverse his decision to not become prime minister.
It’s difficult to disagree with Hezbollah’s assessment, if that is indeed what it believes. It is dawning on everybody that Hariri is the only serious candidate available. His decision to withdraw from the race is looking increasingly like a tactical move to compel Hezbollah, Aoun, and Bassil to reach that conclusion.
Hezbollah will remain trapped if it refuses to show flexibility over a new government. By trying to preserve the foul system that is in place and protect its parasitic allies and their interests, the party is only accelerating the system’s demise. More damaging, if the system crumbles at a moment when Hezbollah is perceived as the strongest defender of the political class that brought about this calamity, the consequences could be far-reaching for the party.
Within a relatively short period of time, Lebanon will have no choice but to go to international financial institutions to secure capital for an economy that is in dire need of liquidity. The political class will have almost no maneuvering room to prevent such an outcome, as by then the Lebanese will be screaming. In fact, to delay outside intervention would probably be suicidal for both the political class and Hezbollah.
Once the International Monetary Fund imposes a reform package on Lebanon, the ability of the politicians to prevent it will be limited. There will be much suffering because IMF packages are never gentle. But the politicians will find it more difficult to steal and they will have no option other than to go along with IMF conditions if they want money. The nature of Lebanon’s political leadership will change because there will be a stern authority over the politicians’ heads.
Hezbollah knows this and hardly relishes such a result. But everything the party is doing makes it more probable. The only alternative, then, is to accept a credible government and hope it can work out a deal with the international community that focuses on economic reform, debt rescheduling, and measures avoiding severe austerity. The Lebanese may sacrifice for a government in which they can believe, but they have to be shown light at the end of the tunnel.
Much has been said of Nasrallah’s recent remarks that Lebanon had to consider alternative economic relations to those with Western countries, and his advice to his own community to bear the hardships of the economic situation. Both ideas show the extent to which Hezbollah’s leader is grasping at straws. China, Russia, and Iran are in no position to help Lebanon, nor do they have an incentive to do so. Moreover, Lebanese know that most economic power lies in the West.
As for the Shi‘a, they did not support Hezbollah to spend years in poverty. They always considered Hezbollah as a ticket to social promotion in the Lebanese state and a way out of their past impoverishment. Asking them to grit their teeth and bear it is hardly a good plan. Once the system folds, Nasrallah will have hundreds of thousands of coreligionists to feed, and the odds are more than even that a majority will soon blame Hezbollah for their predicament.
At the end of the long national trauma, what will Hezbollah be able to offer? Weapons? Resistance? Slogans? Of what value will they be as the Lebanese climb out of the abyss? Hezbollah doesn’t offer any serious remedies to the problems of a region marked by deteriorating living conditions, an increasingly young population without prospects of a prosperous future, and corrupt leaderships that have plundered and repressed their societies. This is a dramatic moment for the party, which finds itself the prisoner of a maelstrom of recrimination tearing across a region in full transformation.
Lebanon’s FPM, Hezbollah Hold Onto Hariri
Paula Astih/Asharq Al-Awsat/November 28/2019
Hezbollah and the Free Patriotic Movement (FPM) have insisted on nominating caretaker Lebanese Prime Minister Saad Hariri to head the new government, stressing that he should have a role in providing a solution to the country’s economic and political crises. The two parties argued that the crisis has been the result of economic policies adopted by several governments over the past years. Ministerial sources close to President Michel Aoun told Asharq Al-Awsat that the insistence on Hariri was based on the certainty that he must assume the responsibility to finding solutions to the crises gripping the country, similar to other political parties. The sources added that Hezbollah and the FPM have underlined the need for Progressive Socialist Party leader Walid Jumblatt to also shoulder responsibility for the crises. Lebanon has been without a government since Hariri quit as prime minister on Oct. 29 following unprecedented demonstrations. No date has yet been set by Aoun, who is the FPM founder, for binding parliamentary consultations to name a new prime minister. Meanwhile, dozens of mothers gathered on Wednesday in a Beirut suburb to reject attempts of division and intimidation, following a night of sporadic confrontations between partisans of disputing political groups. Mothers and residents of Ain el-Rummaneh and Shiyyah marched together in a solidarity rally. The women called for rejecting “all the scenes that the streets witnessed over the past two days” and denouncing “the return to the rhetoric of frontlines and war.” Stone-throwing clashes took place on Tuesday night between young men from the two neighborhoods and were quickly contained by the army. Also on Tuesday, dozens of FPM supporters organized a convoy to the village of Bikfaya, where residents are predominantly supporters of the Kataeb Party, to demonstrate near the house of former President Amin Gemayel. People in the area confronted the convoy and attacked a number of cars before the army intervened and restored security.
