Hariri Quits as Lebanon PM-Designate After Cabinet Rejected

Lebanon’s Prime Minister-designate Saad Hariri stepped down Thursday after the president rejected his latest cabinet proposal, plunging the country deeper into a political crisis that’s compounded its economic meltdown. The pound weakened.

“I presented my apology for not being able to form a government and God help the country,” Hariri, who had sought to form a cabinet of experts, told reporters from the presidential palace. He said President Michel Aoun had told him that the two wouldn’t agree, even given more time to consult.

A few hours later, Aoun disputed that account, hinting that a compromise could have been reached but Hariri was unwilling to extend the talks.

The pound, which has lost more than 90% of its value since the start of Lebanon’s financial crisis in late 2019, crossed the threshold of 20,000 to the dollar after Hariri’s announcement dashed any remaining hopes that the country would soon have a functioning government that could work to stabilize the economy.

Hariri Quits as Lebanon PM-Designate After Cabinet Rejected

In a statement issued on the presidency’s Twitter account, Aoun said he’ll soon begin consultations with parliament on naming a prospective prime minister. That person will be the third to try to form a government since outgoing Premier Hassan Diab resigned following a massive explosion at Beirut’s port in August killed at least 200 people and destroyed swaths of the capital.

Supporters of Hariri, the country’s most influential Sunni leader, blocked some streets in Beirut to protest what they said was an effort to sideline their leadership and to complain about a currency crisis that’s sparked triple-digit inflation and pushed more than half the population of Lebanon, a middle-income country, into poverty.

The international community, primarily former colonial power France, has been pushing politicians to form a new government quickly and implement reforms that would unlock more than $11 billion donor funds and help resume stalled talks with the International Monetary Fund.

The government, which defaulted on $30 billion in international debt over a year ago, has struggled to implement reforms given its limited authority and lack of backing from influential political leaders.

Speaking shortly after the news, IMF spokesman Gerry Rice said the fund looked forward to the “formation of a new government with a mandate for reforms and to address deepening crisis, as the country must enact policies to restore macroeconomic stability, pave the way for investment, jobs and growth.”

Paris has threatened politicians with sanctions if delays persist. The U.S. has already imposed penalties on a number of senior political players in Lebanon on allegations linked both to terrorism and to corruption, but they’ve had little impact domestically.

Hariri, who was appointed to form a new government in October, had insisted on a slate of non-partisan technocrats to manage the financial crisis that’s depleted foreign currency reserves and saw the economy shrink by at least a fifth last year.

Aoun, a Maronite Christian ally of the Iran-backed Hezbollah group, has said his position as president allows him to name Christian ministers close to him and has sought veto power in the new government. Hariri is an opponent of Hezbollah.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.