Lebanon was officially in another power vacuum on Sunday as Michel Aoun left the presidential palace but with parliament yet to decide on his successor.
The divisive 89-year-old leader signed a decree accepting the resignation of the government a day before the end of his term.
“This morning, I sent a letter to the House of Representatives in accordance with my constitutional powers and signed the government's resignation decree,” he wrote on Twitter.
His departure comes despite no agreement on his replacement, after MPs failed to elect a successor in four attempts in Lebanon's deeply divided parliament.
Lebanon is being run by a caretaker government as political divisions have prevented the creation of a new Cabinet since parliamentary elections this year.
In the event of a presidential vacuum, the government is supposed to take on presidential powers. But it will be the first time a caretaker government could be called upon to fill the vacuum since the end of Lebanon's civil war 32 years ago.
Lebanon has been in the grip of an economic crisis that has been described by the World Bank as one of the worst in modern history. There is spiralling national debt, a banking crisis and the impact of the coronavirus pandemic. All of these challenges have combined during political upheaval and nationwide protests.
The failure to find a successor to Mr Aoun was not unexpected and has precedent — it took 46 sessions and 29 months for parliament to elect him in 2016.
In the country's confessional system, the presidency is always reserved for a Maronite Christian.
A few thousand supports gathered outside the presidential palace in Baabda to send off the former army chief who founded the Free Patriotic Movement, the political party which is allied with Iran-backed Hezbollah.
His departure came as Lebanon's most senior Maronite Christian cleric on Sunday accused authorities of creating a political vacuum by leaving the presidency unfilled.
Mr Aoun's term officially ends on Monday.
Patriarch Beshara Al Rai said they had “left this supreme and essential presidency in a vacuum, either deliberately, or out of stupidity or selfishness”.
Political blame game
In a speech outside the palace, Mr Aoun told thousands of supporters that he has accepted the resignation of Mr Mikati's government.
Addressing crowds of supporters, Mr Aoun blasted his political opponents and said that they prevented him from bringing to justice central bank governor Riad Salameh, who is being investigated in several European countries for alleged money laundering and embezzlement.
"You all know the the conditions of the country and how its coffers were robbed, its central bank was robbed and how your pockets were robbed," Mr Aoun said, adding that all Lebanese were hurt by losing their life savings in local banks.
He added that some politicians prevented the investigation into the port blast.
Mr Aoun, who blamed his political rivals and others for the crisis except for members of his political party, later left the palace and headed to his residence in Beirut's northern suburb of Rabieh.
Lebanese are deeply divided over Mr Aoun, a former army commander, with some seeing him as a defender of the country's Christian community and a leading figure who tried to seriously fight corruption in Lebanon.
His opponents criticise him for his role in the 1975-90 civil war and for his shifting alliances, especially with the Iran-backed Hezbollah, the country's most powerful military and political force.
He has also come under fire for grooming his son-in-law to replace him, and many blame him for the economic crisis that is rooted in decades of corruption and mismanagement.
Mr Aoun told parliament in a letter that Mr Mikati was "uninterested" in forming a new government to deal with Lebanon's myriad problems and called on him to resign.
Mr Mikati retorted that Mr Aoun's decision had "no constitutional basis" and that his cabinet will "continue to carry out all its constitutional duties, including its caretaker functions".
Constitutional expert Wissam Lahham said that "what Aoun is doing is unprecedented" since Lebanon adopted its constitution in 1926.
Economic crisis continues
Mr Aoun leaves Lebanon facing an array of challenges, from collapsing services to rampant inflation.
Talks between Lebanon’s government and the IMF that began in May 2020 and reached a staff-level agreement in April have made very little progress.
The Lebanese government has implemented few of the IMF’s demands from the agreement, which are mandatory before finalising a bailout program. Among them are restructuring Lebanon’s ailing financial sector, implementing fiscal reforms, restructuring external public debt and putting in place strong anti-corruption and anti-money laundering measures.
“The prospects of an IMF deal were already dim before the upcoming power vacuum and departure of Aoun,” said Nasser Saidi, an economist and former Minister of Economy. “There is no political will or appetite for undertaking reforms.”
