Can new central bank chief kick off Lebanon’s long-awaited economic transformation?

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Among the many people who have held protests outside the headquarters of Lebanon’s central bank office in Beirut this year are retired soldiers, who demanded inflation adjustments to their pensions on March 30, 2023. (AFP file)
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Updated 03 August 2023
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Can new central bank chief kick off Lebanon’s long-awaited economic transformation?

  • Wassim Mansouri has daunting task of establishing new rules for monetary dealings between government and central bank
  • Amid Lebanon’s political deadlock, there is no guarantee he will succeed where the outgoing governor Riad Salameh failed

BEIRUT: Wassim Mansouri, the first vice governor of Banque du Liban, Lebanon’s central bank, assumed the responsibilities of former governor Riad Salameh on Monday, ushering in a period of cautious optimism and sparking hopes of a belated return to fiscal responsibility.

Amid the worst financial crisis in the country’s history, made worse by years of asset stripping by the nation’s political elite, Mansouri faces the daunting task of restoring the credibility of the long-abused central bank.

“It is necessary to put an end to the policy of government borrowing from the central bank and limit the process to matters of emergency only, and for a limited period of time, provided that it is legalized,” Mansouri said on his first day in office.




Wassim Manssouri, Lebanon's acting central bank governor, speaks during a press conference at the bank's headquarters in Beirut on July 31, 2023. (AFP)

This was his attempt to establish new rules for monetary dealings between the government and the central bank, to bring fiscal policy back in line with Lebanon’s Code of Money and Credit, which was established in 1963.

Mansouri aims to secure legal and legislative cover for his conditions, from both the executive and legislative authorities, to continue financing the government while exempting himself from the possibility of any subsequent responsibility.

He called for the implementation of fiscal reforms within six months, which should include approval of the budget for 2023-24, the adoption of capital controls, a restructuring of banks, and enforcement of financial discipline.

Financial markets reacted positively to the news of Salameh’s departure after a checkered 30-year stint. The value of the US dollar fell against the Lebanese pound, dropping from 99,000 to 88,500 in the week before he stepped down.




Lebanon's failed former central bank governor Riad Salameh. (AFP file photo)

It feels like a breath of fresh air has just blown from a hole that has opened suddenly in a thick, impenetrable wall that was built between the central bank and literally the whole world,” George Kanaan, CEO of the Arab Bankers Association, told Arab News.

“Suddenly we are told that he is willing to provide statistics, he is willing to work with the government, he is willing to inform the parliament, he is willing to discuss things, he wants matters legalized under proper legislation to allow him to work.

“(This is) nothing like the old times. This is a great new beginning. The question, though, is what needs to follow immediately? The answer is a series of reforms, starting with legislative reforms. And then we can begin to see how the crisis will eventually come to an end.

“However, there is a reason why they have been blocked, as the political class in Lebanon does not see that they are necessary, or they believe that, if implemented, the reforms will harm them. And in that case the spring will be short lived.”

Indeed, there is no guarantee that Mansouri will succeed. There is no proposed law that would allow the central bank to lend money to the state in a way that provides legislative cover. And there is no indication of the possibility of a parliamentary session to pass such draft legislation.

Caretaker Prime Minister Najib Mikati has not presented a draft law that would allow the government to borrow foreign currencies from the bank. According to local media reports, he hesitated to do so “due to its unlawfulness,” putting the ball in parliament’s court.

The policy of lending by the central bank to the state has been a fundamental cause of the depletion of monetary reserves and the collapse of Lebanon’s once-flourishing banking and financial sectors, compounded by the government’s failure to implement reforms and curb waste and corruption.

The government is currently seeking a loan of up to $1.2 billion over six months to cover the salaries of public sector, military and security personnel, the cost of essential imports, and interventions in the market when necessary.

Can Mansouri succeed where Salameh failed? The government is in prolonged caretaker mode and the parliament remains deeply divided, making it difficult to pass any legislation that might prove controversial. Meanwhile, the central bank’s reserves, according to financial references, now stand at only between $9 billion and $10 billion.

