The Main Challenges Facing Lebanon's New Government

In this photo released by Lebanese government, Lebanese President Michel Aoun, left, meets with Prime Minister Najib Mikat, at the presidential palace, in Baabda, east of Beirut, Lebanon, Friday, Sept 10, 2021. (Dalati Nohra/Lebanese Official Government via AP)
In this photo released by Lebanese government, Lebanese President Michel Aoun, left, meets with Prime Minister Najib Mikat, at the presidential palace, in Baabda, east of Beirut, Lebanon, Friday, Sept 10, 2021. (Dalati Nohra/Lebanese Official Government via AP)
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The Main Challenges Facing Lebanon's New Government

In this photo released by Lebanese government, Lebanese President Michel Aoun, left, meets with Prime Minister Najib Mikat, at the presidential palace, in Baabda, east of Beirut, Lebanon, Friday, Sept 10, 2021. (Dalati Nohra/Lebanese Official Government via AP)
In this photo released by Lebanese government, Lebanese President Michel Aoun, left, meets with Prime Minister Najib Mikat, at the presidential palace, in Baabda, east of Beirut, Lebanon, Friday, Sept 10, 2021. (Dalati Nohra/Lebanese Official Government via AP)

Lebanon's new government, finally formed in the throes of an accelerating economic meltdown after 13 months of political deadlock, has its work cut out.

What are the most pressing issues for the cabinet announced on Friday, and how easy will they be to tackle?

What are the priorities?
Prime Minister Najib Mikati's 24-member cabinet desperately needs to lift Lebanon out of what the World Bank has called one of the planet's worst economic crises since the 1850s.

The Lebanese pound has lost more than 90 percent of its value to the dollar on the black market, inflation has soared and people's savings are trapped in banks.

With foreign currency reserves plummeting, the cash-strapped state has been struggling to maintain subsidies on basic goods.

Petrol and medicine have become scarce, the state barely provides two hours of electricity supply a day, and almost 80 percent of the population now lives in poverty.

"The first priority for the government really will be to stem the collapse," said Maha Yahya, director of the Carnegie Middle East Center.

Subsidies needed to be lifted and a safety net put in place to ease the blow on the most vulnerable, she said.

To do this, analysts have said, the cabinet will need to relaunch talks with the International Monetary Fund to unlock billions of dollars in financial aid.

After defaulting on its debt in March 2020 for the first time in history, Lebanon started talks with the IMF, but these quickly hit a wall amid bickering over who should bear the brunt of the losses.

Will this be easy?
The international community has demanded sweeping reforms and a forensic audit of the country's central bank before any financial assistance is disbursed.

The previous government in 2020 announced a rescue roadmap that included electricity sector reform, restructuring the banking sector and lifting the official dollar peg.

But it has yet to be implemented.

As for the central bank audit, it too has stalled, with the central bank claiming it could not provide the auditing firm with some of the required documents because of banking secrecy.

Economist Mike Azar said that reforming the oversized commercial banking sector and central bank, as well as restructuring the public sector, would be key for any deal with the IMF.

"There isn't anything you can do short of these two major restructurings," he told AFP.

But the traditional ruling class that has dominated politics in Lebanon since the 1975-1990 war was likely to be reluctant.

"Restructuring the public sector has an impact on the political parties, as it is the main financing source for their" patronage system, he said.

"How would they accept that?"

Although some of the 24 new ministers in Mikati's cabinet are technocrats, all have been endorsed by at least one of Lebanon's many competing political parties.

Yahya said drawing up a medium- to long-term rescue plan for the country would be a "major challenge" as the new government lacked any political consensus.

"This government was formed with the business-as-usual mentality so everybody there represents one political leadership or the other," she said.

This means political parties "can use the ministers within the government to block any reform they see as undermining their interests or unpopular in the street".

Will there be elections?
Mikati on Friday vowed to hold May 2022 parliamentary elections on time.

In a country rocked in 2019 by protests calling for the overhaul of the entire political class, some activists see this as a chance to vote out an old guard deemed incompetent and corrupt, and bring in younger experts to actually represent the people's best interests.

But analyst Michel Doueihy said the political parties in power since the end of the civil war were ready to do anything to cling on to power.

