Lebanon’s advisers to work on compromise on financial plan, sources say

A closed shop for rent in the upmarket area of Kaslik, north of Lebanon's capital Beirut, is pictured on July 16, 2020. (AFP)
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Updated 17 July 2020

Lebanon’s advisers to work on compromise on financial plan, sources say

  • The plan has been undermined by objections from Lebanon’s ruling elite, obstructing IMF talks aimed at rescuing the country from a financial meltdown
  • The IMF warned Lebanon on Monday that attempts to lower losses from the financial crisis could only delay recovery

BEIRUT: Lebanon’s financial adviser Lazard will see if a government financial rescue plan can be adjusted to reach a compromise workable for the International Monetary Fund, two sources said on Friday, after the plan hit resistance from politicians, banks and the central bank.
The plan, which anticipates vast losses in the financial system, has been undermined by objections from Lebanon’s ruling elite, obstructing IMF talks aimed at rescuing the country from a financial meltdown.
Prime Minister Hassan Diab’s government had approved the plan, which would lead to losses of 241 trillion Lebanese pounds in the financial system, or $68.9 billion at the exchange rate applied by the plan, as the basis for talks with the IMF.
The IMF said the losses appeared to be about the right order of magnitude.
But a parliamentary fact-finding committee, backed by all Lebanon’s main parties, objected to the approach taken in the plan. Applying different assumptions, it came up with losses between a quarter and half that amount.
“Lazard will come possibly next week to see if they can adjust the government plan and work on a compromise acceptable to the IMF. They will do any adjustment based on the government plan,” one of the sources said.
The second source said the aim of the Lazard visit is “how we can try to adjust the government plan to see if we can come up with something workable for the IMF and for the Lebanese counterparts.”
Lebanon’s legal adviser, Cleary Gottlieb Steen & Hamilton LLP, is also visiting the country, the sources said.
Lazard and Cleary Gottlieb declined to comment.
The IMF warned Lebanon on Monday that attempts to lower losses from the financial crisis could only delay recovery.
Alain Bifani, a senior member of Lebanon’s negotiating team with the IMF, resigned as finance ministry director general last month, saying vested interests were undermining the government plan.


Lebanon’s leaders face rage, calls for reform after blast

Updated 07 August 2020

Lebanon’s leaders face rage, calls for reform after blast

  • State media reported late Thursday that security forces fired tear gas in central Beirut to disperse dozens of anti-government demonstrators
  • Some protesters were injured

BEIRUT: Lebanon’s leadership faced growing rage after a massive explosion laid waste to large parts of central Beirut, with security forces firing tear gas at demonstrations late Thursday as international leaders called for reform.
Shock has turned to anger in a traumatized nation where at least 149 people died and more than 5,000 were injured in Tuesday’s colossal explosion of a huge pile of ammonium nitrate that had languished for years in a port warehouse.
To many Lebanese, it was tragic proof of the rot at the core of their governing system, which has failed to halt the deepest economic crisis since the 1975-1990 civil war and has plunged millions into poverty.
State media reported late Thursday that security forces fired tear gas in central Beirut to disperse dozens of anti-government demonstrators enraged by the blast.
Some in the small protest were wounded, the National News Agency reported.
Earlier, visiting French President Emmanuel Macron pledged to lead international emergency relief efforts and organize an aid conference in the coming days, promising that “Lebanon is not alone.”
But he also warned that the country — already in desperate need of a multi-billion-dollar bailout and hit by political turmoil since October — would “continue to sink” unless it implements urgent reforms.
Speaking of Lebanon’s political leaders, Macron said “their responsibility is huge — that of a revamped pact with the Lebanese people in the coming weeks, that of deep change.”
The International Monetary Fund, whose talks with Lebanon started in May but have since stalled, warned that it was “essential to overcome the impasse in the discussions on critical reforms.”
The IMF urged Lebanon — which is seeking more than $20 billion in external funding and now faces billions more in disaster costs — “to put in place a meaningful program to turn around the economy” following Tuesday’s disaster.
Macron’s visit to the small Mediterranean country, a French protectorate during colonial times, was the first by a foreign head of state since the disaster.
The French president visited Beirut’s harborside blast zone, a wasteland of blackened ruins, rubble and charred debris where a 140-meter-wide (460-foot-wide) crater has filled with seawater.
As he inspected a devastated pharmacy, crowds outside vented their fury at the country’s “terrorist” leadership, shouting “revolution” and “the people want an end to the regime!.”
Later Macron was thronged by survivors who pleaded with him to help get rid of their reviled ruling elite.
Another woman implored Macron to keep French financial aid out of the reach of Lebanese officials, accused by many of their people of rampant graft and greed.
“I guarantee you that this aid will not fall into corrupt hands,” the president pledged.
Macron later told BFMTV he was not presenting Lebanon’s leadership with a “diktat” after some of the political class criticized his remarks as interference.
Compounding their woes, Lebanon recorded 255 coronavirus cases Thursday — its highest single-day infection tally — after the blast upended a planned lockdown and sent thousands streaming into overflowing hospitals.
The disaster death toll rose from 137 to 149 on Thursday evening, the health ministry said, and was expected to further rise as rescue workers kept digging through the rubble.
Even as they counted their dead, many Lebanese were consumed with anger over the blast.
“We can’t bear more than this. This is it. The whole system has got to go,” said 30-year-old Mohammad Suyur.
The small demonstration on Thursday night, as well as a flood of angry social media posts, suggested the disaster could reignite a cross-sectarian protest movement that erupted in October but faded because of the grinding economic hardship and the coronavirus pandemic.
Prime Minister Hassan Diab and President Michel Aoun have promised to put the culprits responsible for the disaster behind bars.
A military prosecutor announced 16 port staff had been detained over the blast.
But trust in institutions is low and few on Beirut’s streets hold out hope for an impartial inquiry.
Amid the fury and gloom, the explosion’s aftermath has also yielded countless uplifting examples of spontaneous solidarity.
Business owners swiftly posted offers to repair doors, paint damaged walls or replace shattered windows for free.
Lebanon’s diaspora, believed to be nearly three times the tiny country’s five million population, has rushed to launch fundraisers and wire money to loved ones.
In Beirut, volunteers handled much of the cleanup.
Husam Abu Nasr, a 30-year-old volunteer, said: “We don’t have a state to take these steps, so we took matters into our own hands.”