The National Bloc: IMF agreement under Lebanon bankers’ fire

The exchange rate of the US dollar witnessed a significant rise against the Lebanese pound at the end of the week’s trading, while the battle against the country's draft agreement signed last April with the International Monetary Fund has raged to an incredible extent. Obviously, the Lebanese public opinion realizes that the devilish currency rollercoaster is neither economic nor technical in nature, but is only a byproduct of the political crisis instigated by the ruling establishment to further weaken the Lebanese economy.

The campaign was renewed on Monday, June 21, in a leaked letter of advisor to the “Association of Banks” Carlos Abadi in which he rejects the initial agreement saying it is "unlawful" and "unconstitutional". Abadi was permanently barred from the securities business in the US by the Financial Industry Regulatory Authority and is known for his closeness to Central Bank Governor Riad Salameh. 

In this context, the announcement of the Association of Banks in Lebanon on June 22 that “it does not absolutely oppose the agreement” outlived its usefulness and failed in mitigating the impact of the letter signed by Abadi, as the Association’s statement remained vague and lacked clarity.

In a televised interview on June 22, and despite his public support to the agreement and his membership in the negotiating team, the central bank governor did not hesitate to devoid the agreement of its content by refusing to amend the banking secrecy law, which is one of its basic provisions.

This campaign constitutes a dangerous development; first in its timing with the governmental paralysis on the impact of President Mikati's attempt to form a new government, and relying on a political vacuum that would negatively affect the work of the negotiating team. And second, its clear disclosure of the desire to harness state property and gold reserves to offset losses in the banking sector.

Today we are at a dangerous crossroads. This is a moment of massive decision and consequence, whether we choose to see that or not. The accelerating decline of the Central Bank’s reserves of foreign currency, as the Governor and those who speak on behalf of the “Association of Banks” are seeking to gain time to create a new reality in which the selling of state’s assets and gold becomes a necessity for survival. Despite the bitter fact – if Lebanon state-owned assets are sold – it would constitute an unprecedented "described theft" of the money and future of Lebanese at a time when the political forces, without exception, have surrendered to some major depositors and networks of beneficiaries.

This reality requires the new parliament to pass the laws that were approved in the draft agreement, namely the 2022 budget, the amendment of banking secrecy law, a fair law for “capital control” and the restructuring of the banking sector. The change-and-opposition deputies must mobilize support inside and outside the parliament and communicate with the international community in order to approve a series of reforms regarded as the salvation threshold to any financial assistance to Lebanon.

In Lebanon, there are those who consider themselves entrusted with the liberal and free economic prototype, while on the other hand their mafia and monopolistic behavior threaten the inevitable withering away of the state and economy.

On the contrary, building a free economy in Lebanon and protecting individual initiative begins with implementing reforms, strengthening transparency and oversight, and reforming the banking sector, whose primary function is to safeguard depositors' assets and make loans to individuals and businesses, not only act as a spokesperson to the central bank.