Central Bank and govt unveiled new measures likely to compound economic hardship for citizens, while presidential vacuum continued with no end in sight.

Economic crisis continued. Central Bank 7 May announced it would not renew scheme authorising so-called Sayrafa (Exchange) platform, policy tool bank uses to inject U.S. dollars into circulation, in attempt to slow down devaluation of national currency; exchange nevertheless remained operational amid signs of another sharp currency devaluation looming. Finance ministry 12 May announced that it would raise “customs dollar” – exchange rate used to calculate duty payable on imported goods – to 86,000 LBP to $1, up from 60,000 LBP, in effect making VAT payable on imported goods four to six times higher than official rate; move will worsen inflation and put further financial strain on households.

Executive vacuum showed few signs of breakthrough. Presidential vacuum entered seventh consecutive month as parliament in May held no election session, reflecting deadlock. Parliament Speaker Nabih Berri 10 May publicly called for new president to be elected before 15 June, indicating that authorities will need to appoint new Central Bank governor when incumbent Riad Salameh’s term ends on 31 July. Suleiman Frangieh – preferred presidential candidate of Shiite parties Hizbollah and Amal – 11 May met with Saudi ambassador to Lebanon; observers argued that Frangieh’s candidacy must overcome opposition from Lebanon’s main Christian parties and perhaps from Riyadh, too. While Frangieh’s backers claimed that meeting indicated Saudi openness to his candidacy, his opponents claimed that Riyadh’s position had not materially changed.

Lebanon failed to hold municipal elections. After parliament in April extended mandates of municipalities and local public officials, due to expire on 31 May, Constitutional Council 30 May dismissed three appeals against mandate extension, citing need to prevent Lebanon’s local institutions from operating in legal vacuum. Postponement of elections will likely contribute to degradation of municipalities and essential services they provide, as elected council members resign, emigrate or pass away. Around 10% of municipalities countrywide are already officially defunct.

Armed groups and Israel exchanged fire in most significant cross-border escalation since 2006 war; economic hardship continued and parliament postponed May municipal elections.

Cross-border hostilities flared amid Israeli raids in Jerusalem. Amid Israeli police brutality against Palestinian worshippers at Jerusalem’s Al-Aqsa Mosque (see Israel-Palestine), militants in southern Lebanon 6 April fired 34 rockets into northern Israel in largest cross-border barrage since 2006 war, causing minor injuries and property damage; Israel blamed attack on Palestinian militant group Hamas and next day responded with early morning airstrikes in southern Lebanon and Gaza against alleged Hamas infrastructure. While calm subsequently returned, hostilities highlighted that Israeli actions at Muslim holy sites could trigger direct confrontation between Israel and Hizbollah or associated armed groups, echoing earlier warnings by Hizbollah and Hamas representatives in Lebanon.

Economic crisis continued amid worsening living conditions. Following dramatic collapse of Lebanese lira in late March, Central Bank intervention stabilised currency around 100,000 to $1 in April; another sharp devaluation remains likely given low foreign currency reserves. Ministry of Finance 4 April confirmed that govt had spent almost two thirds of $1.13bn worth of Special Drawing Rights from International Monetary Fund – one of its few remaining foreign currency sources. Living conditions continued to erode amid high fuel prices, shortages of essential imported products and public unrest. Notably, state electricity provider 3 April reported collapse of three electricity transmission towers in northern Bekaa due to theft of steel, jeopardising region’s electricity supply.

Presidential vacuum continued as parliament postponed municipal elections. Presidential vacuum entered sixth consecutive month as parliament in April held no election session. Underscoring prevailing deadlock, Lebanese Forces leader Samir Geagea 1 April reiterated his party would block any candidate from Hizbollah’s axis. Caretaker cabinet 18 April convened to authorise public-sector wage and benefit increases, medication imports, and sanitation contracts. In first parliamentary session not aimed at electing president since vacuum began, MPs 18 April extended mandate of municipalities and local public officials for additional 12 months, in effect postponing municipal elections due by 31 May. Critics see decision as step toward indefinitely delaying long-overdue polls, eroding increasingly important institution.

