BEIRUT: Lebanon’s caretaker Minister of Economy Amin Salam has criticized four deputy governors of the central bank over their threat to resign if a new governor is not appointed, calling it “an escape from responsibility and an unpatriotic act.”
Salam warned that any mass resignation would leave a dangerous vacuum in Lebanon’s highest monetary authority.
“In the event of a collective resignation of the deputies of the governor of the central bank, the government must find a solution, and everyone is obliged to adhere to it, regardless of their political opinions, as having a vacuum in the highest monetary authority in the country is prohibited,” he said.
Riad Salameh’s term as central bank governor, a position he has held since 1993, is set to end on July 31.
Salameh is facing corruption charges from the European judiciary, and an Interpol warrant has been issued for his arrest, although he denies all allegations against him.
He is also accused in Lebanon of engaging in financial engineering and colluding with the ruling authority to cover up their corruption.
The appointment of a replacement for Salameh remains uncertain amid a presidential vacuum that shows no signs of ending after nine months.
In the meantime, it is unclear whether the option of appointing Salameh’s deputy, Wassim Mansouri, to manage the bank is being considered, or if extending Salameh’s term for a limited period is being contemplated.
Several reformist MPs, including Najat Aoun, Paula Yacoubian, Yassin Yassin, Firas Hamdan and Melhem Khalaf, have preemptively opposed any attempt to extend Salameh’s term.
The four deputy governors of the central bank, representing the Shiite, Sunni, Druze and Armenian Catholic sects, are believed to be unwilling to make decisions that could adversely affect them in light of the country’s financial crisis.
They are also wary of being seen as substitutes for a governor who belongs to the Maronite sect.
Under the country’s sectarian political sharing arrangement, the position of central bank governor is the second most important after the presidency and leadership of the Lebanese army, both roles held by the Maronite sect.
Parliamentary Speaker Nabih Berri has objected to the appointment of Mansouri, the Shiite first deputy, as governor due to sectarian sensitivities.
Meanwhile, caretaker Prime Minister Najib Mikati has expressed concerns about potential fluctuations in the exchange rate following the end of Salameh’s term without a replacement being named.
Mikati said: “The constitution is clear in text and spirit, and we adhere to its provisions. We do not tailor our work according to the whims and desires of some.”
A source close to Mikati said that the caretaker PM considers the appointment of a new governor a “shared responsibility that everyone should bear, regardless of their alignments, in order to reach a solution.”
According to the code of money and credit, the central council of the central bank has various responsibilities, including determining the monetary and lending policy of the bank, setting the discount rate and interest rates on bank loans, discussing measures related to banks, establishing and regulating clearinghouses, dealing with issues related to issuing loans from the public sector, managing bank properties, resolving real estate reservations, objections, or mortgages, handling the relinquishment of privileges or rights, and overseeing arbitration projects and settlements related to the bank’s interests.
Former minister and lawyer Ziad Baroud suggested an alternative when the governor’s term ends to avoid a vacuum, saying that according to Article 25 of the code of money and credit, the first deputy governor can assume the governor’s duties until a new governor is appointed.
Baroud added that the main problem lies in the possibility of the four deputies resigning.
However, he ruled out any collective resignation, as this would lead to a vacuum in the central council and would do little to solve Lebanon’s difficult financial situation.
Former MP Nicolas Nahas highlighted the importance of ensuring the continuity of public institutions, particularly the governorship of the central bank, as the monetary policy is under its purview.
Nahas said the premier will hold talks with relevant parties in the next two weeks to facilitate political consensus on proposing a new governor to the government.
He said it was premature to suggest extending the term of the current governor, and stressed the need for a mechanism that instills confidence in banks and institutions.
Paul Morcos, dean of the law faculty at EM Strasbourg Business School and the head of the Justicia human rights institution, described the statement by the four deputies as a preemptive measure to avoid any potential responsibilities resulting from the prolonged presidential vacuum and caretaker government.
In response to the deputies’ threat to take “appropriate action,” Morcos said resignation is not an easy matter considering the exceptional monetary, banking and financial situation.
Meanwhile, Salameh’s first deputy, Mansouri, recently returned from Washington after spending nine days in undisclosed meetings.
