Magazine article Business Credit

Hot Spots: Lebanon

Magazine article Business Credit

Hot Spots: Lebanon

Article excerpt

Lebanon has functioned with a caretaker government during much of this year since Hezbollah (labeled as a terrorist organization by the United States) toppled the Western-backed government of Prime Minister Saad Hariri in a dispute over the investigation of the assassination of his father Rafik. In this time, the absence of an administration with the mandate to implement much-needed reforms delayed crucial investment in infrastructure. Perhaps even more importantly, Lebanon, with aspirations to be a regional business and financial hub, missed a unique opportunity to present itself as a safe haven during a time of regional turmoil, a role that in the end was filled by Duhai and Doha.

Many attributed the five-month delay in forming a new government to the notion that Lebanon is now generally dysfunctional politically, and reports had it that fights over the distribution of cabinet posts (and thus political power) among the country's various sects were the main reason for the hold-up. The problems go deeper, however, as the country has become almost irreparably divided over issues of ideology, the question of which outside powers should be allowed to have leverage, and which community within Lebanon is entitled to command the greatest weight.

Caretaker Prime Minister Najib Mikati was finally able to announce the formation of a new government, but, as was to be expected, it is heavily skewed toward political groups backed by Damascus and Tehran, which sidelines Western and, in particular, U.S. influence. The Hezbollah coalition known as "March 8" gained 18 out of 30 cabinet seats, including some of the most important, such as justice, defense, labor, energy and telecommunications. The so-called "March 14" group, Hariri's party, chose not to participate, and Mikati left little doubt as to where his loyalties are when he declared he would pursue the liberation of land "that remains under the occupation of the Israeli enemy." President Bashar al-Assad of Syria, with whom Mikati has close links, had good reason to welcome the new government, which says it is "committed to maintain strong, brotherly ties which bind Lebanon to all Arab countries, without exception," but which will be adamant in its refusal to support the United Nations-backed tribunal that is expected shortly to issue indictments that will implicate members of Hezbollah in the killing of former Prime Minister Hariri.

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This is not to say that the new administration can boast of much internal unity. It follows the rules of the national covenant that is Lebanon's basic law (in place of a constitution), which requires that the post of president go to a Maronite Christian, that of prime minister be occupied by a Sunni Muslim, and that of speaker of parliament be given to a Shia. But the preponderance of Hezbollah and its allies together with the virtual absence of Hariri and his forces all but guarantees that the administration will run into its share of problems down the road. Mikati could be a strong leader. He is a wealthy Sunni businessman and a former minister of public works and transportation in three cabinets between 1998 and 2004. But it is highly doubtful that he can, or even will want to, work with all of Lebanon's rival political camps and be the consensus candidate he insists he is.

One of the more critical positions in the new cabinet, that of finance minister, has been given to Mohammed Safadi, Lebanon's former economy minister. One of his earliest chores will he to try to move both the 2010 and 2011 budgets forward, which have been deadlocked, holding up at least USD 2 billion to grow infrastructure projects. …

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