On June 29, the director general of Lebanon's Finance Ministry, Alain Bifani, resigned from his position. He is the second official involved in negotiations with the International Monetary Fund to resign in less than two weeks, amid signs that the government's talks with the organisation are stalling.
Mr Bifani is the man who has estimated Lebanon's losses on behalf of the government, but his figures are seen as too high by the central bank and by a parliamentary committee looking at the figure. Most disheartening is the fact that this sterile debate is wasting valuable time as Lebanon sinks deeper into a very serious economic crisis, with the national currency in freefall.
The political class, like the ineffective government of Prime Minister Hassan Diab, is to blame for this situation. Last week, President Michel Aoun convened a national dialogue session that was a flop, as many key political representatives boycotted the event. Yet if Lebanon is to reach a deal with the IMF, a similar format will be needed to bring the politicians and parties together so that they can arrive at a consensus on reform needed to progress on a bailout.
Mr Aoun’s dialogue did not directly address economic issues, only “social peace.” With Lebanon on the threshold of hyperinflation, such an agenda made no sense. Indeed, the president has been largely absent as a national leader. The post-1989 constitution does not leave presidents with many prerogatives, but it does ordain them as “symbols of the nation’s unity.” Therefore, Mr Aoun is ideally placed, in principle at least, to help steer the politicians towards a compromise on reform.
Mr Bifani told a television station that his resignation came because he disagreed with the way the authorities were managing the economic crisis. If Lebanon fails to reach a deal with the IMF, the consequences would not only be catastrophic for the country, they would have existential repercussions, as Lebanon is rapidly running out of foreign currency reserves. These are absolutely essential for a country that imports the vast majority of what it consumes.
The ineffectiveness of the Diab government and of the political leadership in general has been breathtaking. The Lebanese pound has been collapsing in recent weeks, even as the government has printed more money. This suggests we are heading into hyperinflation territory. Economic reform will require that the politicians and parties surrender part of their corruption networks so that a deal can be agreed with the IMF. However, for now none of them want to give anything up before securing political concessions in exchange.
Lebanon could disappear as a country on its hundredth anniversary If reforms are blocked and an IMF deal isn't agreed
This should not come as a surprise. Lebanese politics has largely become a game of destructive brinkmanship of late. The prevailing wisdom is that the politicians and parties do not want to adopt the reforms necessary for an IMF deal. It is easy to assume the worst about them, but such a radical judgment is not necessarily true for a number of reasons. First, the entire system would collapse if no accord is reached, meaning not only would their corruption networks dry up, but so too would many of these leaders’ power base in the political order.
Moreover, Hezbollah, the main player in the political system, has shown a desire to preserve Lebanon as an entity that can protect the party from its enemies. That is why it was so keen to safeguard the political class and the sectarian structure when protests began last October, and that is why it is bolstering the Diab government today. Lebanon’s disintegration, which the absence of an IMF deal would ensure, would not only lead to geographic and institutional fragmentation, it would remove the covering of the state that had served Hezbollah well.
So while Hezbollah would probably emerge stronger than other groups in Lebanon, it would also have to manage an increasingly unviable situation, while having to answer to over a million of its impoverished Shiite brethren. Unless an IMF bailout is forthcoming, this is a burden the paramilitary organisation could soon find overwhelming — regardless of its illicit financing networks. Moreover, this catastrophic situation would be open-ended without the introduction of reforms.
Therefore, given the starkness of the choice, the only option at this stage is for the sectarian political leaders to discuss a package deal that would allow Lebanon to move forward with the IMF. This can only take place in a closed forum portrayed as an emergency national summit on the economic situation. The politicians and parties would have to use this venue to come to a broad agreement over what they are willing to concede in order to begin implementing a reform project.
The equation is simple: if reforms are blocked and an IMF deal isn't agreed, Lebanon could disappear as a country on its hundredth anniversary. It will become a Hobbesian environment – without food, fuel, medicine and all the things that a normal country takes for granted. The cartel in power would salvage little from the wreckage. That is why its members must negotiate an agreement among themselves. Mr Aoun has not achieved much, but at least he can offer the country a road map and save some shards from his shattered mandate.
