The Lebanese Central Bank governor leaves the country frazzled

28-07-2023

Sarah Villegas

Middle East and Human Rights Researcher

Global Human Rights Defence

On the 27th of July, the Lebanese Cabinet failed to choose a successor to long-time central bank Governor Riad Salameh. [1] This leadership vacuum at the bank raises fears of further state fragmentation and reflects wider divisions that have also left the presidency vacant and the country without a fully empowered Cabinet for over a year.

This is happening in an unstable context wherein two days before, French special envoy, Jean-Yves Le Drian arrived in Beirut to resolve crisis-hit Lebanon’s protracted political deadlock. [2] The country has been locked in a dire economic crisis since 2019 and has been governed by a caretaker cabinet for more than a year and without a president for nearly nine months. Riad Salameh leaves the country in economic ruin, with a gross domestic product plunging to an estimated $16.2 bn in 2023 from about $55 bn in 2018 according to the International Monetary Fund. [3]

As the economist Nadim Shehadi observed of a recent summit in Paris: “The whole world seems to have a say in the election of a president in Lebanon.” [4] It is indeed true that the French and other countries’ interventions only raise hopes among the population instead of recommending feasible policies. Instead of blaming the Lebanese decisionmakers, the international community should take a stand in providing better solutions.

The political and economic crisis is critical as Lebanese lawmakers failed already 12 times so far to elect a new president as bitter disputes between the powerful Iran-backed Shiite movement Hezbollah and its opponents have plunged Lebanon into a power vacuum. [5] Despite multiple attempts spearheaded by Lebanon’s former colonial ruler France to extricate the country from its woes, these initiatives have ended in failure.

Indeed, since the Port of Beirut explosion in August 2020, the Elysée has primarily led the international file on Lebanon. Right after the explosion, President Macron visited Lebanon, pledged to midwife a government that could implement reforms in 15 days, promised to sanction spoilers, and called for an international investigation into the explosion. [6] None of these promises materialised, therefore, it delivered a decisive blow to both France’s reputation in the country and Macron’s credibility.

One must admit that the crisis cannot be solved overnight. However, Hezbollah is seeking a veto on any challenge to its authority, regardless of the constitution, elections, or the consequences for the country. [7] Since 2008, paralysis and state failure in Lebanon are not simply a function of “power-sharing” gone wrong, but rather the consequence of an armed militia that demands a veto on any check to its power. 

Sources and further readings

[1] Arab News, ‘Vacuum looms as Cabinet fails to select successor to Lebanon central bank governor’ (27 July 2023) <Vacuum looms as Cabinet fails to select successor to Lebanon central bank governor> accessed 31 July 2023.

[2] Arab News, ‘French envoy in Lebanon to seek way out of political deadlock’ (25 July 2023) <French envoy in Lebanon to seek way out of political deadlock> accessed 31 July 2023.

[3] International Monetary Fund, ‘IMF Executive Board Concludes 2023 Article IV Consultation with Lebanon’ (31 July 2023) <IMF Executive Board Concludes 2023 Article IV Consultation with Lebanon> accessed 31 July 2023.

[4] Arab News, ‘Paris Summit: Can Lebanon finally be protected from the region’s conflicts?’ (8 February 2023) <Paris Summit: Can Lebanon finally be protected from the region’s conflicts?> accessed 2 August 2023.

[5] BBC, ‘Lebanon’s tainted bank chief leaves an economy in tatters’ (21 July 2023) <Lebanon’s tainted bank chief leaves an economy in tatters> accessed 31 July 2023.

[6] Middle East Institute, ‘The US and France must push back on Iran to break Lebanon’s political gridlock’ (28 July 2023) <The US and France must push back on Iran to break Lebanon’s political gridlock> accessed 31 July 2023.

[7] The Tahrir Institute for Middle East Policy, ‘The Legal Whirlwind Around Lebanon’s Departing Central Bank Governor’ (7 July 2023) <The Legal Whirlwind Around Lebanon’s Departing Central Bank Governor> accessed 31 July 2023.

Middle East Eye, ‘Lebanon’s central bank governor leaves his post with legacy in tatters’ (31 July 2023) <Lebanon’s central bank governor leaves his post with legacy in tatters> accessed 31 July 2023.

AlJazeera, ‘Now a wanted man, Lebanon’s central bank head steps down’ (31 July 2023) <Now a wanted man, Lebanon’s central bank head steps down> accessed 31 July 2023.