Lebanon Crisis Brings Mixed Legacy for Riad Salameh

FILE PHOTO: Lebanon's Central Bank Governor Riad Salameh reacts after a news conference at Central Bank in Beirut, Lebanon November 11, 2019. REUTERS/Mohamed Azakir
FILE PHOTO: Lebanon's Central Bank Governor Riad Salameh reacts after a news conference at Central Bank in Beirut, Lebanon November 11, 2019. REUTERS/Mohamed Azakir
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Lebanon Crisis Brings Mixed Legacy for Riad Salameh

FILE PHOTO: Lebanon's Central Bank Governor Riad Salameh reacts after a news conference at Central Bank in Beirut, Lebanon November 11, 2019. REUTERS/Mohamed Azakir
FILE PHOTO: Lebanon's Central Bank Governor Riad Salameh reacts after a news conference at Central Bank in Beirut, Lebanon November 11, 2019. REUTERS/Mohamed Azakir

Touted as the guardian of Lebanon’s monetary stability, he steered the tiny country's finances for nearly three decades, through post-war recovery and bouts of unrest.

Now, Lebanon’s central bank governor is being called a “thief” by some anti-government protesters who see him as a member of a corrupt ruling elite whose mismanagement has driven the country to the edge of bankruptcy.

The changing fortunes of Riad Salameh, a 69-year-old former investment banker, mirror the rise and fall of Lebanon’s post-war banking sector, which he personally oversaw, The Associated Presse reported.

Last year, as economic conditions worsened and Lebanon was engulfed in mass protests, banks began imposing limits on cash withdrawals and limits on transfers abroad that continue to deprive depositors of access to their savings. In recent weeks, the Lebanese pound — pegged to the dollar for more than two decades under Salameh — lost 60% of its value against the dollar on the black market.

Protesters rioted, hurling firebombs and smashing ATM machines. Metal barriers rose up around the banks.

“They are like thieves, hiding behind their fortifications,” said Ahmad Rustom, 46, a self-employed carpenter standing outside a local bank in Beirut recently. “The fact that they are fortifying means they don’t intend to give people their money back.”

At the center of this tumult is Salameh, one of the world’s longest-serving governors. Prime Minister Hassan Diab's government has singled him out, blaming the bank's “opaque policies" for the downward currency spiral over the past weeks.

Salameh has declined an AP request for an interview but defended himself publicly against what he described as a “systematic campaign” against the central bank, blaming successive governments for the crisis.

“Yes, the central bank financed the state, but it is not the one that spent the money,” Salameh charged in a televised speech.

In perhaps the starkest warning to Salameh, the head of cash operations at the central bank was charged earlier this month with violating banking laws and money laundering, allegations the central bank denied. The official, Mazen Hamdan, was later ordered released on bail.

Salameh’s supporters say he did his best to keep the economy afloat and is being made a scapegoat.

David Schenker, the US assistant secretary of state for Near Eastern affairs, has weighed in, saying Salameh has credibility and that Washington has “worked well” with him.

Nassib Ghobril, chief economist at Lebanon's Byblos Bank, the country's third-largest lender, said Salameh "used the tools at hand to maintain the currency stability for so long, despite the fact that only the monetary policy was functioning” in the country.

Salameh is credited with preserving financial stability at critical junctures.
In 2009, he became the first Arab central bank governor to ring the bell at the New York Stock Exchange.

“I hope that through my work I have benefited Lebanon and its banking sector but for sure this is not an individual effort but that of a team at the central bank,” he once said in an interview.

Successive governments, however, did little to enact reforms or improve Lebanon’s infrastructure, while continuing to borrow heavily, accumulating one of the world’s largest debts reaching $90 billion, or 170% of GDP.

With Lebanon in constant need of hard currency to cover its massive trade balance deficit — it exports way too little and imports almost everything —Salameh helped attract deposits to local banks by offering higher interest rates than those of international markets.

When the flow of hard currency dropped, beginning in 2016 — in large part because falling oil prices reduced remittances from Lebanese working in Gulf Arab nations — Salameh responded with a so-called “financial engineerings” debt policy. This encouraged local banks to obtain dollars from abroad by paying high interest rates, to keep the state's finances afloat.

This approach is what his detractors now say proved too costly for the country. An economic recovery plan recently adopted by the government showed that the central bank had $44 billion in losses over the past years, the result of losing financial operations.

In the months before anti-government demonstrations erupted last October, panicked depositors pulled billions of dollars from banks, which subsequently closed for two weeks and later imposed stringent restrictions on withdrawals.

