Can Lebanon’s new central bank governor break the cycle of economic crisis?

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Updated 31 March 2025
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Can Lebanon’s new central bank governor break the cycle of economic crisis?

  • Lebanon appointed Karim Souaid as its central bank governor after a two-year vacancy, which in itself was a breakthrough
  • The new Banque du Liban chief inherits a crumbling economy in a nation beset with political rivalries and blighted by conflict

LONDON: As Lebanon faces up to its broken finances, neglected infrastructure and postwar reconstruction, the appointment of Karim Souaid as the new central bank governor marks an important step toward economic recovery.

On March 27, after weeks of government wrangling, 17 of the cabinet’s 24 ministers voted to name asset manager Souaid as governor of Banque du Liban, the country’s National News Agency reported.

Souaid replaces interim governor Wassim Mansouri, who led the central bank after Riad Salameh’s controversial 30-year tenure ended in 2023 — almost a year before his arrest on embezzlement, money laundering and fraud charges tied to financial commissions.

The choice of candidate was critical for both domestic and international stakeholders, as the role is key to enacting the financial reforms required by donors, including the International Monetary Fund, in exchange for a bailout.

Souaid’s appointment comes with high expectations. His priorities include restarting talks with the IMF, negotiating sovereign debt restructuring and rebuilding foreign exchange reserves.

Nafez Zouk, a sovereign analyst at Aviva Investors, told Arab News that the new central bank chief “needs to be able to demonstrate some commitment to the IMF’s approach for restructuring the banking sector.”




Karim Souaid was appointed as the new central bank governor. (Supplied)

Souaid brings extensive experience in privatization, banking regulations and structuring large-scale economic transitions. He is also the founder and managing partner of the Bahrain-based private investment firm Growthgate Equity Partners.

However, his success as central bank chief will depend on international support, as Western nations and financial institutions have linked aid to sweeping economic reforms, including banking sector restructuring.

Last year, the EU pledged €1 billion ($1.08 billion) to help Lebanon curb refugee flows to Europe. Half was paid in August, while the rest is contingent on “some conditions,” EU Commissioner Dubravka Suica said during a February visit.

“The main precondition is the restructure of the banking sector ... and a good agreement with the International Monetary Fund,” she said after meeting Lebanese President Joseph Aoun.

However, critics have raised concerns about Souaid’s ties to Lebanon’s financial elite and members of the entrenched ruling class, fearing that his policies might favor the banking sector over broader economic reform, local media reported.

Prime Minister Nawaf Salam has also expressed reservations about Souaid’s appointment, saying the central bank chief “must adhere, from today, to the financial policy of our reformist government… on negotiating a new program with the IMF, restructuring the banks and presenting a comprehensive plan” to preserve depositors’ rights.




An excavator removes wreckage at site of an Israeli airstrike that targeted a house in the southern Lebanese village of Kfar Tibnit. (AFP)

Before Souaid’s appointment, Aoun and Salam were unable to reach a consensus on a candidate, according to local media reports. The president therefore insisted on putting the matter to a Cabinet vote.

Echoing the prime minister’s apprehensions is Nasser Saidi, a former Lebanese economy minister and central bank vice governor, who raised concerns about the selection process for the new central bank chief, warning that powerful interest groups may have too much influence.

He told the Financial Times that the decision carried serious consequences for Lebanon’s economic future, saying that one of Souaid’s biggest challenges will be convincing the world to trust the nation’s banking system enough to risk investing in its recovery.

“The stakes are too high: You cannot have the same people responsible for the biggest crisis Lebanon has ever been through also trying to restructure the banking sector,” said Saidi, who served as first vice governor of the Banque du Liban for two consecutive terms.

“How are we going to convince the rest of the world that it can trust Lebanon’s banking system, and provide the country with the funding it needs to rebuild (after the war)?”




The World Bank ranks the economic collapse among the worst globally since the mid-19th century. (AFP/File)

Last month, the IMF welcomed Lebanon’s request for support in tackling its protracted economic crisis. In February, after meeting with the newly appointed finance minister, Yassine Jaber, the international lender showed openness to a new loan agreement.

