meed-logo

line1 line2 line3
SIGN IN / REGISTER

Political deadlock in Lebanon blocks reforms

5 June 2023

 

Lebanon’s political deadlock is likely to continue to weigh on the country’s economy and undermine security over the medium term, according to experts.

The country currently has an interim government and has been without a president since former President Michel Aoun’s term ended at the end of October last year.

Progress towards forming a new government is likely to be slow, with the legislature divided over who should replace Aoun as president.

In March, the Iran-backed Hezbollah group and House Speaker Nabih Berri’s Amal Movement party – which together constitute Lebanon’s Shia base – announced their support for the Christian politician Sleiman Frangieh.

Hezbollah and its allies have since tried to gather support for Frangieh as president, but strong opposition from the majority of the country’s Christian, Sunni and Druze political blocs has left him short of the 65 votes required to be elected in the 128-member legislature.

Over recent weeks, members of Lebanon’s parliament that oppose Frangieh have started to rally around the former finance minister Jihad Azour.

Azour currently serves as the director of the Middle East and Central Asia Department at the International Monetary Fund (IMF).

As the parliament is divided, whether either candidate can obtain a majority vote remains uncertain. According to experts, even if a president is named, it will be extremely difficult for them to form a government.

Nicholas Blanford, a non-resident senior fellow with the Atlantic Council’s Middle East programmes, says it will likely be some time before a government is formed.

“Getting a president elected is only the first step,” he said. “Once the new president is in place, there is the tricky task of forming a new government.

“As we’ve seen over the past 20 years, forming a new government can take months as people bicker and jostle for various lucrative and influential portfolios.”

Barbara Leaf, the US assistant secretary for Near Eastern affairs, said on 31 May, during a Senate committee hearing, that the Biden administration was considering sanctions if a new president is not elected soon

Outside pressure

Only when a government has been formed will Lebanon be able to start initiating the series of reforms that the international community has demanded to unlock aid, grants and loans to try to put the country on the path to economic recovery.

As Lebanon’s economic crisis has worsened and the security situation has declined, increasing pressure has been applied from other countries that want to try to restore stability in the region.

Barbara Leaf, the US assistant secretary for Near Eastern affairs, said on 31 May, during a Senate committee hearing, that the Biden administration was considering sanctions if a new president is not elected soon.

Separately, two members of the US House Foreign Affairs Committee called on the administration to impose sanctions on individuals involved in corruption to “make clear to Lebanon’s political class that the status quo is not acceptable”.

In a letter to Secretary of State Antony Blinken on 30 May, they said: “We also call on the administration to continue pressing for full accountability for the August 2020 Beirut port blast and support independent, international investigatory efforts into egregious fraud and malfeasance by the governor of Lebanon’s central bank.

They added: “We must not allow Lebanon to be held hostage by those looking to advance their own selfish interests.”

French crackdown

French officials have also taken action to try to crack down on perceived corruption by members of Lebanon’s political elite.

In May, French prosecutors issued an arrest warrant for Lebanon’s central bank governor, Riad Salameh.

The warrant followed Salameh’s failure to appear before French prosecutors to be questioned on corruption charges.

In response, Salameh issued a statement saying that the arrest warrant violated the law.

Salameh has been the target of a series of judicial investigations at home and abroad on allegations that include fraud, money laundering and illicit enrichment.

European investigators looking into the fortune he has amassed during three decades in the job had scheduled a hearing in Paris for 16 May.

A key problem is you still have the same cabal of oligarchs in power and it is likely they will still be represented in the next government
Nicholas Blanford, Atlantic Council’s Middle East programmes

Breaking the deadlock

Analysts believe cracking down on corruption among Lebanon’s political elite is key to breaking the country’s political deadlock.

“A key problem is that you still have the same cabal of oligarchs in power and it is likely that they will still be represented in the next government,” said Blanford. “These oligarchs do not want reform because if they implement a meaningful reform process, they run the risk of losing their positions of power.”

While the country’s opposing political blocs continue to vie for power and the formation of a new government seemingly remains only possible after at least several months of negotiations, the outlook for Lebanon in the short term looks bleak.

Meaningful government assistance for Lebanese citizens struggling with declining security and heightened economic pressures remains a distant prospect. High levels of emigration are also likely to continue as the country’s population seeks relief from the hardships at home.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10907713/main.gif
Wil Crisp

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • June 2025: Data drives regional projects

    30 June 2025

    Click here to download the PDF

    Includes: Top 10 Global Contractors | Brent Spot Price | Construction output

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14171168/main.gif
    MEED Editorial
  • UAE-Turkiye financial links strengthen

    30 June 2025

    This package on UAE-Turkiye relations also includes:

    > UAE-Turkiye trade gains momentum
    > Turkiye’s Kalyon goes global

     

    Turkish bank DenizBank is one of Turkiye’s leading private banks and, as a wholly owned subsidiary of Emirates NBD since 2019, it is playing a leading role in developing business links between the UAE and Turkiye.