“Aoun’s departure is simply another nail in the coffin,” he said. “It does not change the fundamentals of a dysfunctional failed state and totally ineffective polity.”
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From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
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The specs
Engine 60kwh FWD
Battery Rimac 120kwh Lithium Nickel Manganese Cobalt Oxide (LiNiMnCoO2) chemistry
Power 204hp Torque 360Nm
Price, base / as tested Dh174,500
ESSENTIALS
The flights
Emirates, Etihad and Swiss fly direct from the UAE to Zurich from Dh2,855 return, including taxes.
The chalet
Chalet N is currently open in winter only, between now and April 21. During the ski season, starting on December 11, a week’s rental costs from €210,000 (Dh898,431) per week for the whole property, which has 22 beds in total, across six suites, three double rooms and a children’s suite. The price includes all scheduled meals, a week’s ski pass, Wi-Fi, parking, transfers between Munich, Innsbruck or Zurich airports and one 50-minute massage per person. Private ski lessons cost from €360 (Dh1,541) per day. Halal food is available on request.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
More on Quran memorisation:
Racecard
6pm: The Pointe - Conditions (TB) Dh82,500 (Turf) 1,400m
6.35pm: Palm West Beach - Maiden (TB) Dh82,500 (T) 1,800m
7.10pm: The View at the Palm - Handicap (TB) Dh85,000 (Dirt) 1,400m
7.45pm: Nakeel Graduate Stakes - Conditions (TB) Dh100,000 (T) 1,600m
8.20pm: Club Vista Mare - Handicap (TB) Dh95,000 (D) 1,900m
8.55pm: The Palm Fountain - Handicap (TB) Dh95,000 (D) 1,200m
9.30pm: The Palm Tower - Handicap (TB) Dh87,500 (T) 1,600m
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Retirement funds heavily invested in equities at a risky time
Pension funds in growing economies in Asia, Latin America and the Middle East have a sharply higher percentage of assets parked in stocks, just at a time when trade tensions threaten to derail markets.
Retirement money managers in 14 geographies now allocate 40 per cent of their assets to equities, an 8 percentage-point climb over the past five years, according to a Mercer survey released last week that canvassed government, corporate and mandatory pension funds with almost $5 trillion in assets under management. That compares with about 25 per cent for pension funds in Europe.
The escalating trade spat between the US and China has heightened fears that stocks are ripe for a downturn. With tensions mounting and outcomes driven more by politics than economics, the S&P 500 Index will be on course for a “full-scale bear market” without Federal Reserve interest-rate cuts, Citigroup’s global macro strategy team said earlier this week.
The increased allocation to equities by growth-market pension funds has come at the expense of fixed-income investments, which declined 11 percentage points over the five years, according to the survey.
Hong Kong funds have the highest exposure to equities at 66 per cent, although that’s been relatively stable over the period. Japan’s equity allocation jumped 13 percentage points while South Korea’s increased 8 percentage points.
The money managers are also directing a higher portion of their funds to assets outside of their home countries. On average, foreign stocks now account for 49 per cent of respondents’ equity investments, 4 percentage points higher than five years ago, while foreign fixed-income exposure climbed 7 percentage points to 23 per cent. Funds in Japan, South Korea, Malaysia and Taiwan are among those seeking greater diversification in stocks and fixed income.
• Bloomberg
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
Name: Peter Dicce
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
The specs
Engine: 3.8-litre, twin-turbo V8
Transmission: eight-speed automatic
Power: 582bhp
Torque: 730Nm
Price: Dh649,000
On sale: now
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'Of Love & War'
Lynsey Addario, Penguin Press
'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
Last 10 NBA champions
2017: Golden State bt Cleveland 4-1
2016: Cleveland bt Golden State 4-3
2015: Golden State bt Cleveland 4-2
2014: San Antonio bt Miami 4-1
2013: Miami bt San Antonio 4-3
2012: Miami bt Oklahoma City 4-1
2011: Dallas bt Miami 4-2
2010: Los Angeles Lakers bt Boston 4-3
2009: Los Angeles Lakers bt Orlando 4-1
2008: Boston bt Los Angeles Lakers 4-2
Brief scores:
Day 2
England: 277 & 19-0
West Indies: 154
