Lebanon finally has a government, but Gebran Bassil remains in its way

Gebran Bassil's demands were a significant obstacle to the Lebanese Cabinet's formation. Reuters

It took over a year for Lebanon’s political class to form a government, but many Lebanese are not sure whether to celebrate, even if most will admit that a continuation of the political vacuum was no longer tenable. But under the best of circumstances, Najib Mikati’s government will face multiple difficulties.

Mr Mikati’s priority will be to halt the rapid economic deterioration in Lebanon. The first thing he is expected to do is to finalise the lifting of subsidies on fuel products, long a heavy burden on the country’s finances.

In recent months, anticipation of this step, which is necessary to end the haemorrhaging of foreign currency reserves, has led to the widespread hoarding of gasoline and fuel oil. Moreover, large quantities of subsidised fuel have traditionally been siphoned off to Syria, where prices are higher. The subsequent shortages have led to long lines at petrol stations and inflated prices across the board.

The new government does have some margin of manoeuvre financially. It will have $540 million in World Bank loans to spend, including $246m for an emergency social safety net. It will also have access to around $370m in humanitarian aid pledged at an August 4 conference organised by French president Emmanuel Macron. Most importantly, Lebanon will soon receive $860m from its Special Drawing Rights allocation at the International Monetary Fund.

None of this will address core demands that the IMF would impose on Lebanon, but it could well stabilise the country, which has been through a terrible summer. Mr Mikati’s most significant contribution would be to restore some confidence, when virtually none is visible today in Lebanese society.

Politically, Mr Mikati will have to deal with the political ambitions of Gebran Bassil, the son in law of Lebanese President Michel Aoun. Mr Bassil wants to succeed his father in law, a desire the latter fully shares. The long delay in forming a government was to a large extent because Mr Bassil sought to name, with Mr Aoun, over a third of the ministers. By doing so he could have controlled the Cabinet agenda and brought the government down if all the ministers he named resigned.

Officially, Mr Aoun and Mr Bassil failed to do so, but the issue was resolved through an ambiguity. While Mr Mikati was unwilling to form a government that would have given the President and his son in law effective veto power, he accepted a compromise on two Christian ministers named outside of Mr Aoun’s and Mr Bassil’s quota. The ministers were chosen in agreement by Mr Aoun and Mr Mikati.

This may create problems. While the two ministers are on good terms with both the President and Prime Minister, if they were to side with Mr Aoun in the future, that could give him and Mr Bassil the leverage they need to advance Mr Bassil’s interests, thereby undermining all Cabinet cohesion to Mr Mikati’s disadvantage.

Mr Bassil was reportedly forced to compromise through a combination of French threats of sanctions and pressure from Hezbollah. The President’s son in law is a Hezbollah ally, but there were limits to what the party was willing to accept from him. His efforts to stymie the government formation process to impose his demands only accelerated the rapid deterioration of the economic situation, which created a range of problems for Hezbollah.

More significantly, in the days leading up to agreement on a government, Iranian President Ebrahim Raissi and Mr Macron had spoken by telephone, with Mr Raissi declaring that Iran wanted a Lebanese government. This appeared to be the point where Hezbollah made it clear to Mr Bassil that a solution was necessary.

Mr Mikati benefits from significant regional and international support, but he is well aware that Lebanon sits at the intersection of regional and international interests and rivalries. If Iran and France were instrumental in forcing an accord on a government, Arab states will be no less vital in giving the government regional credibility and cover. Mr Mikati is particularly keen to rebuild ties with the Arab world, which years of Hezbollah’s domination have damaged.

With elections scheduled for next spring, it is probably fair to say that Mr Mikati is keen to reinforce his position to return as prime minister after the vote, if it takes place. The main alternative is Saad Hariri, whom Mr Aoun and Mr Bassil are likely to block. That means that between now and election time the Prime Minister will have to walk a tightrope that involves making real progress on the economic front while also managing his relationship with Mr Aoun and Mr Bassil.

That will not be easy. Mr Bassil is focused entirely on his political interests and will behave toward the government in ways that can enhance his popularity. That means the Aoun-affiliated justice minister is likely to try to open corruption files against Mr Bassil’s political enemies, while the Aoun-aligned social affairs minister will distribute aid in ways that can bring a victory to Bassil’s candidates in elections.

Such patronage is far from ideal, and will do little to reassure the international community. But Mr Mikati will have to use his guile if he is to move forward on the economic plan he has in mind for Lebanon. Many Lebanese are hoping he can succeed, and will not look kindly if serious efforts at progress are thwarted.