    Recep Bastug, who was appointed as DenizBank’s CEO in 2024, says there is great potential for trade between the two countries. 

    “Turkiye is a growing country,” he says. “We’ve had volatility over the past five years, but the Turkiye economy and the banking sector have been able to manage those periods successfully.”

    Having spent years with international institutions such as BBVA, Bastug has vast experience in the banking sector. “Turkish banks, especially private ones like DenizBank, are very successful. In terms of capital, balance sheet structure and digital transformation, we are in a strong position,” he says.

    Solid fundamentals

    Turkiye’s fundamentals remain solid with a diversified export-oriented economy, a young and skilled population of 85 million, and relatively low debt levels. “We are not a highly leveraged country. Our household debt-to-GDP ratio is low. With the right policy mix, we offer high potential for foreign investors,” says Bastug.

    That potential is increasingly being realised through growing engagement with the GCC and the UAE. “Turkiye’s connection with the Gulf is going up, and DenizBank is set to play a serious role in these relations. Day by day, Turkish companies are expanding their footprint in the region.”

    GCC projects

    Baştug says that many of these companies approach DenizBank to help facilitate their entry into Gulf markets. “Some of our clients are extremely well capitalised, but others need support for major projects. Just recently, one Turkish company announced a $3bn project in the region. We’re helping them connect with Emirates NBD and navigate the local financial landscape.”

    DenizBank is actively supporting the creation of trilateral partnerships – particularly between Turkiye, the UAE and Saudi Arabia. “We see huge opportunity in forming financial strongholds across these markets, leveraging Turkiye’s contractor experience, the UAE’s capital and Saudi Arabia’s scale,” says Baştug.

    DenizBank is already delivering results. “With Emirates NBD, we’ve identified 10 strategic cooperation areas, including trade finance, payments and capital markets. Thanks to this partnership, Emirates NBD has become the number one debt capital markets bank in Turkiye, even ahead of global players.”

    One area of growing activity is initial public offering (IPO) participation. “We’ve launched a mutual fund that allows Turkish private banking clients to participate in IPOs from the region, including from the UAE and Saudi Arabia. It’s a diversification strategy and helps retain wealth within the group.”

    Turkiye’s connection with the Gulf is going up, and DenizBank is set to play a serious role in these relations. Day by day, Turkish companies are expanding their footprint in the region
    Recep Bastug, DenizBank

    Inflation ends

    Despite the current inflationary environment, Bastug says there is a clear inflection point ahead. “We expect 2027 to be a turning point. Once we exit the inflationary accounting regime [in Turkiye], DenizBank will become one of the biggest contributors to Emirates NBD’s global balance sheet. Last year, we contributed $1.2bn. In 2027, it will be significantly more.”

    DenizBank is the fifth-largest private bank in Turkiye with about a 5% market share. “The largest private bank is at 13%. It’s not easy to close that gap – but we will do it. Our long-term goal, aligned with our shareholder, is to become the biggest and most successful private bank in the country.”

    The bank is especially focused on agriculture, SMEs, and export financing – sectors that are deeply relevant to
    Turkiye’s economic growth and to regional demand. “We are the leading agricultural bank in Turkiye, and we believe strongly in the sector’s future – both for local consumption and exports.”

    Regional opportunities

    Bastug also sees potential for engagement beyond the GCC, including in post-conflict reconstruction. “In the past, Turkiye had strong trade volumes with Syria. Even during wartime, commercial links remained. Once a stable environment emerges, there will be opportunities – especially in infrastructure.”

    While a physical branch presence is not currently being considered, DenizBank is prepared to support Turkish contractors operating in neighbouring countries. “We have the relationships and expertise to facilitate this growth. And culturally, we’re well aligned with the region – it helps make business smoother.”

    As Turkiye re-establishes economic momentum and Gulf economies look to deliver on long-term visions, DenizBank is positioning itself for a more active role in the region in the future. “We are preparing the bank for the next stage, and with the backing of Emirates NBD, we’re confident in our ability to lead.” 

    READ MORE
    > UAE-Turkiye trade gains momentum
    > Turkiye’s Kalyon goes global

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14170372/main.gif
    Colin Foreman
  • Multiply agrees to sell Pal Cooling to Tabreed and CVC

    30 June 2025

    Abu Dhabi-based investment company Multiply Group has agreed to sell all of its shares in its district cooling subsidiary Pal Cooling Holding (PCH) for AED3.8bn ($1bn) to a consortium comprising Engie-backed National Central Cooling Company (Tabreed) and CVC DIF.