Parliament is split into factions, including the Lebanese Forces, the Lebanese Kataeb, reformist MPs, and some independent MPs, who refuse to pass laws in the absence of a president. The president’s office has been vacant since Michel Aoun’s term ended in October last year as the parliament cannot agree on a successor. They will therefore likely boycott the legislative session if it is scheduled.




The Lebanese pound has plumbed new depths against the US dollar. (AFP file photo)

Some factions, such as the Free Patriotic Movement, have set conditions for attending sessions, while others, notably the Amal movement and Hezbollah, have shown little enthusiasm for them at all.

Asked whether Mansouri will be able to enact change, given this state of political paralysis, Kanaan noted that the new governor does have allies who want him to succeed.

“He is not alone,” Kanaan said. “There are a lot of people who support him. On his own he cannot do it. On his own, he and the other vice governors will probably be forced to leave if they insist on the reforms.

“I think there are other parties in Lebanon, but not necessarily political bodies, that want the reforms done. Certainly, the whole word outside of Lebanon is crying out for those reforms. Everybody wants those reforms.

“Lebanon right now is witnessing a flow of liquidity and a positive economic atmosphere, which is pointing in an upward direction, and that releases pressure for reforms. Everybody would say, if things are going okay, why do we need reforms since things will eventually go in the right direction without the need of those reforms. And this would be unfortunate.”




Retired servicemen clash with soldiers outside Lebanon's central bank during a demonstration demanding inflation-adjustments to their pensions, in Beirut on March 30, 2023. (AFP)

Mansouri has been cautious during his first few days in office and has refrained from making any further statements to the media, leaving time for “action,” as members of his entourage put it. But this means it is hard to predict what the ultimate outcome will be.

Fadi Khalaf, the secretary-general of the Association of Banks in Lebanon, told Arab News: “It is too early to comment on the policy that the central bank’s deputy governor intends to pursue. We are currently in a monitoring and waiting phase.”

Regarding the legacy of Salameh, whose term as governor was renewed four times between the era of the late President Elias Hrawi and that of Aoun, there is no denying he enjoyed the support of most political factions.

Despite his constant objections to policies adopted by the ruling political elite, he continued to cover the Lebanese state’s deficits and operating expenses.

One of the biggest expenses borne by the central bank was the cost of electricity generation, which ran as high as $2 billion annually. The money was handed over in the form of treasury advances that went to the Ministry of Energy, without ever being paid back to the bank.




A woman stands with a sign during a protest by the Depositors Solidarity Union group protesting against the Lebanese Central Bank's monetary policies outside the bank's headquarters in Beirut on June 23, 2023. (AFP)

This prompted Salameh to halt the process in 2020. The electricity sector continues to be the biggest burden on the bank’s mandatory reserve, as well as on the already empty state treasury.

Although the conflict and crisis in neighboring Syria created tough economic challenges for Lebanon, Salameh’s financial legerdemain shielded the country from many of the repercussions, until the financial crisis of 2019 struck.

This brought about the unraveling of the banking sector and the deterioration of the dollar-exchange rate, in a crisis that grew worse when former Prime Minister Hassan Diab’s government defaulted on Lebanon’s foreign debt in 2020.

One banking expert, who spoke to Arab News on condition of anonymity, believes that borrowing “will continue, whether directly or in accordance with the law,” largely continuing Salameh’s legacy.

“(The central bank’s) dollars will go to the state’s expenditure items, but what is required is improvement of the state’s finances and rationalization of spending of dollars,” the expert said.

Mansouri’s window of opportunity for implementing meaningful change is small.

“Not very long — I would say it is a matter of weeks,” said Kanaan.

“In a few weeks’ time, he either makes a step in the right direction, accompanied by all sorts of other reforms, and then we are making real headway in the right direction. Or he leaves. That’s the second alternative. Or he buckles and performs his duties just like Riad was doing before him.”

