On February 15, Prime Minister Tamman Salam announced the formation of a new government of national interest, almost eleven months after the resignation of former PM Najib Mikati’s Hezbollah-dominated government. The agreement on a new government had been delayed due to deep tensions between two traditionally opposite political alliances: the Hezbollah-dominated March 8 bloc and the Sunni-led March 14 alliance. In the new 24-minister cabinet, both blocs are given 8 portfolios.

Impact on country risk

Last month’s agreement is a positive evolution as it indicates an increased willingness by Lebanon’s political elite (and their respective foreign backers Iran and Saudi Arabia) to prevent a further destabilisation of the Lebanese state. However, even if a functioning cabinet can be formed, which remains to be seen given the deep rivalries between the two major blocs, its challenges remain huge. The civil war in neighbouring Syria continues to affect the security situation in Lebanon, which is still regularly hit by deadly violence. Therefore, reducing religious tensions and improving security will be a prior – but challenging – concern for the new government. Meanwhile, the conflict in Syria continues to affect economic activity while the large number of Syrian refugees (almost 1 million people) risks further exacerbating tensions within the Lebanese society. Other priorities for the new government will be agreeing on a successor to President Michel Suleiman and the organisation of parliamentary elections, which were originally planned for June last year.

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