Lebanon pays $1.5bn debt to ease financial tension
Dana Khraiche/Bloomberg/November 28/2019
Lebanon has never defaulted, despite having one of the world’s highest debt burdens.
Lebanon repaid a $1.5 billion Eurobond on Thursday, an official with knowledge of the matter said, buying the country time as speculation swirls over its ability to avoid a default during a political and economic crisis.
The Finance Ministry issued payment instructions to the central bank, also known as Banque du Liban, the official said on condition of anonymity. The next bond payment is scheduled for March, when a $1.2 billion Eurobond comes due.
Lebanon has never defaulted on its obligations despite struggling under one of the world’s biggest debt burdens, and the central bank had repeatedly said it would cover the $1.5 billion bond. But weeks of nationwide protests that ousted the government saw credit risk surge and investor confidence slump.
The yield on the March 2020 bond rose as high as 105 percent last week from a mere 13 percent on October 17, when the demonstrations kicked off. Higher yields, and this month’s record costs for insuring government debt, reflect concern the government may have to restructure sooner or later.
Foreign bondholders are estimated to hold $500 million of the repaid Eurobond, while the central bank has $600 million and the rest is most likely held by local banks, according to a Bank of America Merrill Lynch research note this week.
Day of reckoning
Lebanon is nearing its day of reckoning after years of overspending, borrowing and political paralysis, coupled with the crisis in neighbouring Syria that sent more than 1.5 million refugees into the tiny country.
With a current account deficit of over 25 percent of its gross domestic product, weak growth and debt that’s reached 155 percent of the economy, the central bank tried to maintain financial stability throughout the years and carried out what it called financial engineering. The operation was meant to shore up reserves and raise the capital of local banks, the country’s largest debt holders.
The protests were sparked by a government levy on phone calls such as those using the free WhatsApp service along with other tax measures. The demonstrations quickly turned against a ruling class accused of corruption. Prime Minister Saad Hariri resigned and politicians have been unable to agree on a new name to lead the next government.
US dollar shortage and Lebanon’s economic crisis [2:29]
The central bank began rationing dollars even before the unrest ignited, pushing up demand for the foreign currency and causing the Lebanese pound to plummet on the black market. The move has stymied trade and imports in a country that’s almost entirely reliant on foreign goods.
The central bank has said that it would supply dollars to the importers of fuel, wheat and pharmaceuticals and earlier this week added medical equipment to that list of essential goods.
Decision time: Lebanon faces significant debt crunch
Leila Molana-Allen/Al Jazeera/November 28/2019
The government faces three options as its debt repayment deadline looms: default, restructure or repay.
Lebanon has close to $1.5bn in public debt that it may decide to repay on Thursday. The country’s escalating financial crisis and weeks-long anti-government protests are adding more pressure to an already difficult situation.
At $86bn, Lebanon’s sovereign debt is the world’s third-highest relative to gross domestic product (GDP). The country’s beleaguered economy is expected to contract by 0.2 percent this year.
In an effort to calm protesters and to reduce the deficit from the current 11 percent to 0.6 percent by 2020, the government recently proposed a reform package. However, because talk of a tax on the internet partly fuelled the initial protests, ministers avoided tax increases on individuals and instead proposed using a bank contribution of $3.4bn to alleviate the deficit, alongside other proposals. For protesters however, many of whom want the wholesale removal of the prevailing political class, the move was too little, too late.
While anti-government protests have lowered confidence in the economy still further, the crisis was in motion well before the demonstrations began. The situation was compounded after Prime Minister Saad Hariri resigned on October 29, leaving in place a caretaker government without the bureaucratic powers to introduce the necessary economic reforms.