 


Lebanon says 1 killed in Israeli strike on south

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Lebanon says 1 killed in Israeli strike on south

  • An “Israeli enemy drone strike on a vehicle” in Bint Jbeil “killed one person and wounded two others”

BEIRUT: Lebanon said one person was killed on Saturday in an Israeli strike in the country’s south, the latest deadly raid despite a ceasefire between Israel and militant group Hezbollah.
An “Israeli enemy drone strike on a vehicle” in Bint Jbeil “killed one person and wounded two others,” Lebanon’s health ministry said in a statement carried by the official National News Agency (NNA), noting the toll was provisional.
Earlier Saturday, the ministry reported that a separate Israeli drone strike wounded one person in Shebaa, elsewhere in the south, with the NNA saying that raid targeted a house.
Israel has kept up its bombardment of Lebanon since a November 27 ceasefire that sought to end more than a year of hostilities with Hezbollah including two months of all-out war that left the Iran-backed group severely weakened.
On Thursday, an Israeli strike on a vehicle at the southern entrance of Beirut killed one man and wounded three other people, Lebanon said, as the Israeli army said it hit a “terrorist” working for Iran.
Under the ceasefire deal, Hezbollah was to pull its fighters back north of the Litani river, about 30 kilometers (20 miles) from the Israeli border, leaving the Lebanese army and United Nations peacekeepers as the only armed parties in the region.
Israel was required to fully withdraw its troops from the country, but has kept them in five locations in south Lebanon that it deems strategic.
Israel has warned that it would keep striking Lebanon until Hezbollah has been disarmed.


3 mayors arrested in southern Turkey as part of crackdown on opposition

Updated 33 min 26 sec ago
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3 mayors arrested in southern Turkey as part of crackdown on opposition

  • Abdurrahman Tutdere, the mayor of Adiyaman, and Zeydan Karalar, who heads Adana municipality, were detained in early morning raids

ISTANBUL: The mayors of three major cities in southern Turkey were arrested Saturday, state-run media reported, joining a growing list of opposition figures detained since the mayor of Istanbul was imprisoned in March.
Abdurrahman Tutdere, the mayor of Adiyaman, and Zeydan Karalar, who heads Adana municipality, were detained in early morning raids, according to Anadolu Agency. Both are members of the main opposition Republican People’s Party, or CHP.
The CHP mayor of Antalya, Muhittin Bocek, was arrested with two other suspects in a separate bribery investigation by the Antalya Chief Public Prosecutor’s Office, Anadolu reported.
Karalar was arrested in Istanbul and Tutdere was arrested in the capital, Ankara, where he has a home. Tutdere posted on X that he was being taken to Istanbul.
Ten people, including Karalar and Tutdere, were arrested as part of an investigation by the Istanbul Chief Public Prosecutor’s Office into allegations involving organized crime, bribery and bid-rigging.
Details of the charges against them were not immediately released by prosecutors but the operation follows the arrests of scores of officials from municipalities controlled by the CHP in recent months.
Istanbul Mayor Ekrem Imamoglu, widely considered the main challenger to President Recep Tayyip Erdogan ’s 22-year rule, was jailed four months ago over corruption allegations.
The former CHP mayor of Izmir, Turkey’s third-largest city, and 137 municipal officials were detained earlier this week as part of an investigation into alleged tender-rigging and fraud. On Friday, ex-mayor Tunc Soyer and 59 others were jailed pending trial in what Soyer’s lawyer described as “a clearly unjust, unlawful and politically motivated decision.”
Also Friday, it was reported by state-run media that the CHP mayor of Manavgat, a Mediterranean resort city in Antalya province, and 34 others were detained over alleged corruption.
CHP officials have faced waves of arrests this year that many consider aimed at neutralizing Turkey’s main opposition party. The government insists prosecutors and the judiciary act independently but the arrest of Istanbul’s Imamoglu led to the largest street protests Turkey has seen in more than a decade.
Imamoglu was officially nominated as his party’s presidential candidate following his imprisonment. Turkey’s next election is due in 2028 but could come sooner.
The crackdown comes a year after the CHP made significant gains in local elections. Adiyaman, which was severely affected by the 2023 earthquake, was among several cities previously considered strongholds for Erdogan to fall to the opposition.


