Is Lebanon in a state of bankruptcy? The winds and media in the country are stormy, after Lebanese Deputy Prime Minister Saada a-Shami said last night (Sunday) in an interview with al-Jadid that the country and the central bank have gone bankrupt, and that there are no disagreements over the division of losses between the country, the Bank of Lebanon. The other banks and customers. But at least so far there is no official announcement from either the government or the Lebanese central bank on the matter.
A-Shami’s statement is not unfounded, as Lebanon has huge debts of about $ 100 billion to countries, the World Bank and other foreign banks. Lebanon has no foreign exchange or gold reserves that can cover these debts, and it has no sufficient income neither to pay the debts nor to fulfill the government debts to the citizens and pay the salaries of its workers.
The severe crisis in Lebanon, which has been going on for several years along with the political crisis, is due in large part to the Hezbollah organization’s control of some of the sources of income, but also to corruption at the high levels of senior members of the financial and banking system. A Lebanese court recently announced that the governor of the central bank, Riyadh Selma, would be charged with several counts of corruption, and demanded that several countries freeze his assets. These are the first charges filed against the veteran governor, and his fortune has also been investigated by authorities in at least five European countries.
Judge Gada Aoun of the Mount Lebanon District Court told Reuters that the lawsuit against Selma concerns the purchase and rental of apartments in Paris, including several deals made on behalf of the Central Bank of Lebanon.
Selma, who has served as Lebanese central bank governor for nearly three decades, has denied the charges against him and claimed he ordered an accounting check proving he did not get rich as a result of using public funds. His brother is under arrest for identical suspicions. According to the suspicion, the two brothers set up straw companies in France and purchased real estate from public funds that they obtained fraudulently.
The Lebanese government set up by businessman Najib Mikati last September is not really able to get the country out of the mud, in part because of its inability to keep Hezbollah out of the spotlight, as demanded by Western countries and the World Bank. One of the stuck issues is the negotiations with Israel in a dispute over the economic water border, an argument that prevents the search and development of gas fields with Lebanon, a move that may help the country emerge from the crisis.