Protesters shout slogans as they block the highway leading to the Presidential palace during a protest to demand the formation of a new government in Baabda, east Beirut, Lebanon, 26 November 2019. Pr
Lebanese protesters have taken to the streets to demand the formation of a new government, after what they view as a lack of progress following Prime Minister Saad Hariri’s resignation on October 29 [File: Wael Hamzeh/EPA]
On Tuesday protesters gathered around the central bank, wearing masks of Central Bank governor Riad Salameh’s face and chanting “Thief, thief, Salameh is a thief!” The following day they were back, this time with a Beirut hairdresser offering free haircuts in front of the building “to show them how to give a haircut”, according to a poster advertising the event. The scene references proposals by some economists that the central bank should confiscate a certain percentage from the highest depositors’ accounts, a financial haircut on those who benefitted the most from high interest rates, in order to relieve the debt burden. “We have to find a solution, and the solution must not be [borne by] the poor people,’ said protester Enas Sherry. “They benefitted from the interest, which was very high over the years, so they have to pay what they took from us.”
‘A regulated Ponzi scheme’
Since the end of the country’s 15-year civil war in 1990, Lebanon has depended on tourism, real estate and the country’s banks to draw foreign currency, and US dollars in particular, into the country. For its part, the banking sector offered unusually high interest rates for depositors at an average of 7 percent. Other, more extreme schemes have also been attempted: for a brief period in 2016, as the country faced a downturn in foreign currency injections, the central bank offered 20 percent interest on dollar sums deposited in local banks for as little as one year.
A report released by think-tank Triangle last week called the country’s “decrepit and untenable” financial system “a regulated Ponzi scheme which has benefitted the banking sector and left the rest of the Lebanese to foot the bill.”
Part of the problem is a dollar peg, at 1507.5 Lebanese pounds to the dollar, which has artificially protected the currency for more than two decades. Yet since September, that rate has been slipping in international markets and on the street. The International Monetary Fund estimates the pound is overvalued by up to 50 percent. While the pound is Lebanon’s official currency, dollars have been used interchangeably for decades. Many daily bills for rent and utilities are quoted in US dollars; some landlords and businesses are insisting that clients continue to pay in increasingly scarce dollars, or imposing street rates for the conversion. On Wednesday exchange traders in Beirut quoted to Al Jazeera rates of up to 2,100 pounds to the dollar.
An employee places 50,000 denomination Lebanese pound banknotes in a money counting machine at a currency exchange store in Beirut, Lebanon, on Wednesday, Oct. 30, 2019
Calls have mounted for Lebanon to impose formal restrictions on the movement of money to defend the country’s dollar peg and prevent a run on its banks [File: Hasan Shaaban/Bloomberg]
Thanks to fears of capital flight, in recent weeks depositors have seen unofficial capital controls imposed on withdrawals, decreasing to as low as $200-300 allowed per week by some banks, with extra charges imposed on dollar withdrawals. Customers have queued for hours in some places, only to be told their withdrawals cannot be completed.
Some account holders have been told that their debit cards will see severe restrictions imposed when used abroad, others that cards in local currency cannot be used abroad at all until further notice due to “exceptional circumstances prevailing in the country.”
The effect of the crisis on the millions of Lebanese already struggling to get by will be devastating, says Sibylle Rizk of civil society organisation Kulluna Irada. “It’s not a risk any more, it’s already ongoing. We have a shrinkage of the economy … because we have been living above our means. This is going to have a huge economic and social impact because many companies will close down and many people will lose their jobs, which has already started.”
“For the moment, we don’t see at the higher authority level a clear acknowledgement of the gravity of the situation … we are in a state of denial.”
Payday on Thursday
Lebanon faces three options on Thursday: default, restructure or repay. A default, which would mark the first time the country has failed to fulfil a repayment in the country’s history, is unlikely, say experts.
“The price to pay for the first-ever default is too high,” says Rosalie Berthier, a researcher at Synaps Network. “Because once you default, everybody just expects you to default again … then they’ll never get a good rating any more.”
Lebanese banks’ creditworthiness has already been downgraded several times by ratings agencies in recent months.
Restructuring would involve a combination of renegotiating payment dates, lowering interest rates on the debt and perhaps reducing the value of the biggest depositors’ assets – a financial haircut – and putting the difference back into paying off the debt. The longer this is delayed, the less freedom the central bank has to renegotiate its remaining debt. A pedestrian enters a Western Union Co. currency exchange store on Hamra Street in Beirut, Lebanon, on Tuesday, July 24, 2018.
Lebanon’s banks have been paying the highest interest rates on deposits in almost nine years as lenders seek to shore up their capital to cope with political uncertainty and the high borrowing needs of the government [File: Sima Diab/Bloomberg]
Nassib Ghobril, chief economist at Byblos Bank Group told Al Jazeera blaming the banks for the current crisis is unfair, and a distraction from governmental responsibility.