Lebanon’s economy has been in a state of turmoil since it suffered a financial crash in late 2019, compounded by the COVID-19 pandemic, the Beirut port blast of August 2020 and the 14-month Israel-Hezbollah conflict.

The national currency has lost more than 90 percent of its value and food prices have soared almost tenfold since May 2019. Citizens have struggled to access their savings since banks imposed strict withdrawal limits, effectively trapping deposits.

Lebanon’s prolonged crisis, triggered by widespread corruption and excessive spending by the ruling elite, has driven the country from upper-middle-income to lower-middle-income status, with gross domestic product per capita falling 36.5 percent from 2019 to 2021.

The World Bank ranks the economic collapse among the worst globally since the mid-19th century.

The Israel-Hezbollah war, which began Oct. 8, 2023, and concluded with a fragile ceasefire in November 2024, is estimated to have caused $3.4 billion in damage to Lebanese infrastructure, with economic losses of up to $5.1 billion.

Combined, these figures total 40 percent of Lebanon’s GDP.

The IMF has outlined key conditions for government action. These include addressing weak governance and implementing a fiscal strategy that combines debt restructuring with reforms to restore credibility, predictability and transparency in the fiscal framework.

It has also urged Lebanon to pursue a comprehensive financial sector restructuring, acknowledge losses at private banks and the central bank, and protect smaller depositors. Additionally, it calls for the establishment of a credible monetary and exchange rate system.

Lebanese economist Saidi said that the IMF “quite correctly and wisely” demanded comprehensive economic reforms.

INNUMBERS

• 36.5% Lebanon’s GDP per capita contraction from 2019 to 2021.

• $8.5bn Economic and infrastructure cost of Israel-Hezbollah conflict.

In a March 14 interview with BBC’s “World Business Report,” he said that the government must address fiscal and debt sustainability, restructure public debt, and overhaul the banking and financial sector.

But hurdles remain. Saidi added that while Lebanon “has a government today that I think is willing to undertake reforms, that does not mean that parliament will go along.”

Lebanon also needs political and judicial reform, including an “independent judiciary,” he added.

Nevertheless, Saidi told the BBC that Lebanon, for the first time, has “a team that inspires confidence” and has formed a cabinet that secured parliament’s backing.




Protesters during a rally outside the Palace of Justice in Beirut. (AFP/File)

Despite this positive step, Lebanon must still address structural failures in its public institutions, rooted in decades of opacity, fragmented authority and weak accountability.

Zouk of Aviva Investors believes another big challenge to reforming the financial sector will be “the large resistance from banks and their shareholders.

“Without some degree of accountability and transparency, I struggle to see how the rest of the reform agenda can be implemented,” he said.

There are “several proposals being circulated that would run counter to the IMF and would far from restore credibility and trust to the Lebanese financial sector.”

Saidi highlighted the broader challenges Lebanon faces, cautioning that without financing for reconstruction, achieving socioeconomic and political stability will remain elusive.

“If you don’t have financing for reconstruction, you’re not going to have socioeconomic stability, let alone political stability,” he said.

“There has to be a willingness by all parties to go along with the reforms,” he added, highlighting that this is where external support is crucial, particularly from Saudi Arabia, the UAE, France, Europe and the US.




Lebanon endured a 14-month Israel-Hezbollah conflict. (AFP/File)

Saidi said that support must go beyond helping bring the new government to power — it must include assistance, especially in terms of security.

In March, Reuters cited five sources saying the US was engaging with Lebanon’s new government on selecting the central bank governor to combat corruption and prevent the Iran-backed Hezbollah from exploiting the banking system for illicit financing.

A US official who met the candidates before Souaid’s appointment told the news agency that the US was making its guidance on candidates’ qualifications clear to the Lebanese government.

“The guidelines are: No Hezbollah and nobody who has been caught up in corruption. This is essential from an economic perspective,” the official said.

The move, according to Reuters, highlights the US administration’s continued focus on weakening Hezbollah. The group has seen its political and military clout diminished by Israel, which decimated its leadership, drained its finances and depleted its once formidable arsenal.

Firas Modad, a Middle East analyst and founder of Modad Geopolitics, told Arab News that he believes US approval was a prerequisite for selecting the next Banque du Liban governor.