Economic crisis worsened as currency spiral continued, while deadlock persisted over presidential vacuum without end in sight.

Economic plight continued to worsen. Lebanese lira 14 March crossed threshold of 100,000 to $1 at parallel exchange range and 21 March dropped to 140,000, prompting Central Bank to announce injection of U.S. dollars that stabilised rate around 100,000. Increasingly devalued currency continued to contribute to worsening living conditions. Supermarkets 1 March began pricing goods in U.S. dollars, fuel prices continued to rise, while citizens increasingly struggled to purchase other essential imported products. State electricity provider EDL 13 March reported that 2,000 customers per day were applying to unsubscribe from public grid after sharp tariff hikes. Deteriorating conditions continued to cause unrest and security incidents as depositors demanded access to savings trapped inside illiquid banks: security guard 3 March shot and wounded depositor in capital Beirut; security forces 22 March used tear gas against protestors outside parliament. Despite calls on 5 March by several public teachers’ unions to end strike ongoing since Dec, many unions refused to return to work and demanded inflation-indexed salaries.

Double executive (president and cabinet) continued without end in sight. Presidential vacuum prevailing since 1 Nov continued as parliament in March held no presidential election sessions, reflecting deadlock. Leaders of Shiite parties Amal and Hizbollah 2 and 6 March respectively put forward Suleiman Frangieh as their preferred presidential candidate, leading House Speaker and Amal leader Nabih Berri to declare his preparedness to convene electoral session when opposing camp nominates “a candidate or two”. Christian party Lebanese Forces (LF) leader Samir Geagea, however, swiftly threatened to block Frangieh’s election by helping to frustrate quorum, alleging that Frangieh would unduly represent interests of Hizbollah and its allies. Free Patriotic Movement party also rejected Frangieh. Meanwhile, cabinet 27 March held meeting to discuss confusion over daylight savings time. France 18 March reportedly sought to convince Saudi Arabia – which retains influence over LF and Sunni MPs – to support proposal to elect Frangieh as president alongside new PM supported by opposition; Saudi Arabia, however, appeared unwilling to strongarm its close ally LF.

Economic crisis deepened as currency reached new record low, sparking protests, while executive vacuums continued without end in sight and Hizbollah issued warnings over U.S. policy.

Economic strife worsened amid devaluing currency, fomenting public unrest. Lebanese lira 28 Feb reached new record low value of 85,000 to $1 at parallel exchange rate; accelerated devaluation from around 40,000 in early Jan may be related to significant decrease in U.S. dollars that Central Bank injects into market at subsidised rate, from around $40mn daily in Dec to $10mn in late Feb. Fuel prices continued to rise as other essential imported products grew scarce. Economy and trade ministry 8 and 28 Feb increased prices for Arabic bread. Clashes 10 Feb erupted in both capital Beirut and Tripoli between competing networks of private electricity generators. Widespread protests 16 Feb broke out countrywide against economic conditions and depositors’ continued inability to access savings trapped inside illiquid banks, leading to road blocks and arson attack on bank branch in central Beirut.

Double executive (president and govt) vacuum continued. Presidential vacuum since 1 Nov continued with little apparent prospect of resolution. Parliament held no electoral sessions during Feb, reflecting prevailing deadlock between various political factions. France, U.S., Saudi Arabia, Qatar and Egypt 6 Feb warned they will reconsider “all ties” with Lebanon if vacuum continues indefinitely. Meanwhile, attempts to form new govt to replace caretaker administration have practically ceased. PM Mikati 6 Feb convened cabinet meeting to authorise spending on health, education and other sectors, which most Free Patriotic Movement-aligned ministers boycotted. Ineffectual executive action could jeopardise orderly succession of key executive positions, such as head of general security who is due to retire early March and Central Bank governor, whose term expires in June; municipal elections in May could also be delayed.

Hizbollah accused U.S. of destabilising country. Hizbollah chief Hassan Nasrallah 16 Feb reiterated rhetoric blaming alleged U.S. “siege” for economic misery, warning of grave consequences – including conflict with Israel – if U.S. were to continue deliberate strategy to destabilise country and starve party’s base into submission.