Trump says there could be a Gaza deal next week after Hamas gives ‘positive’ response

Updated 05 July 2025
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Trump says there could be a Gaza deal next week after Hamas gives ‘positive’ response

  • But US leader says he had not been briefed on the current state of negotiations
  • Israeli troops open fire on Palestinians heading to food distribution sites

WASHINGTON: President Donald Trump said on Friday it was good that Hamas said it had responded in “a positive spirit” to a US-brokered Gaza ceasefire proposal.

He told reporters aboard Air Force One there could be a deal on a Gaza ceasefire by next week but that he had not been briefed on the current state of negotiations.

Hamas said Friday it has given a “positive” response to the latest proposal for a ceasefire in Gaza but said further talks were needed on implementation.

It was not clear if Hamas’ statement meant it had accepted the proposal from Trump for a 60-day ceasefire. Hamas has been seeking guarantees that the initial truce would lead to a total end to the war, now nearly 21 months old. Trump has been pushing hard for a deal to be reached, and Israeli Prime Minister Benjamin Netanyahu is due to visit the White House next week to discuss a deal.

The Hamas statement came as Israeli airstrikes killed 15 Palestinians in Gaza early Friday, while a hospital said another 20 people died in shootings while seeking aid.

The UN human rights office said it has recorded 613 Palestinians killed within the span of a month in Gaza while trying to obtain aid. Most were killed while trying to reach food distribution points run by an Israeli-backed American organization, while others were massed waiting for aid trucks connected to the United Nations or other humanitarian organizations, it said.

Efforts ongoing to halt the war

Trump said Tuesday that Israel had agreed on terms for a 60-day ceasefire in Gaza, during which the US would “work with all parties to end the war.” He urged Hamas to accept the deal before conditions worsen.

In its statement late Friday, Hamas said it “has submitted its positive response” to Egyptian and Qatari mediators.

It said it is “fully prepared to immediately enter into a round of negotiations regarding the mechanism for implementing this framework.” It did not elaborate on what needed to be worked out in implementation.

A Hamas official said the ceasefire could start as early as next week but he said talks were needed first to work out how many Palestinian prisoners would be released in return for each freed Israeli hostage and to specify the amount of aid that will enter Gaza during the truce. Hamas has said it wants aid to flow in greater quantities through the United Nations and other humanitarian agencies. The official spoke on condition of anonymity because he wasn’t authorized to discuss the response with the press.

The official also said that negotiations would start from the first day of the truce on a permanent ceasefire and full withdrawal of Israeli troops from Gaza in return for the release of remaining hostages. He said that Trump has guaranteed that the truce will be extended beyond 60 days if needed for those negotiations to reach a deal. There has been no confirmation from the United States of such a guarantee.

Previous rounds of negotiations have run aground over Hamas demands of guarantees that further negotiations would lead to the war’s end, while Netanyahu has insisted Israel would resume fighting to ensure the destruction of the militant group.

“We’ll see what happens. We’re going to know over the next 24 hours,” Trump told reporters on Air Force One late Thursday when asked if Hamas had agreed to the latest framework for a ceasefire.

20 killed Friday while seeking aid

Officials at Nasser Hospital in Khan Younis said at least three Palestinians were killed Friday while on the roads heading to food distribution sites run by the Israeli-backed the Gaza Humanitarian Foundation in southern Gaza.

Since GHF began distributions in late May, witnesses have said almost daily that Israeli troops open fire toward crowds of Palestinians on the roads leading to the food centers. To reach the sites, people must walk several kilometers (miles) through an Israeli military zone where troops control the road.

The Israeli military has said previously it fires warning shots to control crowds or at Palestinians who approach its troops. The GHF has denied any serious injuries or deaths on its sites and says shootings outside their immediate vicinity are under the purview of Israel’s military.

On Friday, in reaction to the UN rights agency’s report, it said in a statement that it was investigating reports of people killed and wounded while seeking aid. It said it was working at “minimizing possible friction between the population” and Israeli forces, including by installing fences and placing signs on the routes.

