Riad Salameh term as the Central Bank governor of Lebanon is set to end in July, prompting efforts to find a suitable successor. The process has been met with multiple challenges, including the caretaker government’s authority to make such an appointment and the influence of external forces. The following is an extended analysis of the situation surrounding this crucial appointment.
Riad Salameh: A Glimpse into the Central Bank Governor’s History
Riad Salameh has had a long and storied career as the Central Bank governor of Lebanon since 1993. Born in 1950, Salameh graduated from the American University of Beirut with a Bachelor’s degree in Economics and later pursued further studies in the United States.
Before becoming the Central Bank governor, he held various positions in the financial sector, including working at Merrill Lynch and serving as the head of Lebanon’s representative office at the World Bank. Throughout his tenure, Salameh has been credited with maintaining financial stability during turbulent times, such as the 2008 global financial crisis and the ongoing economic turmoil in Lebanon.
Despite his successes, Salameh’s tenure has not been without controversy, including allegations of corruption and mismanagement. With his term set to end in July, the search for a suitable successor continues amidst the complex landscape of Lebanese politics and international interests.
The Caretaker Government’s Authority
Legal Opinions and Constitutional Debate Prime Minister Najib Mikati is in consultation with constitutional experts and lawyers to determine if his government possesses the authority to appoint a new Central Bank governor amid the presidential vacancy. Opinions are divided, with a majority arguing against the caretaker government’s authority. However, some experts maintain that “necessity has provisions,” suggesting that the government may still have a role to play in the appointment process.
Hezbollah, one of Lebanon’s most prominent political forces, believes that certain red lines should not be crossed with regard to the president’s powers. Their opposition to the caretaker government’s involvement in the appointment process may create further complications.
External Parties’ Involvement
French officials have expressed concern over appointing a new Central Bank governor and have engaged with various Lebanese parties to discuss the issue. As a key player in Lebanon’s international relations, France’s involvement further complicates the decision-making process.
The United States has exercised its “right of veto” in the appointment process, conducting opinion polls among Lebanese officials and potential candidates. The US’s influence in Lebanon’s internal affairs adds another layer of complexity to the situation.
Potential Changes to the Governor’s Role
Amending the Monetary and Credit Law
As discussions about Riad Salameh’s successor continue, there is a growing interest in reforming the Monetary and Credit Law to change the Central Bank governor’s role. Advocates for change call for placing the governor under the supervision of a specific authority rather than granting them absolute powers.
The Role of the New Governor
Restructuring the Central Bank
The new governor will be responsible for restructuring Banque du Liban and the banking sector to ensure financial stability in Lebanon. This task will require a strong leader with a clear vision for reform.
Collaboration with the International Monetary Fund (IMF)
The new governor is expected to establish a technical management system for banking and monetary work in Lebanon in accordance with an agreement with the IMF. This collaboration will be crucial in securing Lebanon’s financial support to overcome its current economic crisis.
Search for a Suitable Candidate
Emphasis on Human Rights and Legal Background
The search for a suitable candidate focuses on individuals with a strong background in human rights and legal matters and experience in economics. This combination of skills and expertise will be essential for leading the Central Bank through the challenges ahead.
Alternative Names and Challenges
The Changing List of Potential Successors
The list of potential successors to Riad Salameh is ever-changing as new names emerge and others fade away. Each candidate brings their unique strengths and weaknesses to the table, making it difficult for the decision-makers to reach a consensus.
Political Opposition to Candidates
Various political forces within Lebanon are likely to challenge and oppose different candidates, further complicating the appointment process. A candidate’s political affiliations, policy preferences, and personal history may all be scrutinized, leading to potential delays or deadlocks in the process.
April 2023: A Glimmer of Hope Amidst Lebanese Lira Stability
Throughout April 2023, the Lebanese Pound (LBP) experienced a relatively stable exchange rate against the US Dollar (USD) on the black market. The month began with a rate of 1 USD = 97,200 LBP and saw minor fluctuations, reaching a peak of 97,300 LBP and a low of 97,100 LBP.
This stability was primarily attributed to two key factors: the Banque du Liban (BDL) intervention by injecting dollars into the market, and an influx of Lebanese expatriates and tourists during the Easter and Eid al-Fitr holidays, which brought an estimated $400 million into the country.
The stability of the LBP can also be linked to the BDL governor’s intention to end his term on July 31st in a calm environment, preserving the remaining foreign currency reserves. This stable exchange rate, hovering below the LBP 100,000 mark, is a welcome change for the struggling Lebanese economy.
In April, the government focused on addressing ongoing issues such as the Syrian refugee crisis and implementing stricter measures for their repatriation. Additionally, the country launched new initiatives to improve waste management in Beirut and kicked off the Baalbeck International Festival 2023, demonstrating Lebanon’s vibrant cultural life despite the challenging circumstances.
Overall, the month of April 2023 showed a stable and slightly improving exchange rate for the Lebanese Lira, offering a glimmer of hope for the country’s economic recovery.