“The next governor is irrelevant,” he said a few days before Souaid’s appointment. “He will need to be approved by the Americans, and the Lebanese system will not appoint someone that the Americans do not approve of.”




Washington is pushing Lebanon’s new government to disarm Hezbollah and address longstanding issues with Israel. (AFP/File)

Modad added that Lebanon faces a stark choice: “Normalization with Israel or civil war.” This decision will “determine whether there is a chance to rebuild the financial system and recover some money for the bondholders and smaller depositors.”

On March 22, the Israeli military mounted airstrikes on Lebanon amid renewed violence in Gaza and Yemen. A “second wave” targeted sites in southern and eastern Lebanon, according to the Israeli military.

Israel claimed that the attacks targeted “Hezbollah command centers, infrastructure sites, terrorists, rocket launchers and a weapons storage facility.” It marked the deadliest escalation since the ceasefire in late November.

Washington is pushing Lebanon’s new government to disarm Hezbollah and address longstanding issues with Israel, including border demarcation and the release of Lebanese captives through enhanced diplomatic talks.

Hezbollah, meanwhile, has rejected calls to disarm as long as Israel continues to occupy Lebanese territory.

 


Monsoon-loving Indian expats chase rain in UAE desert

Updated 3 sec ago
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Monsoon-loving Indian expats chase rain in UAE desert

  • After Muhammed Sajjad moved from India to the United Arab Emirates a decade ago, he missed his native Kerala’s monsoon season, so he embarked on an unlikely quest: finding rain in the desert
SHARJAH: After Muhammed Sajjad moved from India to the United Arab Emirates a decade ago, he missed his native Kerala’s monsoon season, so he embarked on an unlikely quest: finding rain in the desert.
Using satellite imagery, weather data and other high-tech tools, the amateur meteorologist tracks potential rainfall spots across the desert country and, along with other Indians nostalgic for the monsoon season, chases the clouds in search of rain.
“When I came to UAE in 2015, in August, it... was peak monsoon time” in Kerala, the 35-year-old estate agent told AFP, adding that he had struggled to adjust to the change of climate.
“So I started to search about the rainy condition in UAE and I came to know that there is rain happening in UAE during peak summer,” he said, adding: “I started to explore the possibility to chase the rain, enjoy the rain.”
Each week, he forecasts when and where rain might fall and posts a suggested rendezvous to the 130,000 followers of his “UAE Weatherman” page on Instagram.
He regularly posts footage of his rain expeditions out into the desert, hoping to bring together “all rain lovers who miss rain.”
Last weekend, he headed out into the desert from Sharjah at the head of a convoy of about 100 vehicles.
But nothing is certain. The rain “may happen, it may not happen,” Sajjad said. But when it does, “it is an amazing moment.”


After driving in the desert for hours, the group arrived at the designated spot just as a downpour started.
The rain lovers leapt out of their vehicles, their faces beaming as the rain droplets streamed down their cheeks in a rare reminder of home.
“They feel nostalgic,” Sajjad said proudly.
Most UAE residents are foreigners, among them some 3.5 million Indians who make up the Gulf country’s largest expatriate community.
Despite the use of advanced cloud-seeding technology, the UAE has an average yearly rainfall of just 50 to 100 milliliters.
Most of it falls during short but intense winter storms.
“While long-term averages remain low, the frequency and intensity of extreme weather events has been increasing and is due to global warming,” said Diana Francis, a climate scientist who teaches at Khalifa University in Abu Dhabi.
In the summer, the country often gets less than five milliliters of rain, she said, usually falling away from the coastal areas where most of the population lives.
So rain-seekers must drive deep into the desert interior to have a chance of success.
An Indian expatriate, who gave her name only as Anagha and was on her first expedition into the desert last weekend, said she was “excited to see the rain.”
“All of my family and friends are enjoying good rain and good climate and we are living here in the hot sun,” she said.
The UAE endured its hottest April on record this year.
By contrast, April last year saw the UAE’s heaviest rains in 75 years, which saw 259.5 mm of rainfall in a single day.
Four people died and the commercial hub of Dubai was paralyzed for several days. Scientists of the World Weather Attribution network said the intense rains were “most likely” exacerbated by global warming.
“We couldn’t enjoy it because it was flooded all over UAE,” Anagha said. “This time we are going to see... rain coming to us in the desert.”