Executive vacuums continued without end in sight, economic hardship deepened, and tensions over land border surfaced between Hizbollah and Israel.

Double executive (president and govt) vacuum continued. Parliamentarians failed to elect new president, prolonging vacuum in place since 1 Nov. Parliament Speaker Nabih Berri 19 Jan convened 11th parliamentary session to elect president, which failed to achieve breakthrough as political factions insist on electing their preferred candidates. Meanwhile, attempts to form new govt to replace current caretaker administration practically ceased. PM Mikati 18 Jan managed to convene cabinet meeting, which was boycotted by Christian party Free Patriotic Movement that sees cabinet meetings as unconstitutional without president. Meanwhile, General Prose-cutor Ghassan Oweidat 25 Jan ordered release of suspects held in relation to Aug 2020 Beirut port explosion and sued investigative Judge Tarik Bitar after latter attempted to resume investigation, frozen for year due to pending charges against Bitar; protesters against decision clashed with security forces near central courthouse.

Economic crisis persisted, fomenting pockets of public unrest. Lebanese Lira (LBP) 25 Jan reached new record low value of 60,000 to USD$1, contributing to worsening living conditions for many households. Fuel prices continued to rise and citizens increasingly struggled to purchase imported products, such as medicine. Health Minister Firas Abiad 10 Jan announced that infant milk would no longer be subsidized, removing one of few remaining state subsidies. Deteriorating conditions led public school teachers to announce week-long strike on 9 Jan; depositors 10 Jan conducted armed hold-ups of two separate banks to demand access to savings. Dozens of protesters 25 Jan burnt tyres outside Central Bank to protest devaluing currency.

Hizbollah and Israel exchanged hostile rhetoric over land border. Hizbollah 3 Jan released video purporting to demonstrate how group’s militant wing would invade northern Israel; several days later, Hizbollah reportedly announced that it had enlisted 9,000 new recruits to bolster military reserves. Israel same week announced plans to conduct military manoeuvres in disputed Shebaa Farms area. Hizbollah chief Hassan Nasrallah 3 Jan said Israeli infringements to “status quo” at Jerusalem’s Holy Esplanade could trigger regional chaos, after Israel’s new national security minister visited site (see Israel-Palestine).

Efforts to elect new president faltered, security incidents proliferated amid economic deterioration, while gunfire killed UN peacekeeper in south.

Executive vacuum continued without exit in sight. Speaker of Parliament Nabih Berri during month convened three parliamentary sessions on 1, 8 and 15 Dec to elect president, which failed to achieve breakthrough like previous seven sessions held Sept-Nov. Anti-Hizbollah camp largely voted for candidate Michel Moawad, while Hizbollah and its parliamentary allies returned blank votes. Rift between Christian party Free Patriotic Movement (FPM) and Hizbollah appeared to deepen after ministers considered loyal to latter 5 Dec attended controversial cabinet meeting called by caretaker PM Mikati, while FPM rejected meeting as unconstitutional amid current dual executive vacuum. Meanwhile, attempts to replace caretaker govt with empowered cabinet practically ceased during month.

Economic hardship continued to worsen amid insecurity. Lebanese Lira (LBP) reached all-time lows in Dec, trading at around 47,000 LBP to $1 on 26 Dec; central bank 27 Dec intervened to bring rate closer to 43,000 LBP, yet similar interventions in past have proved unsustainable. Fuel prices remained high and pharmaceutical manufacturers announced looming price hikes for medicines. Localised security incidents persisted: violent clashes erupted during Dec in northern city of Tripoli, prompting local MP to call for increased presence of state security in city, while depositors continued to hold up banks demanding access to their savings trapped inside illiquid banking system.

Shooting killed UN peacekeeper in south. Unknown assailants 14 Dec allegedly fired on UN Interim Force in Lebanon (UNIFIL) in southern village of Al-Aaqbiya, killing Irish peacekeeper, after local residents reportedly responded in hostile fashion to UNIFIL vehicle entering village; incident follows UN Security Council’s renewal of peacekeeping mandate 31 Aug that included slight revision permitting UNIFIL to operate in south without coordination with Lebanese army, which Hizbollah had criticised as affront to Lebanon’s sovereignty.

