Can Lebanon’s new central bank governor break the cycle of economic crisis?

Analysis Can Lebanon’s new central bank governor break the cycle of economic crisis?
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Updated 31 March 2025
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Can Lebanon’s new central bank governor break the cycle of economic crisis?

Can Lebanon’s new central bank governor break the cycle of economic crisis?
  • Lebanon appointed Karim Souaid as its central bank governor after a two-year vacancy, which in itself was a breakthrough
  • The new Banque du Liban chief inherits a crumbling economy in a nation beset with political rivalries and blighted by conflict

LONDON: As Lebanon faces up to its broken finances, neglected infrastructure and postwar reconstruction, the appointment of Karim Souaid as the new central bank governor marks an important step toward economic recovery.

On March 27, after weeks of government wrangling, 17 of the cabinet’s 24 ministers voted to name asset manager Souaid as governor of Banque du Liban, the country’s National News Agency reported.

Souaid replaces interim governor Wassim Mansouri, who led the central bank after Riad Salameh’s controversial 30-year tenure ended in 2023 — almost a year before his arrest on embezzlement, money laundering and fraud charges tied to financial commissions.

The choice of candidate was critical for both domestic and international stakeholders, as the role is key to enacting the financial reforms required by donors, including the International Monetary Fund, in exchange for a bailout.

Souaid’s appointment comes with high expectations. His priorities include restarting talks with the IMF, negotiating sovereign debt restructuring and rebuilding foreign exchange reserves.

Nafez Zouk, a sovereign analyst at Aviva Investors, told Arab News that the new central bank chief “needs to be able to demonstrate some commitment to the IMF’s approach for restructuring the banking sector.”




Karim Souaid was appointed as the new central bank governor. (Supplied)

Souaid brings extensive experience in privatization, banking regulations and structuring large-scale economic transitions. He is also the founder and managing partner of the Bahrain-based private investment firm Growthgate Equity Partners.

However, his success as central bank chief will depend on international support, as Western nations and financial institutions have linked aid to sweeping economic reforms, including banking sector restructuring.

Last year, the EU pledged €1 billion ($1.08 billion) to help Lebanon curb refugee flows to Europe. Half was paid in August, while the rest is contingent on “some conditions,” EU Commissioner Dubravka Suica said during a February visit.

“The main precondition is the restructure of the banking sector ... and a good agreement with the International Monetary Fund,” she said after meeting Lebanese President Joseph Aoun.

However, critics have raised concerns about Souaid’s ties to Lebanon’s financial elite and members of the entrenched ruling class, fearing that his policies might favor the banking sector over broader economic reform, local media reported.

Prime Minister Nawaf Salam has also expressed reservations about Souaid’s appointment, saying the central bank chief “must adhere, from today, to the financial policy of our reformist government… on negotiating a new program with the IMF, restructuring the banks and presenting a comprehensive plan” to preserve depositors’ rights.




An excavator removes wreckage at site of an Israeli airstrike that targeted a house in the southern Lebanese village of Kfar Tibnit. (AFP)

Before Souaid’s appointment, Aoun and Salam were unable to reach a consensus on a candidate, according to local media reports. The president therefore insisted on putting the matter to a Cabinet vote.

Echoing the prime minister’s apprehensions is Nasser Saidi, a former Lebanese economy minister and central bank vice governor, who raised concerns about the selection process for the new central bank chief, warning that powerful interest groups may have too much influence.

He told the Financial Times that the decision carried serious consequences for Lebanon’s economic future, saying that one of Souaid’s biggest challenges will be convincing the world to trust the nation’s banking system enough to risk investing in its recovery.

“The stakes are too high: You cannot have the same people responsible for the biggest crisis Lebanon has ever been through also trying to restructure the banking sector,” said Saidi, who served as first vice governor of the Banque du Liban for two consecutive terms.

“How are we going to convince the rest of the world that it can trust Lebanon’s banking system, and provide the country with the funding it needs to rebuild (after the war)?”




