Lebanon has been with no president for nine months, and soon, will be with no Central Bank governor as well. The tenure of Riad Salameh, the longest-serving governor in Lebanon’s history, will formally end on July 31, 2023. And in six months so will that of army commander Joseph Aoun, leaving the country’s top three posts vacant, amid a political system that is paralysed and unable to fill them.
By law, the central bank governor is appointed by the prime minister, and sworn-in before a president. Both need to be full-fledged, which doesn’t apply since there is no president in Lebanon at present while incumbent premier Najib Mikati is officially in caretaker mode after his cabinet was formally dismissed last October.
A caretaker premier is constitutionally prohibited from signing off important legislation like naming of a Central Bank governor. That is why Mikati is suggesting expanding his powers, albeit temporarily, in order to appoint a new central bank governor this July, and an army commander by January 2024. The mere thought of giving such vast executive powers to a premier, with the presidential seat remains vacant at Baabda Palace, has sent shivers down the spine of Lebanon’s Maronites.
They would never hear of it but while they wait for a president to be elected, the country is sinking from one low to another. Fuel shortages are chronic, and entire parts of the country gets no more than 2-4 hours of electricity per day, despite the exceptionally hot summer. Thousands have voted – with their feet – and left the country since the economic crisis began in October 2019. The brain drain has been mostly with Lebanon’s brightest young talent, who have turned to a better life and future either in the US, Europe, or the UAE. Depositors have been locked out of their dollar accounts for four years now.
On July 13, the local currency dropped to an all-time low, trading at 100,000 pounds to one US dollar. As Lebanon waits, thousands have been sent into financial ruin, affecting none of the country’s political elite. One option is to extend Riad Salameh’s tenure as governor, which is being peddled by Parliament Speaker Nabih Berri. He claims that another six months of Salameh would be better than a power vacuum at Lebanon’s leading financial institution. Salameh himself had previously said that he has no intention of staying in power beyond his tenure, but according to sources who spoke to Gulf News, he is now open to an extension anywhere between six-months to two-years.
But that has come before a brick wall, since neither the Free Patriotic Movement (FPM) of Gibran Bassil, nor Hezbollah, would accept extension of Salameh’s tenure. And even if they did, the Money and Credit Law says that a prime minister can either appoint a governor or renew his tenure for six years. It makes no mention of extending the governor’s tenure, whether by six months or two years. Another option is to appoint Salameh as a shadow adviser to the bank, to keep running its affairs after 31 July, albeit indirectly. That too has been rejected by the FPM and Hezbollah. By law, the governor’s first deputy Wassim al-Mansouri, would take over from Salameh when his tenure ends. However since Mansouri is a Shiite, that might be a problem for certain quarters in Lebanon.
Mansouri himself has threatened to resign, along with three other deputies, if no replacement is found by the end of this month. If he steps down, then the second deputy would take over the bank’s affairs, who in this case, is a Sunni. But if all four deputies resign collectively, then this would bring down what remains of the Central Bank’s authority and prestige. They have all threatened to step down, fearing that with Salameh gone, they would be held responsible for the mistakes committed during his tenure. The first deputy Mansouri just returned from a visit to the US, where he met officials at the Department of Treasury. He came out with a feeling that the Biden Administration sees that electing a new central bank governor is far more of a priority than finding a new president for Lebanon. The US, he added, was pushing for Kamil Abu Suleiman, a former minister, to replace Salameh. He is a protégé of Samir Gagegea and the Lebanese Forces (LF) which means that Hezbollah may not accept him. France, however, is pushing for the appointment of Jihad Azour, another ex-minister, as central bank governor. Until last month, he was one of the two presidential hopefuls, and he won 59 votes in the election that took place on June 14, which was six votes short of the 65-vote majority needed to win. Making him governor would be a fine reward for having failed to become president, despite the banking of the country’s three main Christian parties.
A last and final option is to accept Wassim Mansouri as acting governor, just like Elias Busseiri, a Christian, was accepted as acting director of General Security earlier this year. If sectarian allocations were swapped at General Intelligence then they might as well be traded at the Central Bank, even if temporarily, meaning a Shiite governor of the Central Bank. Will it pass? Judging by existing tension: it may not, but given Lebanon’s current situation, anything is possible.