Crisis-hit Lebanon's new government meets


Beirut (AFP)

Lebanon's newly-unveiled cabinet met Wednesday for the first time to start tackling the twin challenges posed by a tenacious protest movement and a nosediving economy.

Hassan Diab, who replaced Saad Hariri as prime minister, vowed to meet the demands from the street but demonstrators were unconvinced and scuffled with police overnight.

The 61-year-old academic, was thrown in at the deep end for his first experience on the political big stage and admitted that Lebanon was experiencing "a difficult time in its history".

"Government of last resort," was the headline on the front page of Al-Akhbar, a daily newspaper close to the powerful Hezbollah movement that gave its blessing to Diab's designation last month.

The Shiite group and its allies dominated the talks that produced the new government, from which outgoing premier Saad Hariri and some of his allies were absent.

The millionaire was one of the symbols of the kind of hereditary and sectarian-driven politics that protesters who have been in the streets since mid-October want to end.

He and his government resigned less than two weeks into the non-sectarian protests demanding the complete overhaul of the political system and celebrating the emergence of a new national civic identity.

Protesters from across Lebanon's geographical and confessional divides had demanded a cabinet of independent technocrats as a first step to root out endemic government corruption and incompetence.

Diab is a career academic from the prestigious American University of Beirut and he insisted Tuesday in his first comments that the government just unveiled was a technocratic one.

"This is a government that represents the aspirations of the demonstrators who have been mobilised nationwide for more than three months," he said.

- Technocratic? -

Yet the horsetrading between traditional political factions during lengthy government formation talks was all too familiar to many Lebanese who met the breakthrough with distrust at best.

"Instead of the corrupt politicians, we got the corrupt politicians' friends," said Ahmad Zaid, a 21-year-old student who joined a few hundred protesters in central Beirut after the announcement.

Clusters of demonstrators burned tyres and briefly blocked roads to express their displeasure at the new line-up but clashes with riot police were on a smaller scale than weekend violence that left dozens wounded.

Similar rallies took place in Tripoli -- a hotbed of the protest movement -- in Sidon, Byblos and other cities.

The new cabinet is mostly made up of new faces, many of them academics and former ministry advisers.

It comprises 20 ministers and among its six women is Zeina Akar, Lebanon's first-ever female defence minister.

To downsize the cabinet, some portfolios were merged, resulting in at times baffling combinations such as a single ministry for culture and agriculture.

Anger at what protesters see as a kleptocratic oligarchy was initially fuelled by youth unemployment that stands at more than 30 percent and the abysmal delivery of public services such as water and electricity.

The long-brewing discontent was compounded by fears of a total economic collapse in recent weeks, with a liquidity crunch leading banks to impose crippling capital controls.

Lebanon has one of the world's highest debt-to-GDP ratios and economists have argued it is hard to see how the near bankrupt country could repay its foreign debt.

- 'A little time' -

"Regarding the economic situation, I repeat that this is one of our priorities," Diab said Tuesday night, pledging to find solutions "as fast as possible".

"We need to be given a little time," he said.

A looming default on Lebanon's debt, which has been steadily downgraded deeper into junk status by rating agencies, has sent the dollar soaring on the parallel exchange market.

In a country where many transactions are carried out in dollars and most goods are imported, consumers and business alike have been hit hard by the national currency's free fall.

Money changers announced on Tuesday the rate would be capped at 2,000 pounds to the dollar -- still above the official peg of 1,500 -- but the move is only likely to create a fully illegal black market of unlicensed changers applying different rates.

Every morning, queues of people hoping to withdraw their weekly cap of 100 or 200 dollars form outside banks.

With Hariri and his Sunni bloc staying out of the fray, the national unity government he led for three years is being replaced by a lopsided cabinet dominated by Hezbollah.

Western sanctions on the Iranian-backed organisation are stacking up and economists have argued the new government might struggle to secure the aid it so badly needs.