After three decades as the head of the BDL, Salameh's term expires at the end of July. With only weeks before departure, a successor is not assured.(Credit: Joao Sousa)
A statement signed by all four deputy governors of Banque du Liban on Thursday sparked a wave of panic about a possible vacancy in the governance of the country’s top financial institution. Observers, however, believe it is not a time for a vacuum.
Panic has begun to spread. While BDL’s first deputy governor Wassim Mansouri seemed to be on the way to succeeding Salameh after his departure from office in late July, nothing seems to be certain any more.
On July 7, a surprise statement signed by BDL’s four deputy governors called on the ruling class to find a successor to Salameh. They threatened to“take the necessary measures to preserve the national interest”if a successor is not appointed. The statement raises the possibility of their resignation and of course, another vacuum.
While Lebanon has been without a president for more than eight months, the country has strangely adjusted: from Baabda to General Security, the country has grown accustomed to all sorts of institutional vacancies.
But since July 8, the prospect of a vacancy at the head of the country’s top financial institution — something that never happened before — has set the minds spinning.
“While the economic situation continues to be tragic, the episode has recalled that nobody wants to take responsibility for the disastrous policies that have been implemented in recent years,” said Karim Bitar, a political analyst.
The worst-case scenario looms large on the horizon. Will the ship sink without a captain?
The situation is considered critical to both the press and the highest political circles.
Annahar referred to it as the “most dangerous vacancy,” while the daily Al-Binaa, affiliated with the Syrian Social Nationalist Party, said that “the Americans would be furious at the idea of a possible vacancy in this post.”
The Lebanese executive branch also expressed concern. “The threat to resign is very dangerous,” warned Lebanese caretaker Deputy Prime Minister Saade Chami on Friday.
“Shirking responsibility is an unpatriotic act,” said caretaker Economy Minister Amin Salam, warning that “in the event of a chain of resignations, the cabinet will be forced to find a solution to which everyone will be forced to conform.”
The situation is all the more confusing because the laws are imprecise. While the Code of Money and Credit is clear about cases “when [a single] post of governor had become vacant” in article 25, it is less clear when it comes to multiple absences, in other words, in the case that multiple vice-governors resign.
Because BDL has the capacity of a merchant, “a provisional administrator could be considered as per Article 13 of the same code,” lawyer Karim Daher told L’Orient-Le Jour in February.
But according to many observers, this scenario remains theoretical, almost illusory. The statement is a warning and an attempt to pressure political elites to appoint a successor to Salameh as soon as possible.
“The message is clear: they want a new governor, there is absolutely no question of extending Riad Salameh’s term, and it is a threat to resign, not a resignation,” said a source close to the BDL who declined to be named.
A breach of contract at such a high post is not something that could be done overnight. The deputy governors have been preparing for the transition for weeks. Meanwhile, the political class has expressed its protest. “Even if they really did intend to resign, they would have to give a three months legal notice,” said a senior bank officer.
Status quo
While the ship may not be abandoned at sea, we still don’t know who will be its captain in the coming months. Several options are laid forth.
The first is a last-minute extension of Salameh’s term mandate — on an exceptional basis, and despite the legal proceedings under way in Europe and the international arrest warrants against him.
Part of the political class, in particular the Speaker of Parliament, Nabih Berri, would have every interest in seeing its most trusted figure remain in control of monetary policy. This would require a cabinet decision or a simple majority vote in Parliament.
This possibility is becoming less and less likely and seems to be undermined by Salameh’s judicial problems.
“Even Riad Salameh’s staunchest supporters, Nabih Berri and Najib Mikati, have realized that this would not go down well with public opinion, Parliament and especially the international community,” said Bitar.
The second scenario, having the cabinet appoint a new governor, seems difficult but is still on the table. It is the desired outcome of part of the political class and the business world.
“Even if opinions are divided, there is a legal possibility of appointing a governor and certain personalities could emerge without coming up against vetoes from [Amal and Hezbollah],” said Bitar. “But since most of the political players are thinking [about this appointment] as part of a package deal [involving a president, a prime minister and a governor] complicates matters,” he added.
While negotiations have been underway for months on several names, including that of Camille Abousleiman, a lawyer specialized in finance and a former labor minister, the prospect of having an agreement by July 31 is unlikely, particularly since the presidential vacuum would deny any new governor a “Christian cover.”
The last option, perhaps the most realistic at this stage, is that the deputy governors could choose, or be forced, to take over BDL until a new governor is appointed by the cabinet, even if this were to take several months.
Regardless of the option chosen at the end of July, the climate surrounding this milestone reflects a chaotic regime, governed by opacity, where the status quo has the upper hand.
“Basically, nothing will change: all the options are identical because they would all be implemented by the same cabinet. The only thing capable of changing the situation would be the appointment of an independent governor — which is impossible as things are at the moment,” said Sami Nader, director of the Levant Institute for Strategic Affairs. “[but] I don’t see doomsday.”
This article was originally published in French in L'Orient-Le Jour. Translation by Joelle El Khoury.