Protesters now shout insults at Salameh outside the central bank, surrounded with concrete walls and barbed wire on Beirut’s Hamra Street.



Is Hezbollah Capable of Fighting Israel Again?

A poster of slain Hezbollah chief Hassan Nasrallah in Tehran, Iran. (Reuters)
A poster of slain Hezbollah chief Hassan Nasrallah in Tehran, Iran. (Reuters)
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Is Hezbollah Capable of Fighting Israel Again?

A poster of slain Hezbollah chief Hassan Nasrallah in Tehran, Iran. (Reuters)
A poster of slain Hezbollah chief Hassan Nasrallah in Tehran, Iran. (Reuters)

Hezbollah has once again threatened to take up the fight against Israel amid the conflict between Iran and Israel.

The Lebanese people have been warily observing the conflict between the arch foes, worried that Hezbollah may yet again drag them into another war with Israel, this time to defend its main backer Iran.

Hezbollah had launched a “support war” against Israel and in solidarity with Hamas in wake of the Palestinian movement’s October 7, 2023 attack. Israel subsequently launched an all-out war against Hezbollah in 2024, decimating its weapons arsenal and eliminating its top command.

Since a ceasefire took hold in November, efforts have been underway to disarm Hezbollah.

On Monday, deputy Chairman of Hezbollah's Political Council Mahmoud Qamati declared that the party was “prepared to fight the Israeli enemy should it despair in the Lebanese state’s ability to fulfill its vows and commitments in confronting the aggression.”

Ministerial sources told Asharq Al-Awsat his statement was “a message, but whose direction we don’t know.”

“What matters now is that the party is still committing to the government’s decision to stay out of the conflict. Hezbollah had also declared that it will not launch a new support war,” they noted.

Qamati added: “The resistance (Hezbollah) will not abandon its national duty if the state proves itself incapable or unwilling to deter the ongoing Israeli attacks. Hezbollah still believes the confrontation with Israel to be a national and sovereign issue.”

His statements contradict those made by Hezbollah MP Hassan Fadlallah, as well as sources from the party.

Last week, Fadlallah said: “Iran has proven throughout history that it can defend itself when attacked. It is not asking anyone to defend it. It is waging the fight itself, and it knows how to protect its people and how to wage a confrontation.”

“There are no such things as Iran’s proxies, rather there are resistance movements,” he charged.

Dr. Kassem Kassir, a political analyst close to Hezbollah, said Qamati was talking about Israel’s occupation of Lebanese territories and means to confront it, not supporting Iran.

“His remarks are in preparation for any scenario that may emerge,” he told Asharq Al-Awsat.

Imad Salamey, Associate Professor of Political Science and International Affairs at the Lebanese American University, dismissed Hezbollah’s comments about taking up the fight as “nothing more than a desperate attempt to make itself seem relevant, when in reality it is on the brink of total collapse.”

“Hezbollah has lost the overwhelming majority of its military capabilities: its weapons arsenal has been destroyed by Israeli strikes, its supply routes from Israel are no more and its field commanders have been systematically assassinated,” he told Asharq Al-Awsat.

“As for Iranian support, in all likelihood its must have dropped dramatically as a result of internal and external pressure on Tehran, including the Israeli attacks, leaving Hezbollah in unprecedented isolation,” he stressed.

“The fact is that Hezbollah can no longer pose a real threat to Israel. With its popular support waning, the party is likely resorting to internal threats, specifically within its Shiite fold, to suppress any attempt at defection or mutiny,” he explained.

“The threats we have been hearing are nothing more than a form of propaganda aimed at hiding Hezbollah’s reality and reshaping its image that cannot be backed up with any tangible support,” Salamey said.

Head of Lebanese Forces Media and Communications Department Charles Jabbour echoed these comments, saying Qamati’s remarks are nothing more than “words aimed at compensating for Hezbollah’s inability to wage a support war for Iran.”

“Those who supported Hamas were better off supporting the side that established it and supplied it with funds and weapons,” he said, referring to Hezbollah’s main backer Iran.

“All of these threats are aimed at Hezbollah’s supporters to give them the impression that they are still capable of fighting. The reality is that they can no longer do anything but hand over their weapons,” he told Asharq Al-Awsat.

Meanwhile, the Kataeb party praised the Lebanese state’s firm stance in keeping Lebanon neutral from the regional conflict.

The developments demand that Hezbollah take a “clear and immediate decision to meet calls to lay down its weapons and hand them over to the army and disengage itself completely from any foreign powers,” it said.

“It must return to the fold of the state that remains the only protector of all Lebanese people,” it added.