Endgame for Riad Salameh?

The fate of the BDL governor is not yet sealed, but the possibility that he will be removed from his post is being seriously considered for the first time in three decades.

Endgame for Riad Salameh?

Central Bank Governor Riad Salame in his office in Beirut, December 20, 2021. (Joseph Eid/AFP)

Nothing has been decided yet and no agreement has been reached on his successor, but for the first time in three decades, there is a serious possibility that Bank of Lebanon Governor Riad Salameh will be ousted from his post. L'Orient-Le Jour conducted a dozen interviews with politicians, diplomats and economic authorities who navigate these spheres. Almost all those who agreed to respond requested anonymity, given the sensitivity of the subject and the fact that the game is still far from over. That said, three main ideas emerged. The first is that the immovable central bank governor is losing several key supporters on the domestic and external scenes. The second is that discussions to identify a successor, a prerequisite for his departure, have begun. The third is that several political obstacles remain, with the governor still the subject of a battle between the presidential camp and his opponents.

Riad Salameh, who has headed the central bank since 1993, has long been regarded as a financial wizard, the only man capable of keeping Lebanon from international turmoil. The economic and financial crisis that hit the country hard in 2019 has seriously shaken the myth. Symbolic of this decline has been the disintegration of his entire financial architecture, his life's work, with the devaluation of the lira and the "zombification" of the banking sector.

Targeted by judicial investigations in at least four European countries, political considerations made it impossible for the BDL governor to remain in office. But the noose is now tightening and his ranks of supporters are thinning. The revelations follow one another in the Swiss investigation, which focuses on transfers made by BDL to Forry Associates — whose main economic beneficiary is the governor's brother, Raja Salameh — and in the French investigation, which is looking into the real estate assets of the governor and his relatives. The governor is also the subject of two investigations in Lebanon, one led by judge Jean Tannous, the other by judge Ghada Aoun, who is reputed to be close to the presidential camp, which led to the arrest of his brother.

In this context, "support is no longer tenable," says an expert who is closely connected to Lebanon’s political and financial circles.

In recent months, the BDL governor’s position was secured by three actors: The United States, Prime Minister Naiib Mikati and Parliamentary Speaker Nabih Berri. According to our information, the first two are no longer opposed to his departure.

Privately, US officials have so far justified their position in order to prevent Hezbollah and its allies from getting their hands on this strategic position. But several corroborating sources told The OLJ that the American position has recently changed because of the increasing number of judicial investigations against Salameh.

"It is becoming very difficult to negotiate with a person implicated in so many cases," says an informed source. However, the United States needs assurances on what will happen next before going any further. "If there is a Lebanese consensus on a candidate who would continue to cooperate with the Americans, the international community will not oppose this transition," said Joe Macaron, researcher and analyst.

"No plan to end the crisis

According to information gathered by L'Orient-Le Jour, several potential successors have already been sounded out by Lebanese officials but also by American and French diplomats. Five or six candidates have been "shortlisted,” including the former Minister of Labor Camille Abousleiman, who is close to the Lebanese Forces, and the Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), Jihad Azour. "Several personalities and authorities have been called to give their opinion on the candidates in terms of skills," said a financial expert.

When contacted, the American and French embassies in Lebanon were content to say that this is an "internal matter" falling within the "sole competence of the Lebanese government.” Camille Abousleiman and Jihad Azour did not respond to our requests.

If the momentum is building, it is also because Najib Mikati’s position is no longer what it was. At the end of December, he declared that he had no intention of considering the possible dismissal of the BDL Governor, arguing, "you don't change officers during a war.” This is no longer the case. "Mikati is now open to the idea of a dismissal," said a person close to the prime minister.

"He has finally realized that the financial wizard has no serious plan to get out of the crisis," added an informed source.

Najib Mikati seems to realize that the support he gives to the BDL governor may cost him politically and reduce his maneuvering room. The prime minister wants to be associated with the IMF agreement and the country's recovery; by this logic, Salameh is more of a burden than an asset. "Lebanon needs to engage the help of the international community to get out of the crisis. It cannot do so if it does not regain its credibility by holding accountable the one who is responsible for the country's monetary practices,” argued Sami Nader, director of the Levant Institute for Strategic Affairs.

"A new immunity

The governor's fate is not yet sealed, however, because of several obstacles. The most important is political. Nabih Berri is still opposed to dislodging Salameh, in particular because he does not want to grant this victory to President Michel Aoun, who does not hide his hostility towards the governor. The parliamentary speaker and the prime minister both fear that the president will take advantage of this opportunity to appoint a candidate of his own choosing, thereby increasing his influence within the state a few months before his own mandate ends.

None of Salameh’s potential candidates now circulating belong to the presidential camp, which opens the possibility of an agreement in which nobody, or almost nobody, would lose. According to our political columnist, Mounir Rabih, one plan being considered would see several senior officials replaced. According to our columnist, the two heads of the executive discussed the issue at their last meeting in Baabda, Thursday morning. Faced with Aoun’s insistence, Mikati replied that there was no question of taking this decision until an agreement on the name of his successor has been found.

In a sign that consensus is far from being achieved, Salameh has been invited to attend the next cabinet session; the invitation was issued against Aoun’s wishes and his supporters have threatened to boycott the session if it comes to pass. "Allowing him to attend is granting him a new immunity," a Hezbollah official who wished to remain anonymous told The OLJ. The official said his party prefers to remain on the sidelines in this matter which, he said, "should not be concluded quickly.”

In addition to the question of the successor, Salameh’s replacement may also be blocked by context. "The United States fears that this will be exploited before the legislative elections and that it will complicate negotiations with the IMF," says an informed source. The BDL governor is a member of the Lebanese delegation in charge of negotiating with the international body. Negotiations with the IMF, whose delegation is expected in Beirut on Tuesday, should accelerate in the coming weeks and Salameh’s possible ouster would necessarily complicate the deal at first.

Finally, there is another delicate issue: That of how he will be dislodged. If the governor, who has been living at the central bank for weeks, is dismissed as part of a political agreement, it could involve diplomatic protection that would shield him from justice.

“This is not something that can be planned overnight," said an informed source.

This article was originally published in French in L'Orient-Le Jour.

Nothing has been decided yet and no agreement has been reached on his successor, but for the first time in three decades, there is a serious possibility that Bank of Lebanon Governor Riad Salameh will be ousted from his post. L'Orient-Le Jour conducted a dozen interviews with politicians, diplomats and economic authorities who navigate these spheres. Almost all those who agreed to respond...