The failure of the Lebanese Council of Ministers, Thursday, to secure the necessary quorum of the number of ministers to appoint a new governor for the Banque du Liban, raised many concerns in the country about the scenarios that developments could take with the term of the current central bank governor, Riad Salameh, ending on July 31.
The most prominent of these concerns is the extension of the state of vacancy and vacuum to the head of the monetary authority in Lebanon, after about nine months of vacancy in the presidency of the republic, and the accompanying executive and legislative paralysis by virtue of the law that transforms the government into a caretaker business with limited powers, and the parliament into a mere electorate for the president of the republic. without the ability to legislate.
In light of an ongoing financial collapse, since 2019, the Central Bank of Lebanon plays a major role granted to it by the Monetary and Credit Law, to manage the monetary reality, intervene in the currency market, and set banking policies and other tasks, which the vacuum in the central bank’s governance would completely impede. It threatens the country with a wider financial collapse than it has witnessed.
As for the scenarios presented in the political research today, to avoid reaching a vacuum in the governance of the Banque du Liban, it is no less dangerous than the vacancy, in terms of the effects that it would leave, especially in terms of deepening the currently raging political division, which often takes on a sectarian nature, so that it turns Any effort to compensate for the vacancy in the positions, to a dispute over the exclusivity of powers in the hands of the sects and the parties representing them.
Loss of quorum.. “known in advance”
According to the Lebanese constitution, the quorum for the government session requires the presence of two-thirds of the members of the Council of Ministers (24 ministers), especially since the position of the Governor of the Banque du Liban is considered one of the positions called “first category”, whose appointment requires the approval of two-thirds of the Council of Ministers as well.
In light of the Christian ministers’ boycott of government sessions, on the grounds that their convening in light of the presidential vacuum violates the principle of conducting business and carries an infringement on the powers of the Presidency of the Republic, “Hezbollah” took a close position with its Christian ally, the “Free Patriotic Movement”, expressing its rejection of the principle of appointment on the one hand. A caretaker government in light of the presidential vacuum, since before reaching the maturity of the Central Bank’s governance.
And in harmony with him, the ministers of the Marada Party and the Lebanese Democratic Party boycotted the Wednesday session, so that as a result only 7 ministers attended, and the session turned into a “consultative meeting” held by the Prime Minister, Najib Mikati, in his office with the attending ministers, during which they “discussed and deliberated on the existing crisis.” According to what the Deputy Prime Minister, His Excellency Al-Shami, told Al-Hurra.
Al-Shami considers that the session “was not, in fact, dedicated to appointing a governor for the Banque du Liban, as was the case,” stressing that it was a session “to discuss monetary and financial matters in light of the upcoming developments in terms of the governorship of the Banque du Liban,” pointing out that the talk is about it being an “appointment session.” It came from the media and as a result of statements in this context.
And the Speaker of the Lebanese Parliament, Nabih Berri, had confirmed in a statement to Al-Hurra that he had agreed with Mikati to hold a cabinet session, on Thursday, to appoint a new governor for the Banque du Liban, indicating that appointing a new governor is his demand from the ground up.
On the other hand, the expert in banking risks, Muhammad Fahili, believes that what happened was the provision of material “for media consumption, nothing more.”
In his statement to “Al-Hurra” website, Fahili asked, “Didn’t everyone know that the end of the fifth term of the Governor of the Banque du Liban is on July 31? And that there has been no president of the republic since October 2022, and it will not be possible to appoint a ruler? Now, in the last 24 hours, they started looking for solutions? Losing the quorum for the session was already known.”
A vacancy.. there is no vacancy
The warnings of the deputies of the Governor of the Banque du Liban to the political authority, and their hints of the possibility of resigning in the event that they do not assume their responsibilities to appoint a new ruler, have raised fears of the possibility of a vacuum coming in this sensitive location and critical timing, despite the fact that the Monetary and Credit Law clearly stipulates that the first deputy governor of the bank receives Full powers of the ruler in this case.
Mikati met, on Wednesday, with the deputies of the Governor of the Banque du Liban, in the context of successive meetings that took place in the last period, to discuss the post-Salamah stage. And a statement came out from him, in which the deputies stressed that “they are carrying out their national and functional duties within the legal principles.”
However, what was worrying was what Mikati said in a chat with journalists, after his meeting with the ministers, in terms of his failure yet to dissuade the governor’s deputies from resigning.
Al-Shami confirms that there will be a vacancy in the event that the governor’s deputies do not assume their duties, “but nothing is clear so far,” noting that the law provides for the first deputy governor’s handover, and in the event that this does not happen, “every incident has a hadith,” and he warned of the legal consequences. So.