Country entered presidential vacuum, which may persist indefinitely so long as political blocs fail to find compromise, while absence of new govt further impaired efforts to address economic crisis.

Country entered presidential vacuum, which could extend for months or years. Parliamentary blocs made no tangible progress on appointing replacement for outgoing President Michel Aoun, whose six-year term ended on 31 Oct. House Speaker Nabih Berri convened parliamentary voting sessions on 10, 17 and 24 Nov, but none made progress; Michel Moawad favoured by anti-Hizbollah camp in his best showing 10 Nov received 44 votes in first round, short of 86 required for outright first-round win, as pro-Hizbollah alliance continued to return blank votes and refrained from offering alternative candidate amid lack of agreement within bloc.

Presidential vacuum boded ill for forming empowered govt. Prospects of forming new govt without president’s election remained exceedingly dim, as politicians generally accept that caretaker govt exercising presidential prerogatives cannot approve new cabinet. Further weakening current caretaker administration, PM Mikati had late Oct announced that he will convene cabinet only “for urgent matters” during vacuum. Constant debates over presidential choices and constitutionality of govt activity could absorb most of political leadership’ already minimal policymaking capacity, allowing economic crisis to deepen.

State budget entered into force amid concern over worsening economic crisis. Country’s 2022 state budget 15 Nov came into effect, one of several International Monetary Fund (IMF) requirements to unlock potential financial aid package. Notably, budget ended long-defunct official exchange rate of 1,507.5 Lebanese pounds to $1 and adopted significantly higher exchange rates for customs (15,000 pounds for $1); ten-fold increase in customs fees could fuel another bout of inflation, thereby reducing purchasing power and increasing poverty amid soaring energy prices at onset of winter; measure also raised concern that projected state revenue will be less than anticipated. World Food Programme 22 Nov announced it had earmarked $5.4bn in food assistance for next three years, noting food prices are 16 times higher than Oct 2019, when Lebanon’s economic crisis became widely apparent.

Govt and Israel signed maritime border deal, defusing potential flashpoint; political divisions prevented new president’s election and hampered govt formation amid economic crisis.

Israel and Lebanon signed maritime border deal. Govt and Israel agreed demarcation agreement for their shared maritime border following months of U.S.-led mediation efforts that intensified in recent weeks amid rising tensions between Israel and Hizbollah. President Aoun and Israeli PM Yair Lapid 11 Oct declared their satisfaction with deal’s terms, which demarcates border along “line 23”, leaving Karish gas field in Israeli waters and Qana prospect inside Lebanese waters; deal allows Lebanon to explore and potentially exploit Qana and entitles Israel to compensation for its share of Qana. Aoun and Lapid 27 Oct separately signed final agreement; later in day, Israeli and Lebanese delegations separately submitted signed copies to U.S. mediator Hochstein at UN Interim force in Lebanon (UNIFIL) headquarters. Earlier, Lebanon’s army claimed Israeli gunboats 16, 17 Oct repeatedly violated Lebanese territorial waters near border opposite Naqura, which Israel denied.

Parliament failed to elect new president, raising fears of constitutional uncertainty in Nov. Parliament made no tangible progress on electing new president to succeed Aoun, whose six-year term ended 31 Oct. Lebanon appeared poised to enter presidential vacuum from 1 Nov onwards, which will likely further hamper International Monetary Fund (IMF)-mandated reform processes and fuel political polarisation between sparring political camps, raising risk of violent confrontation; crisis will also raise question of whether caretaker govt can validly exercise president’s prerogatives. Similarly, govt formation efforts remained stalled, over five months after May parliamentary polls; Mikati and Aoun failed to settle on list of ministers, reportedly disagreeing over allocation of various ministries to different sectarian communities.

Economic hardship persisted amid limited reform progress. Passage of legislative reforms needed to unlock IMF financial bailout package remained grindingly slow. Parliament 18 Oct passed amendments to banking secrecy law but concerns remained that legislation will not meet IMF’s standards. Parliament is yet to approve formal capital control law, which IMF considers “crucial for boosting economic activity”, as Central Bank struggled to unify various exchange rates. Meanwhile, soaring energy prices before onset of winter threatens to deepen crisis and poverty.