‘What wrong did he do?’ Gaza family mourn three-year-old shot dead

Updated 11 June 2025
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‘What wrong did he do?’ Gaza family mourn three-year-old shot dead

  • In Gaza, “There’s no hope or peace”

KHAN YUNIS, Palestinian Territories: Gazan mother Amal Abu Shalouf ran her hand over her son’s face and hair, a brief farewell before a man abruptly sealed the body bag carrying the three-year-old who was killed just hours earlier on Tuesday.
“Amir, my love, my dear!” cried his mother, struggling to cross the crowded courtyard of Nasser Hospital in Khan Yunis, southern Gaza’s main city, where several bodies lay in white plastic shrouds.
According to the civil defense agency, at least nine people were killed on Tuesday in the southern Gaza Strip as Israeli forces carried out military operations, more than 20 months into the war triggered by Hamas’s 2023 attack on Israel.
Contacted by AFP, the military did not respond to a request for comment about Amir Abu Shalouf’s death.
At the hospital, a man carried the boy’s body in his arms through a crowd of dozens of mourners.
“I swear, I can’t take it,” his teenage brother, Ahmad Abu Shalouf, said, his face covered in tears.
“What wrong did he do?” said another brother, Mohammad Abu Shalouf. “An innocent little boy, sitting inside his tent, and a bullet struck him in the back.”
Mohammad said he had “found him shot in the back” as he returned to the tent that has become the family’s home in Al-Mawasi, a coastal area near Khan Yunis that is now a massive encampment for displaced Palestinians.
The devastating war has created dire humanitarian conditions in Gaza, where the United Nations has warned that the entire population is at risk of famine.
The grieving mother, comforted by relatives, said her young son had been begging for food in recent days and dreaming of a piece of meat.
“There is no food, no water, no clothing,” said Amal, who has eight children to take care of.
Amal said she too was injured in the pre-dawn incident that killed her son.
“I heard something fall next to my foot while I was sitting and baking, and suddenly felt something hit me. I started screaming,” she said.
Outside the tent at the time, she said she tried crawling and reaching for other family members.
“Then I heard my daughter screaming from inside the tent...  found them holding my son, his abdomen and back covered in blood.”
A group of men formed lines to recite a prayer for the dead, their words almost drowned out by the noise of Israeli drones flying overhead.
In the second row, Ahmad Abu Shalouf held his hands over his stomach in prayer, unable to hold back a stream of tears.
Similar scenes played out at the hospital courtyard again and again over several hours, as the day’s dead were mourned.
At one point, an emaciated man collapsed in front of the shrouded bodies.
One mourner pressed his head against one of the bodies, carried on a stretcher at the start of a funeral procession, before being helped up by others.
At a distance, a group of women supported Umm Mohammad Shahwan, a grieving mother, with all of them in tears.
“We need the war to end,” said Amal Abu Shalouf.
In Gaza, she lamented, “there’s no hope or peace.”


Syria rescuers say two killed in drone strikes on northwest

Updated 11 June 2025
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Syria rescuers say two killed in drone strikes on northwest

  • During a meeting in Riyadh last month, US President Donald Trump called on his Syrian counterpart Ahmed Al-Sharaa to help Washington prevent a resurgence by Daesh

DAMASCUS: Two people were killed in separate drone strikes Tuesday on a car and a motorcycle in the northwestern bastion of the Islamist former rebels who now head the Syrian government, rescuers said.
There was no immediate claim of responsibility for the twin drone strikes in the Idlib region but a US-led coalition in Syria has carried out past strikes on terrorists in the area.
Earlier this year, the United States said it killed several commanders of Al-Qaeda’s Syria affiliate Hurras Al-Din in the area.
The group had recently announced it was breaking up on the orders of the interim government set up by the rebels after their overthrow of Bashar Assad in December.
US troops are deployed in Syria as part of a US-led coalition to fight the Daesh group.
When contacted by AFP, a US defense official said they were aware of the reports but had “nothing to provide” at the time.
During a meeting in Riyadh last month, US President Donald Trump called on his Syrian counterpart Ahmed Al-Sharaa to help Washington prevent a resurgence by Daesh.
 