“The banking sector has been assuming the responsibility of public finance stability … and therefore of social stability, for years,” said Ghobril. “It’s long overdue for the executive branch to assume some of that responsibility by implementing reforms to reduce the structural deficit. [Banks] can no longer contribute on their own.”The finance ministry says the country can and will repay the Eurobond on Thursday. But doing so will eat into the country’s dwindling dollar reserves, which Rizk says could better be used to invest in critical commodities like fuel, wheat and medicines as the country slips further into crisis.
Equally, as 37 percent of Lebanon’s sovereign debt is held locally in the country’s banking sector, activists argue repayment will put much of the dollar sum back in the pockets of the country’s elites – who own and are the highest depositors in the banks – reinforcing the unequal system protesters are railing against.
Protesters like Enas are determined that the country should default, face the music, and be forced to build a different future. “We need to start building our industry, our agriculture, our own economy, a real economy,” she says. “There are many people who are clean [uncorrupted] people, good people, smart people, who can work and work hard if they have the opportunity.”
Lebanon: Protesters cautious after clashes with sectarian groups
Leila Molana-Allen/Al Jazeera/November 28/2019
Demonstrations recently turned violent after supporters of the two Shia groups attacked protesters on Sunday.
Beirut, Lebanon – As Lebanon enters its seventh week of anti-government demonstrations, protesters reacted with cautious defiance after three days of repeated clashes with sectarian supporters.
After a relatively quiet weekend following nationwide celebrations of Lebanon’s 76th independence day on Friday, the trouble began on Sunday night when protesters blocked roads across the country in advance of calls for a general strike on Monday.
That night saw some of the most sustained clashes since the protests began, as demonstrators and sectarian supporters of leading Shia parties Hezbollah and Amal riding scooters faced off repeatedly until the early hours on Beirut’s arterial ring road.
Scores of riot police attempted to keep the two sides apart as sectarian supporters threw rocks at protesters, who retaliated in kind.
Using alleyways on either side of the highway, Hezbollah and Amal Movement supporters tried several times to infiltrate the group of protesters, some of whom armed themselves with sticks and metal bars.
At one point protesters chased the infiltrators, bringing back and setting fire to one of their scooters as a trophy.
“It hasn’t deterred me at all, of course, I will be out again,” said protester Marie-Nour Hechaime, who fled the scene twice before returning to continue blocking the road. “It was scary on the spot, but not more than that.”
Demonstrator Wael Abdel Khaled pulled up his sleeves to show Al Jazeera the cuts and bruises he sustained.
“They hit both my arms and my leg with a rock,” Abdel Khaled said. “It was raining rocks on us. It was a battle, really like a battle. But we are not scared. We want it peacefully, but we are not scared of anyone. We want to build a better Lebanon.”
Another group on mopeds headed to Martyr’s Square, where they destroyed protesters’ tents and cars parked nearby.
Shortly after 3am (01:00 GMT), riot police deployed large clouds of tear gas to clear the crowds and by morning, the road was open again. The general strike planned for Monday did not go ahead.
Such attacks by sectarian supporters have been seen several times in recent weeks, but Sunday night’s clashes marked the first occasion when mostly peaceful anti-government protesters retaliated en masse.
‘Self-defence’
On Monday night, a smaller number of protesters took to Martyr’s Square and Riad el Solh, many pacing the streets carrying metal bars after news spread that groups of Hezbollah and Amal supporters were once again riding their motorcycles through downtown Beirut.
The atmosphere was oppressively tense, a marked change from the celebratory, hopeful mood that has defined the protest movement until now.
Protesters maintained they carried the sticks purely for self-defence; many, however, appeared on a hair-trigger and spoiling for a fight.
As the gang of riders drove past, scores of protesters broke through the barriers riot police had erected to separate the two groups and ran at the riders, yelling and waving their improvised weapons.
Several riders stopped and hurled rocks back before driving off. The scene repeated itself several times throughout the night as the riders returned and security forces struggled to keep the two groups apart.
“This is self-defence at the end of the day, the people here are very peaceful but when you are getting hit a first, second, third, fourth, fifth time, you need to protect yourself in the end,” said Abdel Khaled.
“Anyone, by human nature, when he’s scared he is going to defend himself.”
Other protesters, however, were concerned by the violent development.
