Lebanon Moves Closer to New Government After Clearing Major Hurdle

(Bloomberg) -- The Lebanese Forces, a Christian group with close ties to Saudi Arabia, will join a future cabinet, sweeping away a major hurdle that’s held up formation of a government for six months.

Party head Samir Geagea said his faction’s share of cabinet seats was “the biggest issue” behind the delay. The group will get three ministerial portfolios including social affairs and labor, Geagea said.

Prime Minister-designate Saad Hariri was named in May to form a government following the first parliamentary elections since 2009. The vote gave greater representation to an Iran-backed alliance that includes Hezbollah as well as the two main Christian parties. Their enhanced legislative clout led to demands for greater representation in the cabinet, complicating Hariri’s task.

The Lebanese Forces and Hariri’s allies create a “political balance needed to offset the weight of Hezbollah’s alliance,” said Rosanna Bou Monsef, a columnist for the daily Annahar.

Cabinet’s Face

“A government without the Lebanese Forces would have left Hariri as the face of a Hezbollah-led cabinet, and that would have easily drove away investments the country desperately needs,” Bou Monsef said. “But Hariri would have never accepted that.”

Hariri is expected to meet President Michel Aoun later in the day to discuss possible names for a seat reserved for Sunni representatives not allied with the premier, Hariri-owned Future TV reported citing an unidentified person, the last hurdle to announcing the cabinet lineup.

Lebanon, the world’s third most-indebted country, has been grappling with political deadlock and fallout from the civil war in neighboring Syria, which has led to an influx of 1.5 million refugees and the closure of vital trade routes.

The World Bank has halved its 2018 economic growth projection for Lebanon to 1 percent. Public debt will likely reach 180 percent of GDP in five years from 150 percent in 2017, the International Monetary Fund said.

The cabinet will face the tough task of implementing the structural and fiscal reforms needed to unlock $11 billion in loans and grants pledged by the international community to finance critical infrastructure projects. Earlier this year, Hariri’s previous government committed to lower the fiscal deficit by 1 percentage point annually for the next five years and address rampant corruption.

Forming a cabinet is a positive step, yet “far from enough,” said Sami Nader, head of the Beirut-based Levant Institute. The government will need to find ways to boost growth and attract foreign direct investments, he said.

Lebanon is also facing a set of political challenges as the U.S. increases pressure on Iran through sanctions, in the process targeting Tehran’s Lebanese proxy, Hezbollah, which has fought alongside government forces in Syria’s civil war. Israel has warned it won’t allow its chief regional foe Iran to establish a presence in Syria and has attacked what it said were Iranian targets in the war-torn country.

To contact the reporter on this story: Dana Khraiche in Beirut at dkhraiche@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Amy Teibel, Mark Williams

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