Lebanese PM urges swift approval of law aimed at paying back depositors

Lebanese Prime Minister Nawaf Salam speaks with Finance Minister Yassine Jaber and Lebanese Industry Minister Joe Issa El-Khoury in Beirut on Tuesday. (Reuters)
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Updated 23 December 2025
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Lebanese PM urges swift approval of law aimed at paying back depositors

  • Salam said the law is realistic and its goal is to do “justice to depositors,” also spurring recovery in the banking sector

BEIRUT: Lebanese Prime Minister Nawaf Salam urged the Cabinet to swiftly approve a draft law allowing depositors to gradually recover funds frozen in the banking system since a financial collapse in 2019, a move critical to reviving the economy.
The collapse — the result of decades of unsustainable financial policies, waste and corruption — led the state to default on its sovereign debt and sank the Lebanese pound.
The draft law marks the first time Beirut has put forward legislation aimed at addressing a vast funding shortfall — estimated at $70 billion in 2022 but now believed to be higher.

BACKGROUND

The draft law marks the first time Beirut has put forward legislation aimed at addressing a vast funding shortfall — estimated at $70 billion in 2022 but now believed to be higher.

The Cabinet approved several articles on Monday. Discussions would continue on Tuesday, Information Minister Paul Morcos said. Lebanon’s divided parliament must pass the law after cabinet approval.
Salam said the law is realistic and its goal is to do “justice to depositors,” also spurring recovery in the banking sector.
Finance Minister Yassine Jaber said implementation of the law would boost the economy, pumping deposits of $3-$4 billion annually into the system.
The draft, published on Friday, foresees repayments to small depositors – those with deposits valued at less than $100,000 – in monthly or quarterly instalments over four years.
Deposits larger than $100,000 will be repaid via tradable, asset-backed securities to be issued by the central bank or Banque du Liban, with no less than 2 percent of the value paid annually.
The maturity period will be set at 10 years for deposits valued at up to $1 million, at 15 years for deposits valued from $1 million to $5 million, and at 20 years for deposits valued at more than $5 million.
The securities will be backed by the income, revenues and returns of BdL-owned assets and any proceeds from the sale of assets, if any occur. The draft mentions precious metals, which have soared in value this year, as one possible source of income.
It says commercial banks will bear 20 percent of the responsibility for payments for the asset-backed securities. It says BdL and commercial banks will jointly finance the payments of the small deposits, with BdL’s share not exceeding 60 percent.
Debt owed by the state to BdL will be converted into a bond whose maturity and interest rate would be agreed between the Finance Ministry and BdL.
The Association of Banks in Lebanon has objected to the draft, saying on Sunday that the proposals do not reflect banks’ ability to meet “their obligations towards depositors” and that the state was not “fulfilling its outstanding debts to BdL.” 
Mike Azar, an expert on the financial system, said the law appeared to be intentionally vague on politically sensitive but critical questions.
“For example, what happens if the BdL or the banks can’t pay what they owe to depositors?” he said.

Swapping deposits for asset-backed securities issued by BdL could imply a big “contingent state debt,” he said. The government has yet to provide quantitative analysis underpinning the plan, including deposit repayment amounts, sources of funding, and bank recapitalization needs, he added.

Jaber noted that the value of BdL’s gold assets had risen with the price of gold since 2020, which would help provide confidence in the asset-backed securities.
The law requires an international auditing firm to evaluate BdL’s assets within one month to determine the size of the funding shortfall. Banks must also conduct an asset quality review and recapitalize.
The law would write off some dollar deposits.
These would include deposits that resulted from funds being converted into dollars from pounds at the official exchange rate long after it had collapsed as well as deposits containing illicit funds, in accordance with a law to counter money-laundering and financing for terrorism.

 


Israel's settler movement takes victory lap as a sparse outpost becomes a settlement within a month

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Israel's settler movement takes victory lap as a sparse outpost becomes a settlement within a month

  • Smotrich, who has been in charge of Israeli settlement policy for the past three years, has overseen an aggressive construction and expansion binge aimed at dismantling any remaining hopes of establishing a Palestinian state in the occupied West Bank

