ANSD : Lebanon: Reforms, dissociation policy key to foreign aid: analysts

SAT 20 - 4 - 2024

Date: Feb 13, 2020
Source: The Daily Star

Lebanon: Reforms, dissociation policy key to foreign aid: analysts

_{Hussein Dakroub| The Daily Star}
BEIRUT: The new government needs to begin enacting key economic reforms and strictly abide by the policy of dissociation from regional conflicts in order to encourage the international community and Arab countries to extend desperately needed financial aid to the cash-strapped country, political analysts said Wednesday.

They said the severe economic and financial crisis, the worst in decades, was the toughest challenge, in addition to regaining the Arab and international community’s confidence, facing Prime Minister Hassan Diab’s 20-member Cabinet after gaining a vote of confidence from Parliament.

“The most important challenge facing the new government is resolving the economic, social and financial crisis. The government must send a strong signal to the international community about its intention to carry out economic and financial reforms, fight corruption, stop the waste of public funds and reduce the deficit at the [state-run] Electricite du Liban as part of promises Lebanon made at the CEDRE conference,” Dr. Simon Haddad, a political science professor at the American University of Beirut, told The Daily Star.

Haddad added that the government, made up of specialists nominated by Hezbollah and its allies, needs to draw up “a program to resolve the banking crisis and reassure depositors about their savings in banks and ease restrictions on withdrawals and transfers.”

Amid a dollar liquidity crunch, Lebanese banks have imposed unprecedented capital controls, raising depositors’ fears about their savings in U.S. dollars.

Haddad said among the political challenges facing Diab’s Cabinet is “a strict adherence to the dissociation policy and not to link Lebanon to regional conflicts, particularly the U.S.-Iran dispute.”

“Complete compliance with the dissociation policy is bound to encourage the international community to extend aid to Lebanon,” Haddad said. “This step will satisfy America and the international community and spare Lebanon an economic collapse.”

Hezbollah’s opponents, mainly the Future Movement and the Lebanese Forces, have accused the Iranian-backed party of violating the dissociation policy through its deep involvement in the 8-year-old war in Syria and other conflicts in Yemen and Iraq.

Dr. Imad Salamey, associate professor of political science at the Lebanese American University, also underlined the need for the government to abide by the dissociation policy.

“The first challenge for Diab’s government is to assert Lebanon’s affiliations with Arab states and its commitment to the principles of Arab solidarity, siding with Arab states against any looming danger. It implies among other things its reiteration of the Baabda Declaration of disassociation from regional conflicts and the policy of noninterventions in Arab affairs,” Salamey told The Daily Star.

“The government needs to regain internal and external confidence in its financial institutions through abiding by international agreements and providing suitable investments opportunities to boost growth. This would require strong anti-corruption measures and a comprehensive privatization plan for major public sectors, particularly energy and water,” he added.

At the political level, Salamey emphasized that the government must begin immediate preparations for “early elections based on the stipulations of the Taif constitution, including the formation of a senate and the election of a nonconfessional House of deputies.”

Political analyst Kassem Kassir said the biggest challenge facing Diab’s government is “fixing the economic and financial situation, reducing the national debt and the budget deficit, restoring confidence to the banking sector and boosting the ailing electricity sector.”

“The Diab government also needs to comply with the dissociation policy and keep Lebanon away from regional alliances, strengthen relations with Arab countries and the international community,” Kassir told The Daily Star.

“The Parliament’s vote of confidence in Diab’s Cabinet opens the door to the international community and Arab countries to deal with the government and extend financial support to help Lebanon out of its economic crisis,” he said.

A day after gaining a vote of confidence from Parliament, the government came under international pressure to move on with implementing structural economic reforms as a condition for extending financial assistance to the protest-hit country.

The International Support Group for Lebanon Wednesday called on the new government to “swiftly and resolutely undertake timely, tangible, credible, and comprehensive set of measures and reforms to stop and reverse the deepening crises, to address the needs and demands of the Lebanese people.”

“The ISG underlines the importance of action to regain the trust of the Lebanese people and that of the international community and unlock future international assistance for Lebanon,” the group said in a joint statement. The ISG appealed to “all political forces and leaders of Lebanon to prioritize their support for reforms when in the national interest and for the benefit of the people and the country.”

The ISG brings together the United Nations, the governments of China, France, Germany, Italy, Russia, the United Kingdom and the United States, along with the European Union and the Arab League.

Despite being rejected by hundreds of thousands of Lebanese who have taken to the streets since Oct. 17, demanding an overhaul of the decades-old sectarian governing system and the removal of the entire political elite they accused of corruption and mismanagement, the Parliament move gave legitimacy to the government and effectively cleared the way for it to start dealing with tough challenges, mainly the economic and financial banking crisis that is hitting hard at the Lebanese and threatening them with severe poverty.

In a development seen as giving a big boost to his government, Diab Wednesday visited Dar al-Fatwa, where he met with Grand Mufti Sheikh Abdul-Latif Derian, in the first get-together between the two men since Diab's designation to form a new government on Dec. 19.

Local media said that by gaining the blessing of Dar al-Fatwa, the country’s highest Sunni religious authority, this would pave the way for Diab to visit Saudi Arabia, a key player and a major financial supporter of Lebanon in dire times.

“My visit today is very normal. I discussed with the grand mufti the affairs of Muslims and the [current] financial and social conditions,” Diab told reporters after the meeting.

Given the poor public confidence in the new government, Salamey sounded skeptical about international support for Lebanon.

“The vote of confidence for the new government has only demonstrated poor public and political confidence in the new arrangement, which would most likely discourage international support and increase the country’s political isolations,” Salamey said. “The international community has grown more suspect of the new government for being anti-Arab and anti-Western during formations and policy declarations. In all, further degradation of Lebanon’s credit and financial status is expected to dry out remaining foreign deposits.”

Asked whether Arab Gulf states, which have not yet commented on the Diab government, would now promise to extend aid to help Lebanon out of its economic malaise, Salamey said: “There are hardly any incentives left for Arab states to support Lebanon while its Foreign Ministry has previously defied Arab consensus and denied support to Arab Gulf states which are of crucial importance to the support of Lebanese economy.”

“Lebanon needs to prove its ability to regain the support of Arab states and to prevent irresponsible rhetoric and interventions in Arab affairs that jeopardize the country’s regional financial and economic interests,” he added.

Asked how will Lebanese opposition parties which have said they will give the new government a chance, act now after the government gained Parliament’s legitimacy, Salamey said: “All parties, particularly those claiming opposition but have helped ensure parliamentary quorum for government confidence vote are exposed with double standards. They have demonstrated a clear preference for the Diab government over any other alternative measure, including early elections and comprehensive reforms that would undermine the confessional arrangement. At the moment, all these parties are providing tacit but limited support for the Diab government in fear of radical alternative.”

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