The World Bank ranks the economic collapse among the worst globally since the mid-19th century. (AFP/File)

Last month, the IMF welcomed Lebanon’s request for support in tackling its protracted economic crisis. In February, after meeting with the newly appointed finance minister, Yassine Jaber, the international lender showed openness to a new loan agreement.

Lebanon’s economy has been in a state of turmoil since it suffered a financial crash in late 2019, compounded by the COVID-19 pandemic, the Beirut port blast of August 2020 and the 14-month Israel-Hezbollah conflict.

The national currency has lost more than 90 percent of its value and food prices have soared almost tenfold since May 2019. Citizens have struggled to access their savings since banks imposed strict withdrawal limits, effectively trapping deposits.

Lebanon’s prolonged crisis, triggered by widespread corruption and excessive spending by the ruling elite, has driven the country from upper-middle-income to lower-middle-income status, with gross domestic product per capita falling 36.5 percent from 2019 to 2021.

The World Bank ranks the economic collapse among the worst globally since the mid-19th century.

The Israel-Hezbollah war, which began Oct. 8, 2023, and concluded with a fragile ceasefire in November 2024, is estimated to have caused $3.4 billion in damage to Lebanese infrastructure, with economic losses of up to $5.1 billion.

Combined, these figures total 40 percent of Lebanon’s GDP.

The IMF has outlined key conditions for government action. These include addressing weak governance and implementing a fiscal strategy that combines debt restructuring with reforms to restore credibility, predictability and transparency in the fiscal framework.

It has also urged Lebanon to pursue a comprehensive financial sector restructuring, acknowledge losses at private banks and the central bank, and protect smaller depositors. Additionally, it calls for the establishment of a credible monetary and exchange rate system.

Lebanese economist Saidi said that the IMF “quite correctly and wisely” demanded comprehensive economic reforms.

INNUMBERS

• 36.5% Lebanon’s GDP per capita contraction from 2019 to 2021.

• $8.5bn Economic and infrastructure cost of Israel-Hezbollah conflict.

In a March 14 interview with BBC’s “World Business Report,” he said that the government must address fiscal and debt sustainability, restructure public debt, and overhaul the banking and financial sector.

But hurdles remain. Saidi added that while Lebanon “has a government today that I think is willing to undertake reforms, that does not mean that parliament will go along.”

Lebanon also needs political and judicial reform, including an “independent judiciary,” he added.

Nevertheless, Saidi told the BBC that Lebanon, for the first time, has “a team that inspires confidence” and has formed a cabinet that secured parliament’s backing.




Protesters during a rally outside the Palace of Justice in Beirut. (AFP/File)

Despite this positive step, Lebanon must still address structural failures in its public institutions, rooted in decades of opacity, fragmented authority and weak accountability.

Zouk of Aviva Investors believes another big challenge to reforming the financial sector will be “the large resistance from banks and their shareholders.

“Without some degree of accountability and transparency, I struggle to see how the rest of the reform agenda can be implemented,” he said.

There are “several proposals being circulated that would run counter to the IMF and would far from restore credibility and trust to the Lebanese financial sector.”

Saidi highlighted the broader challenges Lebanon faces, cautioning that without financing for reconstruction, achieving socioeconomic and political stability will remain elusive.

“If you don’t have financing for reconstruction, you’re not going to have socioeconomic stability, let alone political stability,” he said.

“There has to be a willingness by all parties to go along with the reforms,” he added, highlighting that this is where external support is crucial, particularly from Saudi Arabia, the UAE, France, Europe and the US.




Lebanon endured a 14-month Israel-Hezbollah conflict. (AFP/File)

Saidi said that support must go beyond helping bring the new government to power — it must include assistance, especially in terms of security.

In March, Reuters cited five sources saying the US was engaging with Lebanon’s new government on selecting the central bank governor to combat corruption and prevent the Iran-backed Hezbollah from exploiting the banking system for illicit financing.

A US official who met the candidates before Souaid’s appointment told the news agency that the US was making its guidance on candidates’ qualifications clear to the Lebanese government.

“The guidelines are: No Hezbollah and nobody who has been caught up in corruption. This is essential from an economic perspective,” the official said.

