Lebanese Prime Minister-designate Saad Hariri is pushing to form a government, after months of indecision. EPA
Lebanese Prime Minister-designate Saad Hariri is pushing to form a government, after months of indecision. EPA
Lebanese Prime Minister-designate Saad Hariri is pushing to form a government, after months of indecision. EPA
Lebanese Prime Minister-designate Saad Hariri is pushing to form a government, after months of indecision. EPA

Lebanon has 10 days to form a government or I’m out, Hariri says


James Haines-Young
  • English
  • Arabic

Saad Hariri, the man tasked with forming Lebanon’s next government, has issued a stark ultimatum to political parties after months of delays – agree the next cabinet in the next 10 days or he will resign and refuse to be reappointed.

Mr Hariri had initially pushed to form a cabinet within a month of the May election but, with that deadline long passed, he’s running out of options.

“Government will be formed within the next 10 days because the country is in dire need of it – the economic situation necessitates it and imposes on everyone to make concessions for the country,” Mr Hariri said on Tuesday.

This is not the two-time prime minister’s first experience of trying to lead the myriad of Lebanese parties to an agreement. On his first appointment in 2009, he resigned as prime minister-designate after three months, resetting the process of forming a government. He was reappointed to form the next government by political parties and on his second attempt was able to get an agreement.

But this time, Mr Hariri said, is different. “In case I [recuse myself,] I will not ask anyone to re-designate me [prime minister]. The circumstances that prevailed in my first government [after being reappointed] are different from the current situation,” he said.

The current crisis has revolved around a battle between the two main Christian parties – the Free Patriotic Movement founded by current president Michel Aoun and the Lebanese Forces headed by Samir Geagea. Both beat expectations in May’s election and have been pushing for an increased share in the expected 30-member cabinet.

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However, speaking from his downtown residence on Tuesday, Mr Hariri said that recent talks with the president had given him hope that a compromise could be agreed. But, he added, recent comments made by caretaker Foreign Minister and FPM head Gebran Bassil had "not been positive".

Mr Hariri's latest warning comes days after Speaker of Parliament Nabih Berri said negotiations were back to square one. “There was a glimmer of hope, but…I’m pessimistic,” Mr Berri said over the weekend.

He also denied that there had been a French initiative to help him form a government but added that money pledged by the international community in April to help the country’s struggling economy was at risk if no government was formed quickly.

In April, donors gathered in Paris for the CEDRE conference where they pledged $11 billion in loans and grants for a Lebanese infrastructure and reform package drafted by Mr Hariri.

"If we think that the world will wait for us, we are wrong," he warned. "The world is moving and the days are passing, and these funds were put to help the Lebanese economy but if the Lebanese don’t want to help themselves, is the world going to wait for them?"

He added that other loans from the World Bank would expire if a new government was not formed to agree the terms.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Fixtures

Friday Leganes v Alaves, 10.15pm; Valencia v Las Palmas, 12.15am

Saturday Celta Vigo v Real Sociedad, 8.15pm; Girona v Atletico Madrid, 10.15pm; Sevilla v Espanyol, 12.15am

Sunday Athletic Bilbao v Getafe, 8.15am; Barcelona v Real Betis, 10.15pm; Deportivo v Real Madrid, 12.15am

Monday Levante v Villarreal, 10.15pm; Malaga v Eibar, midnight

Charlotte Gainsbourg

Rest

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