It’s about time to think differently, after more than five years since the start of the crisis. This is because the issue of Hezbollah, which overshadowed and skewed the debate on the banking system’s restructuring, is no longer as pressing. This is particularly true since the banking lobby, although it blocked all the IMF-demanded reforms and favored a de facto haircut on the deposits that continue to be frozen, won the battle for public opinion.
It must be admitted that the reformist camp has failed. It is even accused of being responsible for the crisis, which is the ultimate irony. The vast majority of the population, as well as the depositors, had an interest in its success. But either it was poorly explained, or it was poorly understood. It doesn’t matter now; the method must change.
There will be no banking restructuring without an agreement with the banks. They have powerful allies in the Parliament, beyond traditional divisions, and in the media sphere. Over the past five years, they have shown to what extent they can obstruct to avoid paying the cost and prevent their disappearance.
However, the “new era” requires a restart of the economy. In order to happen, this restart requires restoring confidence in the Lebanese banking system. Therefore, pragmatism will be required. Choosing to fight not for the solution that is ethically the most just, but for the one that, while staying true to these principles, is the most realistic.
The state will need to contribute to the reimbursement of deposits. To what extent? Under what conditions and terms? What does this imply for the future of the Lebanese economy? These questions must be addressed today. This should be the subject of a public debate that takes into account the position of the state, the banks and the depositors.
However, for this debate to take place and be up to the challenge, two conditions are required. The first is that the defamatory campaign against the reformist camp must stop immediately. It is completely normal for the banking lobby to defend its position. It can’t be told, that restructuring will bleed it dry or even make it disappear and expect it to turn the other cheek. But the methods used by its media allies to discredit ministers in the Salam cabinet or Kulluna Irada are absolutely disgusting, and, in many ways, similar to those used in the past by Hezbollah and its allies. It is impossible to negotiate, let alone find a middle-ground solution, in the face of such mafia-like behavior.
The second condition is that there must be a minimum consensus on the facts. One: The crisis was not caused by the default. Two: The banks bear a large part of the responsibility for both its outbreak and its resolution. They cannot amass billions when the casino is thriving and then refuse to pay a single penny when it goes bankrupt. Three: Not all depositors can be treated equally. Those who have the least and those who have benefited the least from the system must first be protected. Four: The state cannot be stripped of its assets, especially when its return is proclaimed, to reimburse depositors. Five: There will be no economic recovery or significant international aid without an agreement with the IMF. Again, it is impossible to negotiate, let alone find a middle-ground solution, if the other party religiously refuses to overcome denial.
We are living through a pivotal moment. The Joseph Aoun-Nawaf Salam duo can finally resolve this crisis and get Lebanon back on track. They have the trust of public opinion and the international community. However, this requires them to stand united throughout the battle and remain above political parties and interests. The first test is already one of the most important: the appointment of the future central bank governor. This person will play a key role in the banking restructuring, but will also need to redefine the country’s monetary policy and move it out of the “cash economy.” It is a strategic position that, of course, is closely watched by Lebanon’s new patron, with the United States and Saudi Arabia at the forefront.
What do we need? To put it simply, everything except a new Riad Salameh. Everything except a “broker” with ties to the political and financial world, who perceives that the primary purpose of his “job” is to make money. This logic has driven us into a wall. It would be suicidal to replicate it and expect different results.
The future governor must be appointed through a demanding and transparent process based on predefined criteria: integrity, competence and vision. The governor must be able to engage in dialogue with both banks and political parties with full independence.
The “new era” must live up to its promises. Otherwise, even with a weakened Hezbollah, Lebanon will remain a failed state.
This article was translated from L'Orient-Le Jour by Joelle El Khoury.
