After a presidential vacuum for more than two years, the Lebanese parliament was elected army commander Joseph Aoun as President of the Republic on January 9, 2025, to start a new stage that may last for 6 years, and later his choice was signed by international judge Nawaf Salam as the president of a government that won the confidence of Parliament, amid unprecedented internal and regional challenges.
During the past two years, Lebanon witnessed the fourth vacuum at the presidency of the Republic in its history, after the end of the mandate of former President Michel Aoun in October 2022, which resulted in the outbreak of an economic crisis and a sharp financial collapse witnessed by the country.
With the outbreak of the war in Gaza and the participation of Hezbollah in the “war of support” for a year before the signing of the ceasefire agreement on November 27, 2024, the state of political and economic instability exacerbated, and the horizon seemed to be blocked and that there are no solutions available in a country in which political parties fight on the sectarian and sectarian composition and all of them are linked to external forces that affect the national decision.
But Aoun’s election, and then the formation of a peace government as the first government in the New Testament, began the Lebanese political scene on its way to “Al -Hallah”.
The Al -Jazeera Center for Studies published an analytical paper entitled “The New Government and the era in facing economic challenges in Lebanon” in which the academic Ayman Omar discussed the political, economic, financial and financial challenges faced by the new challenges and other priorities facing other priorities.
Political challenges
Aoun’s election came after 12 sessions in the Lebanese Parliament, and due to efforts made by what is known as the five -year committee, and it is made up of the ambassadors of the United States, France, Egypt, Saudi Arabia and Qatar.
After parliamentary consultations, Salam was charged with praise from the five -year committee to form the government, and it came unusually from outside the usual formation of Lebanese governments, Salam broke the rule of each team with a number of ministers commensurate with the size of his parliamentary representation, and at the same time maintained the Shiite representation of the Amal movement and Hezbollah.
The rest of the various political components in the government gathered over the rejection of “Iranian influence” in Lebanon and the call to monopolize weapons in the hands of the state, which made the government team homogeneously homogeneous despite its members lacking experience and their arrival from academic backgrounds.
And because the Lebanese constitution states that the legal quorum for the convening of the Council of Ministers is the two -thirds, the Amal movement and Hezbollah no longer have the ability to disrupt the government sessions, which foretells the start of a new era in Lebanese internal and external politics.
The new government faces a set of Arab and international demands to obtain the support it needs to face economic challenges, foremost of which is the implementation of the ceasefire agreement between Lebanon and Israel in accordance with Security Council Resolution 1701, the disarmament of all armed groups, and the dismantling of all unauthorized facilities from southern Litani to all Lebanese territory.
The demands also include – to achieve the reform of public departments and institutions in accordance with the foundations of the constitution, laws and legislative decrees regulating their work, as well as completing the upcoming administrative appointments in security, judicial and monetary centers.
Economic priorities
The new administration – with its presidential and governmental parties – faces a set of economic challenges represented in the start of the reconstruction of what was destroyed by the recent Israeli war on Lebanon, the reclamation of the affected agricultural lands, the return of negotiation with the International Monetary Fund, and the start of addressing the problem of power outages.
The cost of reconstruction and recovery is about $ 11 billion, according to the World Bank estimates, of which 3-5 billion dollars by the public sector to improve infrastructure, and about 6-8 billion dollars from the private sector to enhance the housing, trade, industry and tourism sector.
While the total number of Lebanon’s losses due to the war amounted to about 14 billion dollars, the government is facing a real dilemma in providing the budget necessary to carry out this task without resorting to assisting the international community, especially the Gulf states.
On the last visit by experts from the International Monetary Fund to Lebanon in May 2024, they warned that the lack of measures regarding the necessary economic reforms will inflict heavy losses on the Lebanese economy and the population, and the importance of agreement with the fund lies in obtaining something similar to the testimony of the good Lebanese economy to martyrdom in front of rating agencies and global financial markets.
The new government has the task of structuring the banking sector, solving the problem of deposits, enhancing public finances by approving public budgets on its constitutional dates, ending the budget deficit, enhancing governance, transparency, accountability, and taking measures to increase transparency in the public sector.
In the long run, it also appears the necessity of moving the economic wheel, providing job opportunities, improving the national currency exchange rate and the value of the Lebanese lira, exploration of oil and gas, and stimulating some important sectors to raise the local product and provide financial revenues.
The growth rate in 2024 decreased by 7.1%, which is a large setback compared to the rate of growth estimated at 0.9% in the event that the conflict does not occur, which reached numbers that reached the cumulative decline of GDP since 2019 to 40%, which has exacerbated the effects of the economic recession and its multiple manifestations.
During the past two years, the Lebanese lira lost about 98% of its purchasing power, which resulted in high prices, financial enlargement, erosion of salaries and wages, and the shrinking of the middle class, which requires a long cumulative path to fix it.
The revitalization of the important sectors of the Lebanese economy is a difficult task with decisive results to revitalize the treasury and raise the indicators, so the tourism affected by the war contributes about 27% of the gross domestic product with revenues that amounted to about 5.41 billion dollars in 2023, and Lebanon still hopes to benefit from its natural resources and possess the necessary technologies to explore for oil and gas, despite the launch of excavation work in “Cancer” (District) One of 10 “boxes” for oil exploration along the Lebanese coast.
Where is the economic crisis heading?
The way Aoun reached the presidency of Lebanon and the formation of the government with a distinct composition is an indication of the end of the political era in the history of Lebanon, and the influence of Hezbollah and its allies in the state declined for the first time in 20 years, especially after the fall of the Bashar al -Assad regime in neighboring Syria.
Given the composition of the current government, the new stage aims to create the circumstances and rules for a transitional stage in the path of Lebanese domestic politics in preparation for the discussion of Hezbollah’s weapon and the weakening of Iranian influence in the first stage, then putting Lebanon on neutrality towards the crises of the region and normalizing relations with Arab countries in a second stage.
The expected scenarios from the Lebanese government are summarized in:
- Firstly: Implementing international decisions in full in a short time, which is unlikely.
- secondly: Achieving partial progress and side reforms that help in establishing calm and starting the return of investments.
- Third: Failure, then the exacerbation of the crisis and more economic pressure.
(You can read the complete analytical paper from this link)