 


Gaza-bound activist convoy enters Libya from Tunisia

Updated 11 June 2025
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Gaza-bound activist convoy enters Libya from Tunisia

  • Convoy members were heard chanting “Resistance, resistance” and “To Gaza we go by the millions” in a video posted on the organizing group’s official Facebook page

BEN GUERDANE, Tunisia: Hundreds of pro-Palestinian activists taking part in a convoy crossed the Tunisian border on Tuesday into Libya, aiming to keep heading eastwards until they break Israel’s blockade on the Palestinian territory, organizers said.
This comes after Israel intercepted an aid ship attempting to breach its blockade on Gaza, which was carrying 12 people, including campaigner Greta Thunberg and European parliament member Franco-Palestinian Rima Hassan.
The “Soumoud” convoy, meaning “steadfastness” in Arabic, set off from Tunis on Monday morning, spokesman Ghassen Henchiri told Tunisian radio station Mosaique FM.
He said it includes 14 buses and around 100 other vehicles, carrying hundreds of people.
Convoy members were heard chanting “Resistance, resistance” and “To Gaza we go by the millions” in a video posted on the organizing group’s official Facebook page.
Henchiri also told Jawhara FM radio channel the convoy plans to remain in Libya for “three or four days at most” before crossing into Egypt and continuing on to Rafah.
Organizers have said Egyptian authorities have not yet provided passage to enter the country, but Henchiri said the convoy received “reassuring” information.
Organizers said the convoy was not bringing aid into Gaza, but rather aimed at carrying out a “symbolic act” by breaking the blockade on the territory described by the United Nations as “the hungriest place on Earth.”
Algerian, Mauritanian, Moroccan and Libyan activists were also among the group, which is set to travel along the Libyan coast.
After 21 months of war, Israel is facing mounting international pressure to allow more aid into Gaza to alleviate widespread shortages of food and basic supplies.
The Madleen aid boat, which set sail for Gaza from Italy on June 1, was halted by Israeli forces on Monday and towed to the port of Ashdod.
The 12 people on board were then transferred to Ben Gurion Airport near Tel Aviv, the foreign ministry said, adding that Thunberg had been deported.
Five French activists were taken into custody after they refused to leave Israel voluntarily.
 

 


Algeria man’s self-immolation investigated as ‘terrorism’

A general view shows the Justice Ministry in the Algerian capital, Algiers. (AFP file photo)
Updated 11 June 2025
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Algeria man’s self-immolation investigated as ‘terrorism’

  • The charges include “endangering the lives and physical safety of others” and “publishing and promoting false and malicious news”

ALGIERS: Algerian authorities have launched a counterterrorism investigation after a man had set himself on fire, an act investigators suspect was part of coordinated plot with links abroad, prosecutors said Tuesday.
Faouzi Zegout was injured as a result of the self-immolation on June 1 outside the justice ministry to protest a case he was involved in.
A video of the incident in the capital Algiers circulated on social media, showing Zegout saying he had done it “because of a judge... who arbitrarily threatened me with a 10-year prison sentence.”
At an Algiers court on Tuesday, a prosecutor said that five people had been detained in the case, without specifying whether Zegout was one of them.
One of the five has been released under judicial supervision, and the case has been transferred to a counterterrorism division, the court heard.
According to the prosecutor, investigators had found that the act was orchestrated by an “organized criminal group” with suspected ties abroad.
The prosecutor said the group had allegedly plotted the act and assigned roles, including filming and publishing the self-immolation online, to “disturb public order and disrupt institutions.”
The charges include “endangering the lives and physical safety of others” and “publishing and promoting false and malicious news.”
The person who filmed the incident had “communicated with people abroad,” had “multiple bank accounts” and “received money transfers from people,” the prosecutor said, without specifying when the alleged transfers had occurred or who made them.
Zegout has said that he recently appeared in court for launching a fundraiser without official authorization to help cover medical costs for sick people.
A court in Frenda, his hometown about 340 kilometers (200 miles) west of Algiers, was scheduled to deliver its decision the same day he set himself on fire.