Michael Young is editor of Diwan, the blog of the Carnegie Middle East programme, in Beirut
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UAE currency: the story behind the money in your pockets
Leaderboard
15 under: Paul Casey (ENG)
-14: Robert MacIntyre (SCO)
-13 Brandon Stone (SA)
-10 Laurie Canter (ENG) , Sergio Garcia (ESP)
-9 Kalle Samooja (FIN)
-8 Thomas Detry (BEL), Justin Harding (SA), Justin Rose (ENG)
Day 2, Abu Dhabi Test: At a glance
Moment of the day Dinesh Chandimal has inherited a challenging job, after being made Sri Lanka’s Test captain. He responded in perfect fashion, with an easy-natured century against Pakistan. He brought up three figures with a majestic cover drive, which he just stood and admired.
Stat of the day – 33 It took 33 balls for Dilruwan Perera to get off the mark. His time on zero was eventful enough. The Sri Lankan No 7 was given out LBW twice, but managed to have both decisions overturned on review. The TV replays showed both times that he had inside edged the ball onto his pad.
The verdict In the two previous times these two sides have met in Abu Dhabi, the Tests have been drawn. The docile nature of proceedings so far makes that the likely outcome again this time, but both sides will be harbouring thoughts that they can force their way into a winning position.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
Ibrahim's play list
Completed an electrical diploma at the Adnoc Technical Institute
Works as a public relations officer with Adnoc
Apart from the piano, he plays the accordion, oud and guitar
His favourite composer is Johann Sebastian Bach
Also enjoys listening to Mozart
Likes all genres of music including Arabic music and jazz
Enjoys rock groups Scorpions and Metallica
Other musicians he likes are Syrian-American pianist Malek Jandali and Lebanese oud player Rabih Abou Khalil
More from Neighbourhood Watch:
The years Ramadan fell in May
Tour de France
When: July 7-29
UAE Team Emirates:
Dan Martin, Alexander Kristoff, Darwin Atapuma, Marco Marcato, Kristijan Durasek, Oliviero Troia, Roberto Ferrari and Rory Sutherland
Dates for the diary
To mark Bodytree’s 10th anniversary, the coming season will be filled with celebratory activities:
- September 21 Anyone interested in becoming a certified yoga instructor can sign up for a 250-hour course in Yoga Teacher Training with Jacquelene Sadek. It begins on September 21 and will take place over the course of six weekends.
- October 18 to 21 International yoga instructor, Yogi Nora, will be visiting Bodytree and offering classes.
- October 26 to November 4 International pilates instructor Courtney Miller will be on hand at the studio, offering classes.
- November 9 Bodytree is hosting a party to celebrate turning 10, and everyone is invited. Expect a day full of free classes on the grounds of the studio.
- December 11 Yogeswari, an advanced certified Jivamukti teacher, will be visiting the studio.
- February 2, 2018 Bodytree will host its 4th annual yoga market.
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Results
3pm: Maiden Dh165,000 (Dirt) 1,400m, Winner: Lancienegaboulevard, Adrie de Vries (jockey), Fawzi Nass (trainer).
3.35pm: Maiden Dh165,000 (Turf) 1,600m, Winner: Al Mukhtar Star, Adrie de Vries, Fawzi Nass.
4.10pm: Handicap Dh165,000 (D) 2,000m, Winner: Gundogdu, Xavier Ziani, Salem bin Ghadayer.
4.45pm: Handicap Dh185,000 (T) 1,200m, Winner: Speedy Move, Sean Kirrane, Satish Seemar.
5.20pm: Handicap Dh185,000 (D) 1,600m, Winner: Moqarrar, Dane O’Neill, Erwan Charpy.
5.55pm: Handicap Dh175,000 (T) 1,800m, Winner: Dolman, Richard Mullen, Satish Seemar.
Second ODI
England 322-7 (50 ovs)
India 236 (50 ovs)
England win by 86 runs
Next match: Tuesday, July 17, Headingley
KILLING OF QASSEM SULEIMANI
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
UAE currency: the story behind the money in your pockets
RESULT
Bayer Leverkusen 2 Bayern Munich 4
Leverkusen: Alario (9'), Wirtz (89')
Bayern: Coman (27'), Goretzka (42'), Gnabry (45'), Lewandowski (66')
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