The move, according to Reuters, highlights the US administration’s continued focus on weakening Hezbollah. The group has seen its political and military clout diminished by Israel, which decimated its leadership, drained its finances and depleted its once formidable arsenal.

Firas Modad, a Middle East analyst and founder of Modad Geopolitics, told Arab News that he believes US approval was a prerequisite for selecting the next Banque du Liban governor.

“The next governor is irrelevant,” he said a few days before Souaid’s appointment. “He will need to be approved by the Americans, and the Lebanese system will not appoint someone that the Americans do not approve of.”




Washington is pushing Lebanon’s new government to disarm Hezbollah and address longstanding issues with Israel. (AFP/File)

Modad added that Lebanon faces a stark choice: “Normalization with Israel or civil war.” This decision will “determine whether there is a chance to rebuild the financial system and recover some money for the bondholders and smaller depositors.”

On March 22, the Israeli military mounted airstrikes on Lebanon amid renewed violence in Gaza and Yemen. A “second wave” targeted sites in southern and eastern Lebanon, according to the Israeli military.

Israel claimed that the attacks targeted “Hezbollah command centers, infrastructure sites, terrorists, rocket launchers and a weapons storage facility.” It marked the deadliest escalation since the ceasefire in late November.

Washington is pushing Lebanon’s new government to disarm Hezbollah and address longstanding issues with Israel, including border demarcation and the release of Lebanese captives through enhanced diplomatic talks.

Hezbollah, meanwhile, has rejected calls to disarm as long as Israel continues to occupy Lebanese territory.

 


Israeli forces seize Gaza aid boat carrying Greta Thunberg, ministry says

Israeli forces seize Gaza aid boat carrying Greta Thunberg, ministry says
Updated 52 min 1 sec ago
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Israeli forces seize Gaza aid boat carrying Greta Thunberg, ministry says

Israeli forces seize Gaza aid boat carrying Greta Thunberg, ministry says
  • Operated by the pro-Palestinian Freedom Flotilla Coalition, the British-flagged Madleen boat is currently off the Egyptian coast, heading slowly toward the Gaza Strip, which is besieged by Israel
  • Gaza’s health ministry says over 54,000 Palestinians have been killed since the start of Israel’s military campaign

JERUSALEM: Israeli forces have taken command of a charity vessel that had tried to break a naval blockade of the Gaza Strip and the boat with its crew of 12 including activist Greta Thunberg is now heading to a port in Israel, officials said on Sunday.
The British-flagged yacht Madleen, which is operated by the pro-Palestinian Freedom Flotilla Coalition (FFC), was aiming to deliver a symbolic amount of aid to Gaza later on Monday and raise international awareness of the humanitarian crisis there.
However, the boat was boarded during the night before it could reach shore, the FFC said on its Telegram account. The Israeli Foreign Ministry later confirmed that it was under Israeli control.
“The ‘selfie yacht’ of the ‘celebrities’ is safely making its way to the shores of Israel. The passengers are expected to return to their home countries,” the ministry wrote on X.

HIGHLIGHTS

• Vessel aimed to deliver aid, raise awareness of Gaza crisis

• Crew includes climate activist Greta Thunberg

• Israel says all aboard are safe, heading to an Israeli port

• UN rapporteur urges more boats to challenge Gaza blockade

All passengers were safe and unharmed, the ministry later added. “They were provided with sandwiches and water. The show is over.”
Among the 12-strong crew are Swedish climate campaigner Thunberg and Rima Hassan, a French member of the European Parliament.
“The crew of the Freedom Flotilla was arrested by the Israeli army in international waters around 2 a.m.,” Hassan posted on X. A photograph showed the crew seated on the boat, all wearing life jackets, with their hands in the air.
The yacht is carrying a small shipment of humanitarian aid, including rice and baby formula. The Foreign Ministry said it would be taken to Gaza. “The tiny amount of aid that was on the yacht and not consumed by the ‘celebrities’ will be transferred to Gaza through real humanitarian channels,” it wrote.
Israeli Defense Minister Israel Katz ordered the military on Sunday to prevent the Madleen from reaching Gaza, calling the mission a propaganda effort in support of Hamas.
Israel imposed a naval blockade on the coastal enclave after Hamas took control of Gaza in 2007.
The blockade has remained in place through multiple conflicts, including the current war, which began after a Hamas-led assault on southern Israel on October 7, 2023, that killed more than 1,200 people, according to an Israeli tally.
Gaza’s health ministry says over 54,000 Palestinians have been killed since the start of Israel’s military campaign. The United Nations has warned that most of Gaza’s more than 2 million residents are facing famine.
The Israeli government says the blockade is essential to prevent weapons from reaching Hamas.
The United Nations’ special rapporteur on human rights in the Palestinian territories, Francesca Albanese, has supported the FFC operation and on Sunday, urged other boats to challenge the Gaza blockade.
“Madleen’s journey may have ended, but the mission isn’t over. Every Mediterranean port must send boats with aid & solidarity to Gaza,” she wrote on X.