    The transaction is still subject to regulatory approvals.

    MEED exclusively reported in May that a team comprising Tabreed and CVC was holding exclusive discussions to acquire PCH.

    Multiply Group initially acquired a 100% stake in PCH and its subsidiaries in July 2021.

    Multiply Group has been advised by Standard Chartered and Clifford Chance. Tabreed and CVC DIF have been advised by Citi, Synergy Consulting and White & Case.

    The transaction brings together two of the UAE’s leading district cooling players. PCH was founded in 2006 and operates five active district cooling plants across the UAE. The company maintains eight long-term concessions and strategic partnerships with some of the UAE’s leading real estate developers, servicing key residential, commercial and mixed-use developments – most notably on Abu Dhabi’s Reem Island.

    Tabreed owns and operates 92 plants, including 76 in the UAE, five in Saudi Arabia, eight in Oman, one in Bahrain, one in India and one in Egypt, in addition to other international projects and operations.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14170511/main.jpg
    Colin Foreman
  • Iraq approves Basra housing project

    30 June 2025

    Iraq has approved plans to build a housing project in Basra that will offer about 5,000 homes in the first phase to tackle the country’s rising housing shortage.

    The project, which is endorsed by Iraq’s National Investment Commission (NIC), will cover an area of about 3 square kilometres.

    According to local media reports, Basra province governor Asaad Al-Idani said the project has already been awarded to a developer.

    Iraq has been gradually recovering since the war. The government initially prioritised infrastructure and public housing to stimulate economic growth, improve living standards and attract foreign investment.

    More recently, benefitting from higher oil prices and a period of relatively stable governance, Baghdad has expanded its focus to reconstructing and modernising the country’s deteriorating infrastructure.

    The Iraqi construction market has also seen significant investments from private real estate developers from the region. In May, Egyptian real estate developer Ora Developers announced that it had started construction on the Al-Wardi residential city project, which consists of more than 100,000 residential units covering about 61 million square metres (sq m) on the southeastern side of Baghdad.

    The move is the latest sign of international investors’ growing appetite for developing real estate in Iraq as part of the country’s post-war building initiatives.

    Also in May, another Egyptian firm, Talaat Moustafa Group Holding, said it was in negotiations with the NIC to develop a mixed-use project. The project, which will cover an area of about 14 million sq m and will be located in the southwest of Baghdad, is expected to contain about 45,000 residential units.

    The positive sentiment has been particularly buoyed by a robust 2024 budget, which allocated nearly $42bn to transport, social infrastructure and housing initiatives.

    Looking ahead, Iraq’s construction industry is expected to register an annual average growth rate of 4.9% in 2025-28, supported by further investments in energy, infrastructure and housing projects, according to UK analytics firm GlobalData.

    MEED’s June 2025 report on Iraq includes:

    > COMMENT: Iraq maintains its pace, for now
    > GOVERNMENT & ECONOMY: Iraq’s economy faces brewing storm
    > OIL & GAS: Iraqi energy project value hits decade-high level
    > PIPELINES: Revival of Syrian oil export route could benefit Iraq
    > POWER: Iraq power sector turns a page
    > CONSTRUCTION: Iraq pours billions into housing and infrastructure projects
    > DATABANK: Iraq forecast dips on lower oil prices

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14170011/main.png
    Yasir Iqbal
  • Meraas announces Dubai City Walk expansion

    30 June 2025

    Register for MEED’s 14-day trial access 

    Local real estate developer Meraas has announced the City Walk Crestlane project as it continues to expand its City Walk residential community in the Al-Wasl area of Dubai.

    The City Walk Crestlane comprises two residential towers offering 198 one-, two-, three-, four- and five-bedroom units.

    The project is expected to be completed and handed over by the third quarter of 2028.

    Earlier this month, Meraas, which is part of Dubai Holding Real Estate, awarded a construction contract for another project at City Walk.

    The local firm Naresco Contracting was awarded a AED450m ($123m) contract for the main construction works on its Central Park Plaza residential project at City Walk.

    The project involves constructing two towers with 23 and 20 floors. Together, they will have 212 residential units.

    In May, Meraas awarded another local firm, Al-Sahel Contracting Company, a AED300m contract for the main construction works on Elara, which is phase seven of the Madinat Jumeirah Living masterplan in Dubai.

    The project involves building three residential towers with 234 apartments.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14169472/main.jpg
    Yasir Iqbal