Separately, witnesses have said Israeli troops open fire toward crowds of Palestinians who gather in military-controlled zones to wait for aid trucks entering Gaza for the UN or other aid organizations not associated with GHF.

On Friday, 17 people were killed waiting for trucks in eastern Khan Younis in the Tahliya area, officials at Nasser Hospital said.

Three survivors told the AP they had gone to wait for the trucks in a military “red zone” in Khan Younis and that troops opened fire from a tank and drones.

It was a “crowd of people, may God help them, who want to eat and live,” said Seddiq Abu Farhana, who was shot in the leg, forcing him to drop a bag of flour he had grabbed. “There was direct firing.”

Airstrikes also hit the Muwasi area on the southern end of Gaza’s Mediterranean coast, where hundreds of thousands of Palestinians driven from their homes are sheltering in tent camps. Of the 15 people killed in the strikes, eight were women and one was a child, according to the hospital.

Israel’s military said it was looking into Friday’s reported airstrikes. It had no immediate comment on the reported shootings surrounding the aid trucks.

UN investigates shootings near aid sites

The spokeswoman for the UN human rights office, Ravina Shamdasani, said the agency was not able to attribute responsibility for the killings. But she said “it is clear that the Israeli military has shelled and shot at Palestinians trying to reach the distribution points” operated by GHF.

In a message to The Associated Press, Shamdasani said that of the total tallied, 509 killings were “GHF-related,” meaning at or near its distribution sites.

In a statement Friday, GHF cast doubt on the casualty figures, accusing the UN of taking its casualty figures “directly from the Hamas-controlled Gaza Health Ministry” and of trying “to falsely smear our effort.”

Shamdasani, the UN rights office spokesperson, told the AP that the data “is based on our own information gathering through various reliable sources, including medical, human rights and humanitarian organizations.”

Rik Peeperkorn, representative of the World Health Organization, said Nasser Hospital, the biggest hospital operating in the south, receives dozens or hundreds of casualties every day, most coming from the vicinity of the food distribution sites.

The International Committee of the Red Cross also said in late June that its field hospital near one of the GHF sites has been overwhelmed more than 20 times in the previous months by mass casualties, most suffering gunshot injuries while on their way to the food distribution sites.

Also on Friday, Israel’s military said two soldiers were killed in combat in Gaza, one in the north and one in the south. Over 860 Israeli soldiers have been killed since the war began, including more than 400 during the fighting in Gaza.

The Israeli military also issued new evacuation orders Friday in northeast Khan Younis in southern Gaza and urged Palestinians to move west ahead of planned military operations against Hamas in the area. The new evacuation zones pushed Palestinians into increasingly smaller spaces by the coast.

The Health Ministry in Gaza said the number of Palestinians killed in the territory has passed 57,000. The ministry does not differentiate between civilians and combatants in its count, but says more than half of the dead are women and children. The ministry is run by medical professionals employed by the Hamas government, and its numbers are widely cited by the UN and international organizations.

The war began when Hamas-led militants attacked southern Israel, killing 1,200 people and taking roughly 250 hostages.


IAEA pulls inspectors from Iran as standoff over access drags on

Updated 05 July 2025
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IAEA pulls inspectors from Iran as standoff over access drags on

  • Tehran has passed law to suspend cooperation with IAEA
  • Iran’s stock of near-bomb-grade uranium unaccounted for

VIENNA: The UN nuclear watchdog said on Friday it had pulled its last remaining inspectors from Iran as a standoff over their return to the country’s nuclear facilities bombed by the United States and Israel deepens.
Israel launched its first military strikes on Iran’s nuclear sites in a 12-day war with the Islamic Republic three weeks ago. The International Atomic Energy Agency’s inspectors have not been able to inspect Iran’s facilities since then, even though IAEA chief Rafael Grossi has said that is his top priority.
Iran’s parliament has now passed a law to suspend cooperation with the IAEA until the safety of its nuclear facilities can be guaranteed. While the IAEA says Iran has not yet formally informed it of any suspension, it is unclear when the agency’s inspectors will be able to return to Iran.
“An IAEA team of inspectors today safely departed from Iran to return to the Agency headquarters in Vienna, after staying in Tehran throughout the recent military conflict,” the IAEA said on X.
Diplomats said the number of IAEA inspectors in Iran was reduced to a handful after the June 13 start of the war. Some have also expressed concern about the inspectors’ safety since the end of the conflict, given fierce criticism of the agency by Iranian officials and Iranian media.
Iran has accused the agency of effectively paving the way for the bombings by issuing a damning report on May 31 that led to a resolution by the IAEA’s 35-nation Board of Governors declaring Iran in breach of its non-proliferation obligations.
IAEA chief Rafael Grossi has said he stands by the report. He has denied it provided diplomatic cover for military action.

