New Cabinet Faces Test on Seriousness over Reform Pledges

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New Cabinet Faces Test on Seriousness over Reform Pledges

Lebanon’s new Cabinet is set to face its first test of credibility when it meets this week to prove its seriousness about pledges to enact essential reforms in order to persuade the international community to come forth with its promised aid to the crises and debt-ridden country.

The Cabinet session, set for 4 p.m. Wednesday and the first since winning Parliament’s vote of confidence, gains special significance because it comes a few days after French President Emmanuel Macron urged Prime Minister Najib Mikati to undertake "urgent" reforms as a condition for the international community to come to the cash-strapped nation’s financial rescue.

By Sunday afternoon, Mikati has not returned to Beirut after visiting France and Britain on his first foreign trip as Lebanon’s prime minister. The two visits came a few days after Mikati’s Cabinet of 24 specialists, formed on Sept. 10, gained a vote of confidence from Parliament, giving ministers a boost to begin tackling a series of crises facing the Lebanese, including an unprecedented economic meltdown and severe food, fuel and medicine shortages and chronic power cuts that have paralyzed normal life in the country.

Asked to assess the outcome of Mikati’s visit to Paris and his talks with Macron, a senior aide to the prime minister told The Daily Star Sunday: “Prime Minister Mikati’s visit to Paris was mainly to thank France for its role in helping Lebanon out of its economic and political crisis and for organizing donor conferences for Lebanon. The visit was also aimed at seeking French support to overcome the Lebanese crisis.”

The source said the visit gained “political significance” given the historic relations between Lebanon and its former colonial power. He added that France, which has emerged the main power broker in Lebanon since last year’s deadly Beirut Port explosion, was instrumental in mobilizing international support for Lebanon.

France has led the international response to the Aug. 4, 2020 massive blast that pulverized Beirut Port, killed at least 214 people, wounded thousands of others and damaged large swathes of the capital. It has organized three international conferences devoted to Lebanon and delivering aid in exchange for promises of political reform and accountability. Macron traveled to Lebanon two days after the blast and visited Beirut again in September last year to launch a French reform initiative designed to lift Lebanon out of its worst economic and financial crunch since the 1975-90 Civil War.

An economic meltdown since the port blast has depleted Central Bank reserves, devalued the Lebanese pound by more than 90 percent and plunged more than 70 percent of Lebanon’s 6 million population below the poverty line, while those who can are emigrating by the thousands.

The same source confirmed media reports that Mikati will also visit a number of Arab countries to mobilize their support to pull Lebanon out of its economic and financial crisis. “Prime Minister Mikati plans to make a tour of Arab and friendly countries aimed at drumming up Arab and international support for Lebanon,” the source said.

Although the agenda of the Cabinet session, to be chaired by President Michel Aoun at Baabda Palace, has yet to be drawn up, the source said the Cabinet was expected to address urgent problems, such as the severe fuel and medicine shortages and a warning by the state-run electricity company that the country faced the threat of a total blackout by end-September amid dwindling fuel oil reserves.

Media reports said the Cabinet was also expected to set up a ministerial team to begin negotiations with the International Monetary Fund on a bailout package to rescue the country from an economic depression, described by the World Bank as one of the world’s worst since the 1850s, posing the gravest threat to the country’s stability since the Civil War. The team will be made up of the ministers of finance, economy, energy and social affairs, in addition to the deputy premier, the Central Bank’s governor, and a number of economic and financial experts.

The speedy formation of the team will send a positive signal about the government’s resolve to move forward with the talks with the IMF, a key demand of international donors. Lebanon began talks with the IMF on a $10 billion bailout package in May 2020, but the negotiations have been stalled by a dispute between different interest groups representing Lebanese banks and the government over the size of losses in the Central Bank.

After his meeting with Mikati at the Elysee Palace Friday, Macron vowed France’s continued support for Lebanon. But he stressed that the international community would not extend aid to Lebanon if it did not undertake reforms. “The Lebanese prime minister has pledged commitment to carry out the essential reforms,” Macron said at a joint press conference with Mikati at the entrance of the Elysee Palace. The reforms should include tackling power and other infrastructure problems, improving public finances, reducing corruption, and stabilizing the banking system, he said.

Macron also underlined the need for Lebanon to quickly resume talks with the IMF. “I repeat what I have said in Beirut. I will not abandon Lebanon and I will not let down Lebanon. France did not abandon or let down Lebanon. But the road is long and difficult and the mission is difficult,” he said.

Speaking in French with Macron on his side, Mikati asserted his determination to “implement the essential and basic reforms as soon as possible in cooperation with my government and with the support of President Michel Aoun and Parliament to restore confidence, spread a new hope and reduce the suffering of the Lebanese population.”

Macron will send a special envoy to Beirut next week to follow up on the government’s measures to begin implementing reforms, an official source told The Daily Star Sunday.

After the Paris visit, Mikati flew to London where he met Saturday with British State Minister for the Middle East and North Africa James Cleverly. The meeting discussed bilateral relations and Lebanon’s needs in these difficult times and Britain’s role in supporting and helping it and following up on the economic recovery plan on which the government is working, the state-run National News Agency reported.

Commenting on Mikati’s visit to Paris, Maronite Patriarch Bechara al-Rai praised Macron’s “steadfast” stance on Lebanon and supporting it at European and international forums.

“But the Lebanese government must honor its commitment [to carry out] reforms in order for this support to be turned into a tangible action and for the promised aid to come to Lebanon,” Rai said in a sermon Sunday at the patriarch’s summer residence in the northern town of Diman. “The people of Lebanon need their tripartite wealth: education, teaching and culture, which were the basis of Lebanon’s distinctive presence in the Middle East,” he added.

The Free Patriotic Movement also urged the new government to deliver reforms, saying its formation raised hopes for halting the economic collapse.

“The birth of the government has given the Lebanese hope for the country to enter a phase of relative stability and halting the collapse,” said a statement issued after the weekly online meeting of the FPM’s political committee chaired by FPM head MP Gebran Bassil Saturday.

“But [achieving economic] recovery and restoring confidence require that the government shoulder its responsibilities in charting and implementing a financial recovery plan, enacting reforms, starting with the forensic audit [of the Central Bank’s accounts], restructuring the banking sector, safeguarding the depositors’ money, distributing losses justly [between the Central Bank, banks and the government], and drafting a transparent and realistic budget for 2022 that will take into account the approval of radical financial reforms. Parliament must accompany this by endorsing capital control laws, revealing the accounts of public employees and recovering the money smuggled abroad,” the statement added.

The international community, mainly the United States and France, has welcomed the formation of a new government in Lebanon, but urged it to quickly undertake essential reforms in order for the promised aid to begin flowing into the country. The European Union has also urged Lebanon's new government to move quickly to adopt reforms that would pave the way for a deal with the IMF to halt the country's economic collapse.

Source: The Daily Star