Govt formation remained stalled ahead of October expiry of President Aoun’s term and violent street clashes erupted amid deepening economic crisis.

Govt formation efforts made no progress. PM Mikati and President Aoun failed to reach breakthrough; new govt may remain unattainable during Aoun’s term, which ends 31 Oct. Parliament 29 Sept held first round of presidential elections, failed to elect new president; uncertainty persists that new president will be appointed before Aoun’s term ends. Parliament 26 Sept passed 2022 budget, which fell short of International Monetary Fund (IMF)’s standards for bailout package; IMF delegation 19 Sept visited capital Beirut to “accelerate” reform process, concluded progress was “very slow”.

Insecurity flared, notably in north Lebanon. Central Bank 12 Sept lifted last remaining fuel subsidies, fuelling further price hikes for gasoline and diesel. Lebanese lira weakened to all-time lows, trading at 39,000 to $1 on 19 Sept. In various regions – notably Tripoli, North and Bekaa Valley – street clashes over robberies and family issues led to deaths and injuries. Interior Minister Bassam Mawlawi 13 Sept announced govt would impose “sustainable” security plan for North Lebanon; 16 Sept reiterated need for state intervention after bank depositors held up seven banks across country within three days to gain access to their own funds trapped inside illiquid banks. Transport minister 23 Sept confirmed that days earlier boat carrying Lebanese en route to Europe sank off Syrian coast, killing over 100.

Govt and Israel inched closer to maritime deal, notwithstanding risk of escalation. U.S. mediator Amos Hochstein 9 Sept met separately with President Aoun, PM Mikati and House Speaker Nabih Berri to discuss Israel’s response to proposal in which govt renounces claims to Karish gas field – some 90km off coast of Lebanon and Israel – in return for exclusive rights to unexplored Qana prospect; Hochstein said that “very good progress has been made” but noted “work to be done.” After drilling company Energean 8 Sept announced it is ready to resume work “within weeks”, Hizbollah chief Hassan Nasrallah 17 Sept reiterated previous warnings that Israel’s exploitation of Karish field before border negotiations conclude is “red line”.

Govt formation efforts continued without breakthrough as economic crisis deepened, while hopes persisted of deal to resolve maritime dispute with Israel. Efforts to form govt following 15 May parliamentary elections made no progress. PM Mikati and President Aoun 17 Aug held consultative meetings after discontinuing such discussions after Mikati 29 June proposed cabinet lineup, citing lack of progress; progress has reportedly been hampered by disagreement on allocation of various ministries to different sectarian communities. As obstacles continue to beset legislated reforms required to unlock International Monetary Fund (IMF) financial bailout package, economic crisis continued to deepen. After intermittent bread shortages triggered fights at bakeries nationwide in mid-to-late July, civil servants during month conducted open-ended strikes for weeks, protesting their heavily devalued wages, which has brought most state institutions to standstill. In mid-month, pressure on Lebanese lira increased once more, with currency weakening from 31,000 to one U.S.-dollar on 10 Aug to 34,000 on 20 Aug. European vessel 6 Aug rescued over 75 Lebanese citizens near Turkish coast from sinking boat, on which they had been trying to reach Europe. Amid rising tensions between Israel and Hizbollah over maritime dispute, hopes continued during month of resolution after U.S. mediator Amos Hochstein late July met with Aoun, Mikati, and House Speaker Nabih Berri, as well as Israeli leaders. Govt reportedly offered to back down from its expanded claim (known as “line 29”), thus renouncing any claim to Karish gas field, in return for solution that adopts “line 23” (which places demarcation line further north) but awards Lebanon additional 80km² that includes Qana prospect – gas deposit of unproven worth; Israel reportedly expressed willingness to accommodate proposal, subject to receiving compensation for ceding 80km² pocket. Despite reported progress, Hizbollah chief Hassan Nasrallah 19 Aug publicly accused Hochstein of wasting time, warning that “escalation will be inevitable” if negotiations do not conclude promptly and allow Lebanon to begin exploring its offshore natural gas reserves.