“[When I saw them holding weapons] I told everyone, ‘What you’re doing does not represent our protest,'” said artist Michel el-Hachem, adding the change in atmosphere on Monday made him uncomfortable.
“I was telling everyone, ‘Please leave the square’ and I and a lot of other people who didn’t agree with this type of protest actually left.”
By Tuesday the tensions spread to other sectarian groups: in the Ain el Remmaneh and Chiyah neighbourhoods of Beirut, Hezbollah and Amal Movement supporters clashed with locals, many of whom support the Christian Lebanese Forces party, throughout the evening.
As the two groups stood on either side of a street – which marked a major front line between Christian and Muslim sides of the city during the country’s 15-year civil war – onlookers remarked on the eerie echoes conjured by the scene.
‘Honeymoon is over’
While fewer protesters have continued to turn out since the clashes escalated, the smaller numbers on the streets this week was attributed to a need to recover and regroup, said Abdel Khaled, rather than any loss of determination.
“Because we had a battle on Sunday night, so, of course, some people, they want to rest – in Arabic, we call it the ‘warrior’s break’. They need to breathe a bit after what happened, maybe there is damage. But people are still talking, they’re having meetings and trying to find a solution.”
Hechaime noted things have changed after the past few days of violence.
“About the future, I feel that the honeymoon is over … People are starting to feel that this is going to last. We’re really going to have to be strategic and even the ‘we’ is starting to be re-evaluated a bit.
“I feel a bit discouraged at the moment, but I think it’s normal that you have ups and downs, so I think we just have to continue.”
Dichotomous discourse
Some, however, argue if the anti-government protesters aim for a truly united Lebanese movement, they ought to consider what they have to offer the young Lebanese coming out in support of Hezbollah and Amal.
“There is a kind of discourse that is very dichotomous: us and them, we are civilised, we want to bring about a new country, we know how to protest. While they are thugs, and mobs. It’s very pejorative, reducing their whole identity to them riding around on mopeds causing tension,” said Jamil Mouawad, a politics lecturer at the American University of Beirut.
“The superficial reading is that they’re counter-revolutionaries, sent by parties to beat up protesters and push forward a counter-revolution; but that’s not the main cause. They consider the road closures an act of aggression against their mobility as these are the main routes of access to their neighbourhoods. The more protesters are closing roads, the more they are irritated.”
Rather than reacting to aggression from sectarian supporters, protesters should attempt a dialogue, said Mouawad.
“I don’t see that protesters have opened any channels to reach out to these people, other than the chants saying ‘all of us’.”
As the protesters grow fearful and weary, a second, equally pressing concern is where they go from here.
President Michel Aoun announced on Tuesday that consultations to select a new prime minister will be held at the presidential palace in Baabda on Thursday, a full month after caretaker Prime Minister Saad Hariri resigned.
What next?
If Parliament’s next choice is anything like the last – Tripoli billionaire Mohammad Safadi was briefly nominated a two weeks ago before widespread protests in response convinced him to withdraw his name – demonstrators are unlikely to accept it.
If, however, the popular chant calling for the rejection of the entire existing political class, “all of them means all of them”, is fulfilled, who will lead the country next?
So far, a key tenet of the anti-government protests’ success has been their lack of a defined leadership. Having no one in charge has allowed protesters to dodge calls for negotiation from politicians and represent themselves as truly grassroots.
Some, however, in the ubiquitous WhatsApp groups where many of the protests are organised, have begun to voice concern that without leaders and a clear strategy for the future, confidence is waning as to the long-term gains of opposing a new government formed from existing politicians.
“Who will replace them, after all? We need, at the very least, a mission statement and some lists of candidates,” said one poster.
Before a new breed of politicians can be carved out, the priority must be solving the economic crisis looming over the country, said university professor and activist Mona Fawaz.
“This is the way forward but it’s not easy. You cannot reverse 40 years of corruption in 40 days. Unless there is an intervention [by the current government] to move us out of the deadlock we are in … the danger is grave.”
Civil society organiser Zeina al-Helou, however, said among some groups plans for the future are already under way.
“The protests did not start from scratch, a number of political groups actively working towards change had already started way before 17 October,” she said. “The next step is obviously elections and this is on the agenda, of course. We are working at the grassroots level with the protesters and in different regions to ensure that the achievements [of the protests] yield themselves in election results. So yes, there is a plan; yes, there is a will and; no, we will not stop,” said al-Helou.