The traditional ruling "class is trying through this government to catch its breath" and restore some credibility ahead of the next parliamentary elections, he told AFP.

He said their tactics could even include postponing the polls.



US-Ukraine Minerals Deal: What We Know

FILE - President Donald Trump, right, meets with Ukrainian President Volodymyr Zelenskyy in the Oval Office at the White House, Feb. 28, 2025, in Washington. (AP Photo/ Mystyslav Chernov, File)
FILE - President Donald Trump, right, meets with Ukrainian President Volodymyr Zelenskyy in the Oval Office at the White House, Feb. 28, 2025, in Washington. (AP Photo/ Mystyslav Chernov, File)
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US-Ukraine Minerals Deal: What We Know

FILE - President Donald Trump, right, meets with Ukrainian President Volodymyr Zelenskyy in the Oval Office at the White House, Feb. 28, 2025, in Washington. (AP Photo/ Mystyslav Chernov, File)
FILE - President Donald Trump, right, meets with Ukrainian President Volodymyr Zelenskyy in the Oval Office at the White House, Feb. 28, 2025, in Washington. (AP Photo/ Mystyslav Chernov, File)

Washington and Kyiv have signed a new minerals deal that will see the United States invest in Ukraine's rare earth and other deposits as it seeks to reduce military aid to the war-torn country.

The deal came together after US President Donald Trump demanded compensation for US aid given to Ukraine under his predecessor Joe Biden's administration, and follows weeks of delays following a spat in late February between Trump and Ukrainian leader Volodymyr Zelensky, AFP said.

Here's what we know about the agreement -- which lacks any explicit security guarantees for Ukraine:

- What's in the deal? -

Under the terms of the deal announced on Wednesday, Ukraine and the United States will establish a joint Reconstruction Investment Fund.

The fund will be controlled by a company with "equal representation of three Ukrainian and three American board members," the US Treasury Department said in a statement.

The agreement covers 57 types of resources, including oil and gas.

If the United States decides to buy the resources, they will be given "first choice to either acquire them or designate the purchaser of our choice," the Treasury Department said.

The new fund "will receive 50 percent of royalties, license fees, and other similar payments from natural resource projects in Ukraine," according to the US Treasury.

Its profits will be invested exclusively in Ukraine for the first 10 years, after which profits "may be distributed between the partners," Kyiv said.

What resources does Ukraine have?

Ukraine holds about five percent of the world's mineral resources and rare earths, according to various estimates.

But work has not yet started on tapping many of the resources and a number of sites are in territory now controlled by Russian forces.

Ukraine also has around 20 percent of the world's graphite, an essential material for electric batteries, according to France's Bureau of Geological and Mining Research, and is a major producer of manganese and titanium.

It also says it possesses one of the largest lithium deposits in Europe, which is yet to be extracted.

Kyiv says "rare earth metals are known to exist in six deposits" and an investment of $300 million would be needed to develop a deposit at Novopoltavske, which it claimed was one of the world's largest.

Does Ukraine have to repay the US?

Trump demanded compensation for US aid given to Ukraine under his predecessor Joe Biden's administration.

But under the terms of the deal signed this week, Ukraine will not be asked to pay back the billions of dollars it has received from the United States since Russia's invasion of the country in February 2022.

New military aid from Washington will be counted as its contribution to the fund, according to the text of the agreement.

Ukraine said it will maintain full control over its subsoil, infrastructure and natural resources throughout the process.

Kyiv noted that the agreement does not impact its bid for integration with the European Union.

What does US support mean for Ukraine?

Ukraine has said any deal would need to include long-term and robust security guarantees that would deter Russia from attacking again.

But the text does not place any specific security obligations on the United States.

It simply says that the United States "supports Ukraine's efforts to obtain the security assurances necessary to build a lasting peace."

However, a US Treasury statement notably mentioned Russia's "full-scale invasion" of Ukraine -- diverging from the Trump administration's usual formulation of a "conflict" for which Kyiv bears a large degree of responsibility.

"This is win-win for both sides," US Treasury Secretary Scott Bessent told Fox Business on Thursday.

"I think this is a strong signal to the Russian leadership," he said.