 


Israeli hostages highlighted at Boulder Jewish Festival after attack on group urging their release

Israeli hostages highlighted at Boulder Jewish Festival after attack on group urging their release
Updated 09 June 2025
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Israeli hostages highlighted at Boulder Jewish Festival after attack on group urging their release

Israeli hostages highlighted at Boulder Jewish Festival after attack on group urging their release
  • Demonstrators handed out stickers stamped with “611,” representing the 611 days since the first Israeli hostages were taken by Hamas militants

BOULDER, Colorado: For the 611 days since Omri Miran was taken hostage by Hamas, his family has lived in fear, his brother-in-law told those gathered at the Boulder Jewish Festival on Sunday, one week after a man firebombed a group calling for the release of Israeli hostages at the mall where Moshe Lavi now spoke.
“We received only partial, limited and at times horrifying proof of life,” Lavi said to a hushed crowd. “We don’t know how much he’s suffering, deprived of food, water, sunlight, tortured, abused, as I speak to you now.”
For its 30th year, the Jewish cultural festival centered on the stories of Israeli hostages after authorities said man who yelled “Free Palestine” threw Molotov cocktails at Boulder demonstrators calling for their release. Festival organizers said they reimagined it to focus on healing and center the group’s cause — raising awareness of the 55 people believed to still be in captivity in Gaza.
Authorities said 15 people and a dog were victims of the attack at the Pearl Street pedestrian mall. They include eight women and seven men, ranging in age from 25 to 88. One is a Holocaust survivor.
Not all were physically injured, and some are considered victims for the legal case because they were present and could potentially have been hurt.
Run for Their Lives, the group targeted in the attack, started in October 2023 after Hamas militants from the Gaza Strip stormed into Israel, killing 1,200 people and taking 250 others hostage. The Boulder chapter, one of 230 worldwide, walks at the mall every weekend for 18 minutes, the numerical value of the Hebrew word “chai,” which means “life.”
Several hundred people joined the Sunday walk that typically draws only a couple dozen. Colorado Sen. John Hickenlooper was among the participants. Demonstrators handed out stickers stamped with “611,” representing the 611 days since the first Israeli hostages were taken by Hamas militants.
On a stage near the site of the attack, hundreds gathered to listen to speakers and songs. Vendors sold traditional Jewish and Israeli cuisine. In tents marked “Hostage Square,” rows of chairs sat empty save for photos of the hostages and the exhortation “Bring them home now!”
Lavi thanked local demonstrators for their bravery in advocating for his family. He described Miran as a gentle and loving gardener, husband and father to two young children.
Merav Tsubely, an Israeli-American who came to the festival from a city north of Boulder, watched as hostages’ families thanked those gathered in recorded video messages. One of Miran’s children appeared on screen and said in Hebrew, “When daddy comes back from Gaza, he’ll take me to kindergarten.”
“Just seeing them speaking to us, here, with all they’re going through, their supporting us is kind of mind blowing,” Tsubely said, her eyes welling. “It just reminds us how connected we all are.”
Mohamed Sabry Soliman, 45, was charged for the attack Thursday in Colorado state court with 118 counts, including attempted murder, assault, illegal use of explosives and animal cruelty. He was also charged with a hate crime in federal court.
Soliman, an Egyptian national who federal authorities say was living in the US illegally, told police he was driven by a desire “to kill all Zionist people,” a reference to the movement to establish and sustain a Jewish state in Israel.
The violence in downtown Boulder unfolded against the backdrop of the Israel-Hamas war, which continues to inflame global tensions and has contributed to a spike in antisemitism in the US It also came at the start of the holiday of Shavuot, which commemorates God giving the Torah to the Jewish people at Mount Sinai in Egypt.
US immigration officials took Soliman’s wife and five children, who also are Egyptian, into custody Tuesday. They have not been charged in the attack. A federal judge on Wednesday granted a request to block their deportation.
The Boulder Police Department and the FBI coordinated to provide increased security at the festival as well as local synagogues and the Boulder Jewish Community Center. Officers guarded the event’s entrances, and police Chief Stephen Redfearn said some plainclothes officers would be present in the crowd. On a rooftop near the stage, three held rifles and used binoculars to monitor the crowd as drones buzzed overhead.
Matan Gold-Edelstein’s father was present last weekend and helped douse the fire that burned an older woman. Gold-Edelstein, a 19-year-old college student, said the well-attended festival was a great show of humanity, regardless of religion or politics.
“We’re not here to be in support of a war,” he said. “We’re here in support of our religion, in support of our people and in support of the innocent people who are still being held hostage.”