Lebanon pays $1.5bn debt to ease financial tension
Dana Khraiche/Bloomberg/November 28/2019
Lebanon has never defaulted, despite having one of the world’s highest debt burdens.
Lebanon repaid a $1.5 billion Eurobond on Thursday, an official with knowledge of the matter said, buying the country time as speculation swirls over its ability to avoid a default during a political and economic crisis.
The Finance Ministry issued payment instructions to the central bank, also known as Banque du Liban, the official said on condition of anonymity. The next bond payment is scheduled for March, when a $1.2 billion Eurobond comes due.
Lebanon has never defaulted on its obligations despite struggling under one of the world’s biggest debt burdens, and the central bank had repeatedly said it would cover the $1.5 billion bond. But weeks of nationwide protests that ousted the government saw credit risk surge and investor confidence slump.
The yield on the March 2020 bond rose as high as 105 percent last week from a mere 13 percent on October 17, when the demonstrations kicked off. Higher yields, and this month’s record costs for insuring government debt, reflect concern the government may have to restructure sooner or later.
Foreign bondholders are estimated to hold $500 million of the repaid Eurobond, while the central bank has $600 million and the rest is most likely held by local banks, according to a Bank of America Merrill Lynch research note this week.
Day of reckoning
Lebanon is nearing its day of reckoning after years of overspending, borrowing and political paralysis, coupled with the crisis in neighbouring Syria that sent more than 1.5 million refugees into the tiny country.
With a current account deficit of over 25 percent of its gross domestic product, weak growth and debt that’s reached 155 percent of the economy, the central bank tried to maintain financial stability throughout the years and carried out what it called financial engineering. The operation was meant to shore up reserves and raise the capital of local banks, the country’s largest debt holders.
The protests were sparked by a government levy on phone calls such as those using the free WhatsApp service along with other tax measures. The demonstrations quickly turned against a ruling class accused of corruption. Prime Minister Saad Hariri resigned and politicians have been unable to agree on a new name to lead the next government.
US dollar shortage and Lebanon’s economic crisis [2:29]
The central bank began rationing dollars even before the unrest ignited, pushing up demand for the foreign currency and causing the Lebanese pound to plummet on the black market. The move has stymied trade and imports in a country that’s almost entirely reliant on foreign goods.
The central bank has said that it would supply dollars to the importers of fuel, wheat and pharmaceuticals and earlier this week added medical equipment to that list of essential goods.
Experts urge IMF bailout to contain Lebanon’s financial crisis
Georgi Azar/Annahar/November 28/2019
On Thursday, Lebanon paid back a Eurobond worth $1.5 billion, which proved to be a double-edged sword.
BEIRUT: Lebanon should consider the possibility of restructuring its government debt before the next Eurobonds payments beginning in March 2020, as it grapples with its most severe financial crisis since the civil war.
“The central bank has been draining its forex reserves at an increasing rate relative to previous years” Saeb El-Zein, an emerging market specialist told Annahar, highlighting the need to preserve liquidity for other essential goods.
On Thursday, Lebanon paid back a Eurobond worth $1.5 billion, which proved to be a double-edged sword. After the November maturity, there are limited payments for three months, but March to June inclusive see around US$3.4bn of principal and coupon payments on Eurobonds.
On one hand, it eased concerns of a first-ever default on its debt, on the other, it put a further strain on the central bank’s Fx reserves in the midst of a political deadlock and the lack of an action plan moving forward. According to a recent Moody’s report, the central bank still has 5 to 10 billion dollars of usable reserves.
“The government should have planned the restructuring of this bond payment and other debt a few months ago within a framework of reforms and an action plan to address the external and local twin deficits,” El Zein told Annahar. Lebanese officials, he said, must take the “necessary measures as soon as possible to avert a disorderly restructuring without the professional and experienced and credible support of organizations like the International Monetary Fund (IMF).”
These measures include formal capital controls, restructuring of the government debt, aligning the two foreign exchange rates of the U.S dollar and lowering interest rates, which would ease investor concern and generate a positive sentiment within Lebanon’s banking sector.
This would pave the way for the IMF to intervene, and in coordination with the central bank, set up the framework for a restructuring of Lebanon’s debt, estimated at $88.4 billion or 154.5 percent of GDP. Domestic-currency debt is equal to $55.1 billion (96.3% of GDP) while foreign-currency debt equals $33.3 billion (58.1% of GDP).
Commercial banks hold around $36 billion of debt, almost double the base capital of the sector.