The Lebanese Deputy Prime Minister indicated that the resignation of the ruler’s deputies is submitted to the Council of Ministers, which decides whether or not to accept it, “and therefore they cannot abandon their responsibilities without the approval of the Council of Ministers.”
For his part, Faheili believes that there are two directions that things may take, “there is no vacancy between them.”
According to the expert in banking risks, either the solution takes the path of the Monetary and Credit Law, which provides for the assumption of the first deputy, with full powers, or there are “political engineering” that result in the political class requesting the ruler’s deputies to submit a collective resignation, after which the four deputies of the ruler are assigned collectively. By managing this public utility, “Thus, the first deputy ruler will be absolved of this excess of responsibility that the ruler bears.”
The difference between the two solutions is that the first, according to Fahili, allows the first deputy to assume full powers that “allow him to make a complete shift in the approved monetary policy strategy.” As for the second, the powers are limited to the conduct of business, “and therefore we will not be facing any change to the current situation, if he is Wassim Mansouri.” Or Riad Salameh, and this is what the ruling political class wants.
What determines the trends in this context is the timing of the resignation of the governor’s deputies, if it occurred. According to Fahili, if it was on July 31, it would be intended to assign Salama, being the last remaining in his position, to conduct business in the governorship of the Banque du Liban. But if it takes place on or after August 1, its aim is to assign the four deputies to do so.
Accusations apply to the Speaker of the Lebanese Parliament of his opposition to Wassim Mansouri (First Deputy) assuming the duties of the Governor of the Banque du Liban, because of this current responsibility that he does not want to be placed on the shoulders of someone affiliated with him politically, in addition to sectarian calculations related to avoiding the Shiite community’s control over all financial joints in the country. At the head of both the financial judiciary and the Ministry of Finance are Shiite figures affiliated with Berri.
For his part, Berri stresses, in his statement to Al-Hurra, that there is no problem between him and the first deputy ruler, Mansouri, indicating that he tried to secure special laws for the four deputies of the ruler that would allow them to continue their work after the governorship vacancy.
Third hypothesis
Amidst the Lebanese people’s anticipation of the path that things will take, a third hypothesis emerged for the fate of the governorship of the Banque du Liban, represented in the initiative of the Lebanese Minister of Justice, and in line with the proposal of the Free Patriotic Movement, which is affiliated with it politically, to submit a request for naming a temporary director at the administrative judiciary, before the State Shura Council.
According to a statement from the Ministry of Justice, this comes “in light of possible developments during the next two days, in order to avoid any vacuum affecting the center of the governance of the Banque du Liban, and to ensure the functioning of the financial and monetary facility.”
It is a similar solution to the director, who had been talked about appointing a judicial guard over the Banque du Liban, according to the constitutional expert and head of the “Justicia” institution, Paul Morcos.
The Lebanese lawyer, in his statement to “Al-Hurra” website, indicates that, in the event that the ruler’s deputies insist not to conduct the bank’s business, “the government, the Cases Authority, or any party affected by the vacuum in the Banque du Liban can submit a request to the State Shura Council, which is the administrative judiciary that has the power to Intervention in this case is in accordance with Article 65 of the Shura Council of the State system.
Under this article, the State Council hears disputes related to the cases of employees appointed by decree, and can issue a decision allowing the appointment of a manager or temporary official to run the bank’s business and prevent a vacuum in the position of ruler.
As Morcos excludes this scenario and does not call for it, he points out that there is a precedent in this context, “different in terms of legal nature,” represented in the appointment of a temporary administration for the Lebanon Television Company, in 2013, due to the end of the term of the members of the Board of Directors and the government’s inability at that time to appoint replacements.
Accordingly, this precedent can be used, according to Morcos, to highlight that the temporary administrative director can be appointed in cases of vacancy to run public institutions and interests. Thus, the State Consultative Council, according to what was stated in Article 66 of its system, can urgently consider and issue a decision allowing the appointment of a manager or temporary official to run the bank’s business and prevent a vacuum in the ruler’s position.
However, the Lebanese lawyer expresses his reservations about what happened previously, considering that there is “no need or necessity” for a temporary administration of the Banque du Liban, for several reasons: the first is that the ruler’s duties are de jure transferred to the first deputy according to the law, and therefore “there is no vacuum in the governance of the Banque du Liban.”
On the other hand, Morcos points out that the interim administration “is a traditional administration with a limited framework, and aims to preserve the managed institution, and does not aim to develop it or carry out the roles that the Banque du Liban is aware of, such as intervention in the markets, exchange control, and others.
He concludes that Lebanon today is in an escalating crisis, which “needs a creative, innovative and effective administration in the central bank,” and not just a temporary administration.
2023-07-28 02:53:39
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