Lebanese Prime Minister Saad Hariri submitted his resignation at Baabda Palace on Tuesday, after 12 days of paralyzing street protests brought the government – and a bleeding financial sector – to its knees.

“For all of the partners in the political life of this country, it is today our responsibility to protect Lebanon and promote its economy. This is a serious opportunity which should not be squandered,” he said. His televised speech lasted under one minute.

The announcement came after hundreds of thousands of protesters – in a country of four million – took to the streets demanding the resignation of the entire political establishment.

“All of them means all of them,” was their chant, directed at Lebanon’s dynastic elite from the Sunni-majority city of Tripoli in the north, to the Shiite-majority cities of Nabatiyeh and Tyre in the south.

The sudden resignation of Hariri puts the ball in the court of President Michel Aoun, and more crucially, Hezbollah – which had fought against the government’s resignation until the final hour.

Just ahead of the Prime Minister’s announced 4pm speech, supporters of Hezbollah and the Shiite party Amal attacked the protest encampment which had been blocking the main artery of Beirut.

Riot police stepped aside for the Lebanese army to take charge – rapidly bringing the incident to a close.

The Asia Times witnessed near-silence in the immediate aftermath as the army stood guard, 15 minutes before Hariri’s anticipated resignation.

The United Nations Special Coordinator for Lebanon urged the authorities to act quickly on forming a new government.

Lebanese soldiers stand on guard in Beirut ahead of Prime Minister Saad Hariri’s resignation. Photo: Alison Tahmizian Meuse for Asia Times

‘Days’ from collapse

Lebanon’s central bank governor on Monday told CNN that Lebanon had only “days” to avert disaster in its financial sector, specifically a draining of its dollar reserves and a potential halt to remittances from the vast Lebanese diaspora.

“The real asset of Lebanon is Lebanese working outside in our diaspora. If they don’t see a solution that gives hopes for the future, then these inflows on which Lebanon relies will diminish in a [major] manner,” he said. 

“We’re losing confidence every day,” he warned.

One of the key tasks of the next government will be to unlock $11 billion in CEDRE funds pledged in April 2018 in Paris and meant to get the former French colony back on its feet.

The biggest donor, the World Bank, continues to deliberate whether Lebanon has met the necessary conditions for a $4 billion loan to be released.

While the CEDRE funds are designed for long-term projects, Lebanon may be in immediate need.

Lebanese protesters hold up signs denouncing the former finance minister Fouad Siniora as they gather on the eighth day of protest against tax increases and official corruption outside the bank’s branch in the southern city of Sidon on October 24, 2019. Photo: Mahmoud Zayyat / AFP

Credible cabinet needed

Lebanese banks were shuttered for an eleventh consecutive day on Tuesday, with their closures an increasing source of anxiety.

Capital controls will likely be needed when they finally do open their branches to avert a major run.

So will a cabinet that instills confidence.

Hariri had announced a series of steps to respond to the protests last Wednesday, including requiring the central bank, as well as the private banking sector, to fork over more than $3 billion to reduce Lebanon’s 2020 deficit.

But those were seen by some as knee-jerk measures, lacking a clear strategy. They also failed to placate a crucial mass of demonstrators, who continued to cut off key highways in any way they could – using their cars in some cases to form an intractable roadblock.

One of the biggest issues is that they were to be implemented by the same political elites protesters saw as having brought Lebanon to the brink.

Economist Nasser Saidi says confidence in the ruling elite is beyond repair and believes a new cast of politicians could only deepen the crisis.

“They need to have a new government in place as quickly as possible with the main portfolios in the hands of technocrats – not political appointees – and they need to put together as quickly as possible a macro-financial fiscal plan to rescue Lebanon,” he told Asia Times days before the resignation.

The keyword, besides technocrat, will be independent, as past technocrats appointed by political movements were still beholden to those superiors.

Lebanon’s credit rating was downgraded to junk in August, with the global ratings agency Fitch raising the possibility the Eastern Mediterranean nation could default on its debts.

The peg of the Lebanese pound to the US dollar, maintained as the sacrosanct guarantor of banking stability for nearly two decades, is also now in greater question than ever – with black market rates emerging and banks imposing daily limits on withdrawals of the dollar.

Lebanon’s former colonial administrator France will be a key player in shepherding the Eastern Mediterranean nation through this crisis.

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