Lebanon prime minister resigns after anti-government protests

Saad al-Hariri, Lebanon’s prime minister, has announced his resignation after almost two weeks of nationwide protests demanding that his government step down.

Mr Hariri on Tuesday said he had “reached a dead end” on finding a way forward, suggesting he had been unable to reach a compromise deal with colleagues in Lebanon’s power-sharing government to address the demands of protesters angry about economic decline and corruption.

His resignation throws heavily indebted Lebanon deeper into uncertainty as the country is gripped by a wave of popular anger unleashed by now-revoked plans to impose a tax on WhatsApp calls.

Mr Hariri is likely to remain as the caretaker prime minister, but analysts said it was difficult to see a way forward until a government could be formed that was capable of addressing protesters’ demands and the economic crisis. In the past it has taken months, sometimes years, to agree on a new government.

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Maha Yahya, director of the Carnegie Middle East Center in Beirut, noted that there was no sign in Mr Hariri's resignation statement that Lebanon's political forces had agreed on any transitional arrangements. "It would have been ideal for [Mr Hariri] to resign with the next steps planned and some sort of transitional phase" agreed, she said. Without that, she added, "we are heading into a turbulent period".

Mr Hariri, a Sunni Muslim, headed a fractious power-sharing government drawn from Lebanon’s various religious communities including Christians, Shia Muslims and Druze.

Internal disputes

Analysts say decision making in cabinet has often been paralysed by internal disputes during the past two weeks as demonstrators filled the streets. “Hariri was in a situation where he felt he was being held hostage and his room for manoeuvre [was] incredibly limited,” Ms Yahya said.

Hassan Nasrallah, leader of Hizbullah, the armed Shia group that is viewed as the strongest force in the country, made clear at start of the protests that he was against any government reshuffle or resignation.

Hours before Mr Hariri’s resignation, baton-wielding Hizbullah supporters attacked demonstrators in central Beirut. They destroyed tents erected by protesters in the square that has been the main focal point of the demonstrations.

Lebanon now faces the risk of a devaluation of its currency. The country has traditionally relied on foreign currency deposits in local banks from its large diaspora to fund debt repayments but these have been declining – a reflection of diminishing trust in the country’s economic management.

Capital Economics, a UK-based consultancy, said Mr Hariri’s resignation could “usher in a period of policymaking paralysis, making some form of debt restructuring all the more likely”.

Banks have been closed for almost two weeks and the banking association said they would remain closed until stability was restored. Economists say there is a risk of capital flight and a run on the banks by customers worried about their dollar deposits.

WhatsApp tax

The current protests, the biggest in Lebanon for years, were triggered by plans for a WhatsApp tax but quickly morphed into a revolt demanding broader political change. They have drawn Lebanese from all religious communities who have come out on the streets in towns and villages across the country.

Although the main grievances are economic, demonstrators have directed their ire against the entire political elite, which is seen as corrupt and responsible for driving the country to the brink of economic collapse.

Mr Hariri tried to defuse the crisis by issuing a package of economic reforms that rely on a one-off tax on banks to finance the deficit and that shield the population from new levies. The reforms failed to convince protesters to abandon the streets and have been criticised by economists as unrealistic.

In his resignation speech on Tuesday, Mr Hariri said he wanted a resolution that would reflect “the voice of the people”. He urged political forces in the country “to protect Lebanon and prevent any conflagration from reaching it”, and to revive the economy.

Mr Hariri is the third Arab leader to be forced out of office this year under pressure from protesters angry about economic mismanagement. Demonstrations in Algeria and Sudan helped to unseat the presidents of the two countries earlier this year. – Copyright The Financial Times Limited 2019