Around $11.8 billion in Eurobonds could be held by international market participants, according to a recent report by the Bank of America.
“The IMF is a credible organization that could help stabilize the situation and Lebanon has enough time to plan the restructuring of upcoming payments with a detailed action plan,” El Zein told Annahar.
Lebanon has been gripped by nationwide protests for over 40 days, further exacerbating its dire economic condition and financial stability. Liquidity has become hard to come by, with banks implementing informal capital controls to curb the flight of capital. The unofficial nature of these measures has left room for banks to show preferential treatment for high net worth individuals funneling their money abroad.
According to the Bank of America’s report, the central bank’s Fx reserves loss was estimated at US$0.9 billion in the one week of operations for the banking sector in November, which would deplete its supply by end-1H20.
The report lays out two restructuring scenarios, with an IMF-backed program likely to provide a milder impact.
“We estimate banking sector recapitalization costs to be US$4-6bn (11-13% of GDP). This would lead to deposit bail-in requirements of just 3-4% on all deposits to bring the Capital Adequacy Ratio (CAR) back to the national regulatory requirement of 15%. Should deposit bail-ins only apply to High-Net-Worth Individuals (HNWIs), then the deposit bail-in requirements on such depositors would likely need to double to just 6-8%,” the report noted.
A restructuring of Lebanon’s debt would call for “a 30% front-loaded face-value cut to the existing pre-IMF pre-devaluation government debt stock … to keep government debt at the 150% of GDP level,” it notes.
A break from the peg within an IMF framework seems invertible and has already taken place given when looking at the current parallel trade market. This, according to El Zein, could have been avoided had the necessary reforms been implemented when warning signs began creeping in two years ago.
“In a report released in 2018, the IMF warned Lebanese officials of the need to implement structural reforms to curb our debt which was unsustainable,” El Zein told Annahar.
These pleas, however, fell on deaf ears as both the deficit and debt maintained their upward trajectory.
This sentiment was echoed by Nabil Fahed, the Vice Chairman of the Chamber of Commerce, Industry, and Agriculture who told Annahar that “an IMF intervention has now become a requirement to inject much-needed liquidity into the market.”
The shortage in dollar liquidity has caused a surge in black market rates, with the dollar trading at near the LBP 2000 mark, about a third higher than the pegged rate of 1,507.5.
An injection of $5 billion at the very least would relieve the pressures facing Lebanon’s banking sector, which has cut loans, credit facilities and withdrawals.
“A devaluation of around 20 to 25 percent is an acceptable level when taking into account the average of the parallel market rate,” Fahed told Annahar.
This is but the first condition of any IMF package, Fahed said, along with the total eradication of the budget deficit, the removal of all consumer subsidies including for Lebanon’s electricity sector and a push for the privatization of the viable sectors such as the telecom sector.
“This would be difficult and hard to absorb, especially the elimination of consumer subsidies for essential goods such as gasoline and wheat,” he said.
Wheat, oil and medicine, estimated to cost around $5 billion dollars per annum in imports, are the only remaining commodities being bought at the official 1507.5 rate after the central bank vowed to provide the requisite liquidity.
Days before Prime Minister Saad Hariri submitted his resignation, the embattled premier presented a reform package that sought to slash the budget deficit to 0.7 percent of GDP, which if implemented, would satisfy yet another IMF condition.
The conversation surrounding the issue has gained traction, however, with caretaker Labor Minister Camille Abou Sleiman hinting at the possibility of pursuing an IMF bailout during an interview with a local media outlet.
“Lebanon needs liquidity, and there is no one able to provide this liquidity but the International Monetary Fund,” he said, adding that “certain conditions must be met including an effective government.”
Despite the assurances of the international community, who has stated on a bevy of occasions its willingness to support Lebanon, such a prospect grows bleaker with each passing day. The much-coveted CEDRE $11 billion soft loan package has yet to see the light the day and is unlikely to be released without the implementation of necessary reforms.
“Even if an independent government is formed, an IMF program might be the only way to usher in foreign investments as it would restore investor confidence,” Daher said, highlighting Egypt as a recent example, which managed to attract investments from the Gulf after strictly adhering to the IMF bailout.
What is certain, however, is that any debt restructuring will prove no easy task, on banks, state institutions, and the Lebanese.
“It will have a huge social and economic impact and must be done very cautiously to avoid unrest,” Daher said.
