Three major banks contacted by AFP last week confirmed they have halved the dollar withdrawal limit since the beginning of February, some capping the amount at $600 a month.
The informal controls have sparked public outrage in protest-hit Lebanon, where an anti-government street movement launched on October 17 has grown increasingly angry at banking policies.
The Lebanese people are worried that the new cabinet’s measures are going to target the poor and their bank savings, instead of the rich and political figures, in an attempt to slow down the economic collapse. No one really believes the promises made by the Central Bank, Commercial banks and political leaders, that depositors will not lose their money. The signs are not reassuring.
THE NEW GOVERNMENT’S MISSION
While all eyes are cast on the banks’ new policies and the deteriorating economic situation in Lebanon, the new government is trying to focus on two issues.
First, protect Hezbollah and its allies’ political and financial interests. For example, the new ministerial statement talked about corruption generally, without moving forward with concrete steps on the electricity sector. That’s mainly because both Hezbollah and its ally Gebran Bassil are very much involved in this sector and any anti-corruption measures could cause them major financial loss.
This is also a government that was carefully tailored by Hezbollah, former Security General Director Jamil Assayed – known to be an Assad ally – and Bassil – who owns the blocking third of the cabinet. This is not a government that would threaten Hezbollah’s power, weapons or aces to state institutions. On the contrary, having rid itself from some of the few opponents, Hezbollah and its allies now have more access to the state and its resources, or whatever is left of them.
In that sense, Hezbollah’s operations inside Lebanon will increase, as well as its cross border ones such as smuggling and military transfers. Hezbollah will also be able to bring in hard currency and goods from the region – mainly from Iran, Iraq and Syria - into Lebanon as some of the basic goods are in shortage.
Second, this government will try to make a few superficial or selective reforms in order to fool the international community into bailing it out. As it stays away from the interests of Hezbollah and its allies, this government will target their opponents, mainly those who have been implicated in corruption deals. To cover its real intentions, the new government might resort to target one of its known allies with anti-corruption measures. This person could likely be Speaker Nabih Berri, knowing that both Bassil and Assayed have serious issues with him. Assayed wants to take his spot as the next Speaker of the House, and the Bassil-Berri relationship has always been sore.
For Hezbollah, Berri might have served his purpose and is no longer needed. The fact that he has been protected by Hezbollah for so long has actually back-fired on Hezbollah’s support-base, mainly due to the fact that Berri’s corruption has become too obvious and too painful to endure. The Shia street that has joined the Lebanon protests recently has focused on Berri’s corruption, and Hezbollah might benefit as well from throwing him into the pit.
Lebanon’s new government will try to hide these complexities and play on the international community’s fear of instability. Again, they will sell the same formula of stability for the status co, while adding to it a few cosmetic reforms.
That is why it is essential for the international community to avoid bailing this government at all costs; otherwise, Hezbollah will win again.
THE NEW GOVERNMENT’S CHALLENGES
There is a big difference between what the government plans to do and what it can actually and realistically do.
The mission – outlined above - is quite clear, and will be accompanied by a campaign to crack down on the protestors in the street, to make sure they are no longer heard. If that fails, the plan is to destroy their credibility in the form of international public opinion, by turning the protests into violent ones, or at least create scenes of clashes between the protestors and the security forces.
However, this is easier said than done.
First, the street protests have become an authority that will be taken very seriously, mainly by the international community. Many officials in the US and Europe have linked their response to the new government by the street response. And cracking down on the street protests have essentially failed for the past four months. The previous government, the Lebanese Army, the Internal Security, and Hezbollah-supported thugs, have all taken turns in scaring the protestors into submission.
However, what all these factions did not realize is that violent tactics and the fear factor does not work with people who have nothing left to lose. The Lebanese people have demonstrated many times before, but they have never lost so much, and the economic situation has never been on the verge of collapse before. As people lose their savings, their jobs and their dignity, the street will become the only place to express their anger.
Second, the international community does prioritize stability in Lebanon; however, it has become clear that stability can no longer be tied to Hezbollah and Iran. The Gulf States – except for Qatar - have already made it clear that they will not bail out Lebanon with a Hezbollah-backed government. The US and Europe stated that they will wait and see until the new government starts working; that is after it issues its ministerial statement and gets the vote of confidence from the parliament.
However, if the Lebanese government does not start implementing serious reforms, including those stipulated by CEDRE, no bailout will be offered. And if one looks closely at CEDRE, it is clear that the electricity sector has been prioritized in the list of required reforms, something that this government overlooks in its current ministerial statement.
The indications that this government will fail are many. It will not gain the trust of the street and the international community. In a matter of months, if not days, the financial collapse will become a reality and this government will have to face its failure sooner than it expects.
The hopes that PM Hassan Diab has to enter history as the savior of Lebanon, and Hezbollah’s hopes that the international community will bail out Lebanon, will probably be buried not long after the parliament approves the cabinet. It is a government that was stillborn, and it is probably the last trick Hezbollah and its allies have up their sleeves.
Hanin Ghaddar is the Friedmann Visiting Fellow, Washington Institute for Near East Policy
