Event

Lebanese PM Najib Mikati announced the resignation of his government on 22 March. His Hezbollah-backed government had been in place since the middle of 2011 after the fall of the national unity government that was formed after the latest parliamentary elections in 2009. The resignation followed the government’s on-going failure to agree on a new election law for the polls that are scheduled for June this year and the failure to agree on the reappointment of Ashraf Rifi as head of the Internal Security Forces. The outgoing PM has called for the formation of a “national salvation” government. Meanwhile, clashes continue to be reported sporadically in the northern city of Tripoli, as well as near the border with Syria.

Impact on country risk

The apparent triggers for the fall of the Lebanese government are related to domestic issues, but it is clear that the developments in neighbouring Syria have put a heavy strain on the functioning of the Lebanese government. After all, the conflict between the Alawite Assad regime and the mainly Sunni opposition in Syria seems to have further polarized society and the political scene in Lebanon, which is itself home to a broad variety of religious sects and hosts a large number of displaced Syrians. Further stability in Lebanon will be influenced by the evolution of the conflict in neighbouring Syria, the new electoral schedule and the ability to form a new (unity) government. Meanwhile, after the fall of the government, Lebanon may become more susceptible to developments in Syria, further increasing security risks. Moreover, the recent events can be expected to impact consumer confidence, investments and tourism, further subduing economic performance.

Analyst: The Risk Management Team, r.cecchi@credendogroup.com