IAEA wants talks
Foreign Minister Abbas Araqchi said on Thursday Iran remained committed to the nuclear Non-Proliferation Treaty (NPT).
“(Grossi) reiterated the crucial importance of the IAEA discussing with Iran modalities for resuming its indispensable monitoring and verification activities in Iran as soon as possible,” the IAEA said.
The US and Israeli military strikes either destroyed or badly damaged Iran’s three uranium enrichment sites. But it was less clear what has happened to much of Iran’s nine tons of enriched uranium, especially the more than 400 kg enriched to up to 60 percent purity, a short step from weapons grade.
That is enough, if enriched further, for nine nuclear weapons, according to an IAEA yardstick. Iran says its aims are entirely peaceful but Western powers say there is no civil justification for enriching to such a high level, and the IAEA says no country has done so without developing the atom bomb.
As a party to the NPT, Iran must account for its enriched uranium, which normally is closely monitored by the IAEA, the body that enforces the NPT and verifies countries’ declarations. But the bombing of Iran’s facilities has now muddied the waters.
“We cannot afford that .... the inspection regime is interrupted,” Grossi told a press conference in Vienna last week. 


Israeli settlers and Palestinians clash in West Bank village

Updated 40 min 8 sec ago
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Israeli settlers and Palestinians clash in West Bank village

  • Several Israeli military jeeps arrived at the scene and soldiers fired a few shots in the air, causing Palestinians to withdraw back to the village

SINJIL, Palestinian Territories: Dozens of Israeli settlers and Palestinians clashed Friday in the occupied West Bank village of Sinjil, where a march against recent settler attacks on nearby farmland was due to take place.

AFP journalists saw local residents and activists begin their march before locals reported that settlers had appeared on a hill belonging to the village.

Palestinian youths marched toward the hill to drive away the settlers, setting a fire at its base while the settlers threw rocks from the high ground.

Local Palestinians said that settlers also started a fire.

Several Israeli military jeeps arrived at the scene and soldiers fired a few shots in the air, causing Palestinians to withdraw back to the village.

Anwar Al-Ghafri, a lawyer and member of Sinjil’s city council, said that such incidents are not new, but have intensified in recent days in the area, just north of the West Bank city of Ramallah.

“A group of settlers, with support and approval from the Israeli army, are carrying out organized attacks on citizens’ land,” he said.

“They assault farmers, destroy crops, and prevent people from reaching or trying to reach their land,” he said, describing the events that had prompted Friday’s march.

The settlers involved in Friday’s clashes could not be reached for comment.

Israeli authorities recently erected a high fence cutting off parts of Sinjil from Road 60, which runs through the entire West Bank from north to south, and which both settlers and Palestinians use.

Mohammad Asfour, a 52-year-old resident, said that the fence was isolating his community, like other Palestinian cities and towns that recently had gates erected by Israel to control access to the outside.

“Sinjil is suffering greatly because of this wall. My house is near it, and so are my brothers’ homes. The settler has the right to come to Sinjil — but the sons of Sinjil aren’t allowed to climb up this hill,” Asfour said.

Violence in the West Bank, which Israel has occupied since 1967, has soared since the Hamas attack of October 2023 triggered the Gaza war.

Since then, Israeli troops or settlers have killed at least 947 Palestinians, including many militants, according to the Palestinian health ministry.

Over the same period, at least 35 Israelis have been killed in Palestinian attacks or during Israeli military operations, according to Israeli figures.