Counterfeit change: Lebanon’s new government

Even if the new government intends to introduce significant reforms, the elite will more than likely block any measures that challenge entrenched interests.

Lebanon’s new government formed in late January, following three months of mass protests and political deadlock, amid the country’s worst economic crisis since its 1975-1990 civil war. The new prime minister, Hassan Diab – a former education minister and professor at the American University of Beirut – argues that his downsized, technocratic government is committed to extensive economic reform. But, appealing rhetoric aside, Diab’s cabinet is not built to last: it is incapable of meaningfully addressing Lebanon’s dire economic situation or any of the other serious challenges the country faces.

Diab’s new cabinet is one-third smaller than that of his predecessor, Saad Hariri. It comprises 20 politicians, six of them women, who all lack experience as ministers. However, the introduction of these new faces is a cosmetic change, at best. Many of Diab’s ministers are explicitly politically loyal to the elite who are largely responsible for the country’s current woes. This is especially true of the heads of key ministries.

Diab himself came to power thanks to endorsements from Hezbollah, the Amal Movement, and President Michel Aoun’s Free Patriotic Movement – which, alongside smaller parties, now hold a majority in parliament. They are propping up the new government without the support of pro-Western political rivals, including Hariri’s Future Movement, the country’s largest Sunni party. Finance Minister Ghazi Wazni was appointed by Speaker of Parliament Nabih Berri, a political behemoth, after serving as an adviser to parliament’s finance and budget committee. Wazni, who also has links to commercial banks and Central Bank Governor Riad Salamé, helped shape a fiscal policy that has contributed to Lebanon’s current economic crisis.

Meanwhile, Raymond Ghajar now heads an Energy Ministry in which he worked as a senior adviser for 13 years, mostly under Gebran Bassil, who leads the Free Patriotic Movement. Lebanon’s electricity sector is so weak and inefficient that many people have long had to pay for external generators.

Riots broke out in downtown Beirut on the night of Diab’s appointment

Even if Diab and his ministers intend to introduce significant reforms, the elite will more than likely block any measures that challenge entrenched interests. Lebanon’s most powerful figures, a mixture of business magnates and former warlords, will always have the last word. Owning large shares of the country’s commercial banks and other businesses, they can call on the support of the extensive patronage networks they have built over decades. Therefore, despite the formation of the new government, power ultimately remains in their hands. Diab and his ministers can do little more than make gestures designed to placate the protesters.

Their powerlessness has already become evident. Lebanon passed its 2020 budget just days after the new cabinet was sworn in. Given that the budget was drawn up by Hariri, Diab and his ministers had no say in what could have been a key instrument of structural economic reform.

In the meantime, the protests have become more violent. People have lost patience with a leadership that has refused to meet their demands to implement an economic policy that does not harm ordinary people, to guarantee the independence of the judiciary to take on corruption cases, and to take serious action to mitigate the impact of increasingly severe inflation, a hike in prices, and restrictions on withdrawals of US dollars. Some protesters believe that political parties are trying to hijack their uprising and deceive them with cosmetic changes.

Riots broke out in downtown Beirut on the night of Diab’s appointment, as protesters trying to prevent parliament from establishing quorum to pass the 2020 budget engaged in scuffles with riot police, the Lebanese army, and the parliamentary guard. Allegations that the police have engaged in torture, arbitrary detentions, and other violence against protesters and journalists have fuelled public anger.

The Lebanese elite appear to believe that they can outlast the protests. Yet, rather than meeting protesters’ demands, Lebanon’s ruling parties are appealing to the international community for much-needed economic aid – which they believe can help the country return to normalcy. They have already met with the International Monetary Fund, which has previously recommended an increase in regressive measures (such as value-added tax) and in support for the private sector – despite the fact that many companies are under the control of the elite. Since April 2018, Lebanon’s government has scrambled to implement reforms that would facilitate around $11.1 billion in loans from the international community for infrastructure and development projects. Wazni now seeks between $4 billion and $5 billion in immediate external support to import basic goods such as medicine, wheat, and fuel.

The international community, via the UN-led International Support Group, has backed the Lebanese government since the uprising, seeking to strike a balance between calls for vital reforms and precautions against the collapse of the entire system. But with the new government widely perceived as being dominated by the Iranian-backed Hezbollah – and with the United States focused on reducing Iran’s regional influence – it remains uncertain to what extent Lebanon will receive such economic aid, especially if it fails to engage in the reforms demanded by some foreign powers. Indeed, even Hariri’s government – which included representatives of all major parties – struggled to secure economic aid.

Most worryingly, even if the country does gain international financial support, the price of this is likely to be crippling austerity measures that further strain the country’s socioeconomic fabric. Given current economic conditions, the lack of universal education, and a welfare system that is virtually non-existent, one can only expect the worst. The new government may be tasked with implementing these painful measures – and thereby shifting the blame for them away from the elite – but there is a risk that this will only reignite the protests.

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.


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