Israel reveals tunnel under Gaza hospital, says body of Sinwar’s brother found there

Israel reveals tunnel under Gaza hospital, says body of Sinwar’s brother found there
Updated 08 June 2025
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Israel reveals tunnel under Gaza hospital, says body of Sinwar’s brother found there

Israel reveals tunnel under Gaza hospital, says body of Sinwar’s brother found there
  • Hamas leaders Sinwar, Shabana found dead in tunnel after an Israeli strike
  • Weapons and documents also found in tunnel

KHAN YOUNIS: The Israeli army said on Sunday it had retrieved the body of Hamas’ military chief, Mohammed Sinwar, in an underground tunnel beneath a hospital in southern Gaza, following a targeted operation last month.
Another senior Hamas leader, Mohammad Shabana, commander of the Rafah Brigade, was also found dead at the scene along with a number of other militants, who are still being identified, said IDF spokesperson, Brig. Gen. Effie Defrin.
Israeli forces gave a small group of foreign reporters a tour of the tunnel that had been uncovered beneath the European Hospital in Khan Younis, which Defrin said was a major command and control compound for Hamas.
“This is another example of the cynical use by Hamas, using civilians as human shields, using civilian infrastructure, hospitals, again and again,” said Defrin.
“We found underneath the hospital, right under the emergency room, a compound of a few rooms. In one of them we found, we killed Mohammed Sinwar,” he said.
Israeli Prime Minister Benjamin Netanyahu announced Sinwar’s death last month, but Defrin said they now had his DNA which proved beyond doubt it was him.
Hamas has not commented on reports of the death of either Sinwar or Shabana.
Sinwar was the younger brother of Yahya Sinwar, the Palestinian militant group’s deceased leader and mastermind of the October 2023 attack on Israel that killed 1,200 people according to Israeli tallies, and which triggered the Israeli invasion of Gaza.
Shabana was one of Hamas’s most senior and battle-hardened commanders in southern Gaza. He played a central role in constructing the network of tunnels under the southern city of Rafah, which were used for ambushes and cross-border raids.

The drive to Khan Younis in Israeli military vehicles showed widespread devastation, with countless buildings lying in ruins, and piles of rubble collected at the roadside.
The Israeli military has raided or besieged numerous hospitals during the war, alleging that Hamas uses them to conceal fighters and orchestrate operations — a charge Hamas has repeatedly denied. While Israel has presented evidence in certain cases, some of its assertions remain unverified.
Defrin said the army had carefully planned the strike near the European Hospital in order not to damage it.
A large trench dug in front of the Emergency Room entrance led down to a hole in the claustrophobic, concrete tunnel, which was used as a hideaway by Hamas fighters, the army said.
During the search of the site, Israeli forces recovered weapon stockpiles, ammunition, cash and documents that are now being reviewed for intelligence value.
“We will dismantle Hamas because we cannot live with this terror organization right in our backyard, right across our border,” Defrin said.
More than 54,000 Palestinians have died during the ongoing Israeli assault, according to Gaza health authorities. The UN has warned that most of Gaza’s 2.3 million population is at risk of famine.


