Alwaght- After 30 years of undisputed governance, Riad Salameh’s governorship over Lebanon's central bank ended yesterday, adding another important post to a list of other key uncertainty-stricken state posts.
Salameh has had one of the most controversial performances among the Lebanese officials in recent years.
His stepping down marked an important news report for the Lebanese who since 2019 have undergone the most unprecedented economic crisis since their independence and new monetary policies can directly and immediately influence living conditions and economic situation of a majority of them. In such a significant juncture, picking a new central bank governor is roughly as important as election of a new president.
Being the world's longest-serving central bank governor, Salameh is blamed by many political groups and public opinion as being one the causes of the economic catastrophe Lebanon is struggling with. He and his relatives are also under investigation at home and abroad for corruption.
With the end of Salameh rule, his deputy Wasim Mansouri took over as the government failed to name a new head. This is the first time the central bank top post is taken by a Shiite figure. According to the Lebanese quota-based political structure, the post of central bank is a share of the Maronite Christians. His three aides are Sunni, Shiite, and Armenian catholic, all representing their political parties and members of the central committee of the bank.
Record of Salameh’s performance
59 years have passed since Lebanon's central bank, officially called Banque du Livan (BDL), was founded and half of this time passed under Salameh whose governorship was extended by various governments five times since 1993. His long-standing presence in the position of the head of the BDL has made him one of the most influential figures with extensive political connections with various domestic parties and foreign actors.
Salameh laid the cornerstone of the financial system that served the vested interests of Lebanon's main factions after the 1990-75 civil war, and many observers say these factions fear the consequences of his fall.
He had the support of powerful figures, including Parliament Speaker Nabih Berri and Prime Minister Najib Miqati, and before him PM Saad Hariri, but in recent years, with the instability of the political situation and the corruption case against him, he fell out of favor and demands for his removal have been on the rise.
His governorship was characterized by his early relative success to control post-civil war inflation. In the early years of his work, the Lebanese banking sector was strengthened and national hard currency reserves exceeded $40 billion. Lebanon even was removed from the Financial Action Task Force on Money Laundering (FATF) in 2001 and the country formed an independent commission for countering money laundering.
However, in the last two terms of Salameh's post, the signs of the failure of the central bank's monetary policies and their negative impact on the economic situation were clearly visible. Lack of monetary discipline in financing the government budget deficit, in bank loans, linking the Lebanese lira to the US dollar to stabilize its value stability, and major pay rises to the state managers proved troublesome to his record.
Active fraud cases against Salameh
In March 2022, European Union Agency for Criminal Justice Cooperation blocked about $130 million of the Lebanese assets in France, Germany, Luxembourg, Monaco, and Belgium in relation to a financial corruption case in which Munich attorney general said Salameh had a role.
Afterwards, a probe was launched, investigating a $300 million embezzlement from the BDL between 2002 and 2015 by Salameh and his brother.
European investigators visited Lebanon three times in connection with the investigation. First one was in January for meeting witnesses and adding to their documents. The second one in March for investigating Salameh, and the third one was in May for investigating his brother Raja Salameh and his assistant Marianne Howayek.
In continuation of the case, on May 16 when Salameh did not show up in a Paris Court, France issued his arrest warrant, and in the same week a red notice was issued to him by the Interpol.
A separate home investigation by Judge Ghada Aoun, the attorney general of Mount Lebanon region, charged him with fraud in purchase of an apartment in Paris. Salameh denied the charges and said they were politically-motivated.
His political influence and support by caretaker Prime Minister Najib Mikati have so far helped him avoid arrest. Mikati denied his backing for him, however.
Wassim Mansouri: Records and plans
As it was mention above, with the departure of Salameh, vice-governor Wassim Mansouri took his seat as acting governor. On June 11, 2020 and under PM Hassan Diab, Mansouri was appointed as the first deputy governor with the support of the speaker of parliament, Nabih Berri, who is a relative to Mansouri.
Mansouri, 51, from the southern city of Eitarun and a member of the Amal movement, has a PhD and MA in public law from the University of Montpellier. Before his deputy post, he was the lawyer of Nabih Bari and advisor to the former Minister of Finance Ali Hassan Khalil. He has also worked as a full-time professor at the University of Lebanon's School of Law.
In the first press conference after assuming the new post, Mansouri outlined to media the monetary policy that central bank will follow during his tenure.
Issues in which Mansouri sought to take a different path from Salameh included rejection of budget payments outside the law mechanism, gradual liberalization of the foreign currency rates, monetary discipline in financial transactions, and launching a new mechanism aimed at curbing subsidized currency sales to the businesspeople and companies, and restricting dollar sales to state employees, except for some medicine imports.
He noted that any financing for the government from now on should be for a certain period and subject to the possibility of return. He described the subsidization policy for some goods as “incorrect” and demanded the implementation of a series of reforms within 6 months.
He said that the government resources are limited and the country should move towards full stop of state funding. He asserted that he will never sign a document for state funding outside the legal framework.
Meanwhile, many experts stressed that Mansouri has a difficult job restoring stability to the embattled lira.