YATZIV SETTLEMENT, West Bank: Celebratory music blasting from loudspeakers mixed with the sounds of construction, almost drowning out calls to prayer from a mosque in the Palestinian town across this West Bank valley.
Orthodox Jewish women in colorful head coverings, with babies on their hips, shared platters of fresh vegetables as soldiers encircled the hilltop, keeping guard.
The scene Monday reflected the culmination of Israeli settlers’ long campaign to turn this site, overlooking the Palestinian town of Beit Sahour, into a settlement. Over the years, they fended off plans to build a hospital for Palestinian children on the land, always holding tight to the hope the land would one day become theirs.
That moment is now, they say.
Smotrich goes on settlement spree
After two decades of efforts, it took just a month for their new settlement, called “Yatziv,” to go from an unauthorized outpost of a few mobile homes to a fully recognized settlement. Fittingly, the new settlement’s name means “stable” in Hebrew.
“We are standing stable here in Israel,” Finance Minister and settler leader Bezalel Smotrich told The Associated Press at Monday’s inauguration ceremony. “We’re going to be here forever. We will never establish a Palestinian state here.”
With leaders like Smotrich holding key positions in Israel’s government and establishing close ties with the Trump administration, settlers are feeling the wind at their backs.
Smotrich, who has been in charge of Israeli settlement policy for the past three years, has overseen an aggressive construction and expansion binge aimed at dismantling any remaining hopes of establishing a Palestinian state in the occupied West Bank.
While most of the world considers the settlements illegal, their impact on the ground is clear, with Palestinians saying the ever-expanding construction hems them in and makes it nearly impossible to establish a viable independent state. The Palestinians seek the West Bank, captured by Israel in 1967, as part of a future state.
With Netanyahu and Trump, settlers feel emboldened
Settlers had long set their sights on the hilltop, thanks to its position in a line of settlements surrounding Jerusalem and because they said it was significant to Jewish history. But they put up the boxy prefab homes in November because days earlier, Palestinian attackers had stabbed an Israeli to death at a nearby junction.
The attack created an impetus to justify the settlement, the local settlement council chair, Yaron Rosenthal, told AP. With the election of Israel’s far-right government in late 2022, Trump’s return to office last year and the November attack, conditions were ripe for settlers to make their move, Rosenthal said.
“We understood that there was an opportunity,” he said. “But we didn’t know it would happen so quickly.”
“Now there is the right political constellation for this to happen.”
Smotrich announced approval of the outpost, along with 18 others, on Dec. 21. That capped 20 years of effort, said Nadia Matar, a settler activist.
“Shdema was nearly lost to us,” said Matar, using the name of an Israeli military base at the site. “What prevented that outcome was perseverance.”
Back in 2006, settlers were infuriated upon hearing that Israel’s government was in talks with the US to build a Palestinian children’s hospital on the land, said Hagit Ofran, a director at Peace Now, an anti-settlement watchdog group, especially as the US Agency for International Development was funding a “peace park” at the base of the hill.
The mayor of Beit Sahour urged the US Consulate to pressure Israel to begin hospital construction, while settlers began weekly demonstrations at the site calling on Israel to quash the project, according to consulate files obtained through WikiLeaks.
It was “interesting” that settlers had “no religious, legal, or ... security claim to that land,” wrote consulate staffer Matt Fuller at the time, in an email he shared with the AP. “They just don’t want the Palestinians to have it — and for a hospital no less — a hospital that would mean fewer permits for entry to Jerusalem for treatment.”
The hospital was never built. The site was converted into a military base after the Netanyahu government came to power in 2009. From there, settlers quickly established a foothold by creating makeshift cultural center at the site, putting on lectures, readings and exhibits
Speaking to the AP, Ehud Olmert, the Israeli prime minister at the time the hospital was under discussion, said that was the tipping point.
“Once it is military installation, it is easier than to change its status into a new outpost, a new settlement and so on,” he said.
Olmert said Netanyahu — who has served as prime minister nearly uninterrupted since then — was “committed to entirely different political directions from the ones that I had,” he said. “They didn’t think about cooperation with the Palestinians.”
Palestinians say the land is theirs
The continued legalization of settlements and spiking settler violence — which rose by 27 percent in 2025, according to Israel’s military — have cemented a fearful status quo for West Bank Palestinians.
The land now home to Yatziv was originally owned by Palestinians from Beit Sahour, said the town’s mayor, Elias Isseid.
“These lands have been owned by families from Beit Sahour since ancient times,” he said.
Isseid worries more land loss is to come. Yatziv is the latest in a line of Israeli settlements to pop up around Beit Sahour, all of which are connected by a main highway that runs to Jerusalem without entering Palestinian villages. The new settlement “poses a great danger to our children, our families,” he said.
A bypass road, complete with a new yellow gate, climbs up to Yatziv. The peace park stands empty.