Iranian authorities expand ban on dog walking

Iranians walk their dogs in a park in Tehran on June 8, 2025. (AFP)
Iranians walk their dogs in a park in Tehran on June 8, 2025. (AFP)
Updated 08 June 2025
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Iranian authorities expand ban on dog walking

Iranians walk their dogs in a park in Tehran on June 8, 2025. (AFP)
  • Local authorities have periodically introduced bans on walking dogs in public spaces or carrying them in vehicles as part of a wider campaign to discourage their ownership

TEHRAN: Iranian authorities have expanded a ban on walking dogs in public to multiple cities nationwide, citing public health, social order and safety concerns, domestic media reported on Sunday.
The ban —which echoes a 2019 police directive that barred walking dogs in Tehran — was expanded to Ilam city in the west on Sunday, according to reports.
At least 17 other cities recently introduced similar bans, including Isfahan in the center and Kerman in the south.
Owning and walking dogs has been a contentious topic since the 1979 revolution in Iran, though there is no law outrightly banning dog ownership.
Many religious scholars, however, consider petting dogs or coming into contact with their saliva as "najis" or ritually impure, while some officials view them as a symbol of Western cultural influence.
Local authorities have periodically introduced bans on walking dogs in public spaces or carrying them in vehicles as part of a wider campaign to discourage their ownership.
Enforcing the restrictions has been largely inconsistent, as many owners continue to walk their dogs in Tehran and elsewhere across Iran.
On Sunday, the Etemad newspaper quoted an official from Ilam city as saying that "legal action will be taken against violators."
On Saturday, a state newspaper said the latest measures are aimed at "maintaining public order, ensuring safety and protecting public health."
"Dog walking is a threat to public health, peace and comfort," said Abbas Najafi, prosecutor of the western city of Hamedan, as quoted by Iran newspaper.
In 2021, some 75 lawmakers condemned pet ownership as a "destructive social problem," saying it could "gradually change the Iranian and Islamic way of life."
In 2017, Iran's supreme leader, Ali Khamenei, said that "keeping dogs for reasons other than herding, hunting, and guard dogs is considered reprehensible."
"If this practice resembles that of non-Muslims, promotes their culture, or causes harm and disturbance to neighbours, it is deemed forbidden," he added.

 


Israeli bulldozers flatten more Palestinian buildings in Tulkarm refugee camp

Israeli bulldozers flatten more Palestinian buildings in Tulkarm refugee camp
Updated 08 June 2025
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Israeli bulldozers flatten more Palestinian buildings in Tulkarm refugee camp

Israeli bulldozers flatten more Palestinian buildings in Tulkarm refugee camp
  • Entire residential area reduced to rubble in recent days, residents say
  • Israeli forces plan to destroy 58 structures in Tulkarm, 48 in Nur Shams

LONDON: Israeli forces have conducted demolitions for the third consecutive day in the Palestinian refugee camp of Tulkarm in the northern part of the West Bank, the site of military operations since January.

On Sunday, Israeli bulldozers resumed demolition of numerous residential buildings in the camp. The demolitions are part of the destruction plan of 58 structures in Tulkarm and 48 in the Nur Shams refugee camp.

More than 250 housing units and dozens of commercial establishments have been destroyed in both locations, according to Wafa news agency.

Residents say that an entire residential area in the Tulkarm camp has been reduced to rubble in recent days, with debris hindering access to surrounding buildings.

Israeli operations in Tulkarm for the past 133 days and in Nur Shams for the past 120 days have resulted in the deaths of 13 Palestinians and the displacement of almost 25,000 residents.

At least 400 homes have been destroyed and 2,573 damaged after Israeli forces sealed off roads and entrances with earth barriers and barred Palestinian residents from returning, the Wafa added.