Receding prospects

Yet another attempt to form a government in Lebanon, mired in an unprecedented economic crisis that has pushed tens of thousands of people into poverty and has triggered a large anti-establishment protest, has failed, throwing the country's future similar to its bleak past.

Prime Minister-designate Mustapha Adib resigned late September after failing in his attempt for almost a month to line up a non-partisan cabinet, despite French pressure on sectarian leaders to rally together to deal with the worst crisis since the 1975-1990 civil war.

French President Emmanuel Macron had publicly backed that process following Prime Minister Hassan Diab's resignation in the aftermath of the August 4 port explosion that devastated large parts of the capital Beirut.

Adib, former ambassador to Berlin, was picked on August 31 to form a cabinet. He had tried to form a government of specialists and technocrats in a nation where power is shared between Muslims and Christians and political loyalties tend to follow sectarian lines.

However, his efforts ran to a knot over cabinet appointments, particularly the post of finance minister, who will have a crucial role in drawing up a programme to lift the country out of the deep economic crisis.

Crushed by a mountain of debt, Lebanon's banks are paralysed and its currency is in free fall. Talks with the International Monetary Fund on a vital bailout package stalled this year. The cabinet's first task would have been to restart negotiations with the IMF as well as chalk out a strategy and a roadmap to implement reforms.

The cabinet formation hit the roadblock over a demand by the country's two main Shi'ite groups, Amal and heavily armed Iran-backed Hezbollah, designated as a terrorist group by the US, that they name candidates for several posts including the finance minister, a position previously held by a Shi'ite.

Adib, a Sunni Muslim based on the sectarian system of power-sharing, held several meetings with senior Shi'ite politicians but failed to reach an agreement on how the minister would be chosen. Shi'ite leaders feared being sidelined as Adib sought to shake up appointments to ministries, some of which have been controlled by the same faction for years.

It is obvious that Lebanon's politicians are mired in a dispute over control of the powerful finance ministry and are least concerned about its collapsing economy and fraying social fabric.

Observers wonder that if even the destruction of the capital does not lead to palpable change, can the country be saved?

While backing the process of government formation Macron had made clear that unless this is done, there would be no further international assistance.

The breakdown of the talks indicates that the Lebanese state has been virtually in control of Hezbollah, the powerful Shi'ite militia backed by Iran. Hezbollah has insisted on designating a Shi'ite as the finance minister.

Macron blames Hezbollah for blocking the formation of a government asking if it was "really a political party," or if it simply worked "in a logic dictated by Iran and Its terrorist forces."

As one of the world's most indebted nations, Lebanon's economic outlook is grim and without a change, of course, it seems to be headed for a Venezuela-style collapse.

The middle class has been badly affected by dwindling salaries and job prospects as well as skyrocketing inflation and capital controls that restrict people's access to their bank deposits. Unemployment among under the age group of 35 runs at 37 per cent.

About a decade ago, GDP growth was ticking along at 8-9 per cent a year. But this has fallen sharply for several reasons including the impact of war in Syria, wider regional turmoil and diminished capital flows from abroad.

Despite years of warnings about the need to reform and reign in the deficit, the successive governments have failed to act.

A financial rescue plan hinges on the government getting some USD 10 billion in aid from the IMF and USD 11 billion in favourable loans pledged by international donors at the French-backed conference in Paris in 2018. Donors, in turn, want to see Lebanon commit to long-stalled reforms.

None of these funds will materialise unless the government enacts reforms and accountability measures.

Even as the country grappled with the deepening economic crisis, Beirut was rocked in August by a devastating blast caused by 2,750 tons of highly explosive ammonium nitrate kept unattended at the port for years. A cash injection of up to USD 15 billion is required to rebuild the city.

Following the explosion, the Trump administration stepped up pressure on Hezbollah, imposing new sanctions on its affiliates and enablers. In response, the outfit is trying to position its assets within the legitimate operation of the Lebanese state.

This is one of the reasons, observers say, Hezbollah is insisting on having a tight grip over the finance ministry by the Shi'ite bloc. It will ensure that Hezbollah oversees the allocation of government revenues and the financial resources that flow into the country.

Another important ministry that Hezbollah has been having under its fiefdom is the health ministry through which it gives health care and patronage jobs to its supporters and fighters.

Observers say that political and other administrative reforms to salvage the grim situation in Lebanon will remain an abstraction unless Hezbollah is disarmed and its control over key government functions is relaxed.

The writer is a former Editor of PTI and served as the West Asia correspondent for the same. Views expressed are personal