Beirut (AFP) Prominent street leaders Sunday shunned an invitation by Lebanon's prime minister-designate to sit for talks over the formation of a new government, saying they are not ready to extend support. Debt-burdened Lebanon has been without a fully functioning government since former prime minister Saad Hariri resigned on October 29 in the face of nationwide protests. Demonstrators are demanding an overhaul of the political establishment which they deem corrupt and inept, insisting on a government of independents and experts with no ties to the country's sectarian parties.

Hassan Diab, an engineering professor designated Thursday to form a desperately-needed government, had asked protesters to give him a "chance" to form a cabinet of independent experts within four to six weeks. But the self-styled technocrat's call for consultations with representatives of the popular movement on Sunday failed to draw prominent street leaders or groups. A small crowd of protesters rallied outside Diab's house and slammed visitors who claimed to represent the country's leaderless movement. "You don't represent us," the protesters chanted.

The few who heeded Diab's calls for talks included largely unknown individuals not recognised as representatives of the protest movement. "Not a single group actually active on the ground met today with the prime minister-designate because they are not convinced" he can form a government of technocrats, said Wassef Harakeh, a prominent activist. "They want us to get mired in this game of consultations," he told AFP. In the protest camp in central Beirut, crowds began gathering in the afternoon. "The people that visited the prime minister-designate today do not represent the revolution," said Ali Haidar, a resident of Beirut's southern suburbs. "These talks were a failure," he told AFP from the protest camp.

By AP -- Beirut: After two months of political deadlock, Lebanon has finally designated a new prime minister to form a government. Now comes the hard part: saving Lebanon from an unprecedented financial crisis. Nominated with the support of Iran-backed Hezbollah and its allies, Prime Minister-designate Hassan Diab and the cabinet he has vowed to form quickly must win over investors and foreign donors. What are the main concerns for investors as Lebanon grapples with a hard currency shortage, a huge public debt and a weakening currency? HOW LIKELY IS A DEBT DEFAULT OR RESTRUCTURING? Lebanon’s public debt burden, equivalent to around 150 per cent of GDP, and its twin current account and fiscal deficits looked unsustainable even before anti-government protesters took to the streets two months ago. Lebanon will face a test of its ability to meet its obligations in 2020, with $10.9 billion of debt maturing across the year, including a $1.2 billion eurobond due in March, Refinitiv data shows.

The international sovereign bonds continue to trade at less than half their face value, while credit default swaps have rocketed, suggesting Lebanon may be drifting towards a default. But that might not be a given. “A combination of fiscal reforms and a restructuring of the domestic debt could be enough to put public finances on a sustainable footing without having to resort to an external default,” Farouk Soussa, senior economist at Goldman Sachs, said in a note this week.

And even if a default does occur, Lebanon might be able to cushion the fallout. Central bank holdings of government securities implied that Lebanon had near-term debt management options that would limit losses borne by the private sector in the event of a default, Moody’s Investors Service said in a note.

IS A CURRENCY DEVALUATION A GIVEN?

Lebanon’s 22-year-old peg to the US dollar has been strained to near breaking point by the country’s political and banking crisis. With the pound losing roughly a third of its official value on the black market, a devaluation has loomed increasingly large. Central Bank Governor Riad Salameh governor has ruled out any such move, saying the government has the means to maintain it. But without a revival in sagging capital flows and a recovery in Lebanon’s external balance sheet, the central bank’s ability to defend the peg will diminish. Foreign exchange reserves have already dwindled to $28 billion, according to Goldman Sachs. Economists say, at least in the short-term, a devaluation could be harmful as it would push up Lebanon’s already steep overseas liabilities - hastening the risk of a default. It would also likely stoke inflation, at 1.3 per cent year-on-year in October.

HOW CAN THE BANKING SYSTEM BE REVIVED?

by middleeasteye.net --Lebanon's incoming prime minister began the process of preparing a new government as he seeks to calm protests that have rocked the country for months. Hassan Diab was appointed on Thursday by President Michel Aoun after several weeks of political negotiations in the face of an unprecedented popular movement since 17 October denouncing the entire ruling class, deemed corrupt and incompetent. The movement pushed prime minister Saad Hariri and his government to resign on 29 October and since then has been calling for the formation of a cabinet of technocrats and independents. Parliamentary consultations started with a meeting between Diab and the Head of Parliament, Nabih Berri, who insisted on the need to form a government representative of all parliamentary blocs and of the demonstrators. But some parties have already expressed their reluctance, even their refusal, to participate in the next cabinet.

'Political' government

On Saturday, the Druze leader Walid Joumblatt's bloc announced the boycott of the consultations and announced that it would not participate in the government. For his part, Hariri has not publicly supported his successor, while the main Sunni parliamentary bloc he chairs "will not participate in the next government," a source close to the source told AFP on Friday. The Lebanese Forces (FL), a Christian party whose ministers were the first to resign after the start of the protest movement, have repeatedly announced their refusal to join a "political" government.

On Friday, Diab, whose appointment was supported by the Shia Hezbollah movement and its allies, including the president's party, promised to "form a government of independent technocrats," echoing street demands. The little known academic former minister of education called on the demonstrators to "give him a chance" to form an "exceptional government" and promised to meet on Sunday "various representatives" of the protest movement. But the support given to its designation by Hezbollah and its allies has fuelled the anger of part of the street, in particular Sunnis, who see it as a marginalisation of their community in this multi-faith country. On Saturday, roads were blocked in the Akkar region and in Tripoli, in the north of the country, after a Friday that was marked by scuffles in Beirut.

Hale meets with Bassil, Geagea and Joumblatt

BEIRUT (AP)  BASSEM MROUE — Lebanon's newly designated prime minister said Friday he plans to form a government of experts and independents to deal with the country's crippling economic crisis. Hours after he spoke, riots by his opponents broke out in Beirut, leaving at least seven soldiers injured. Hassan Diab spoke to reporters following a meeting with former Prime Minister Saad Hariri, a day after he was asked by the president to form the country's next government. Diab, who is backed by the militant Hezbollah group and its allies, begins his task with the backdrop of ongoing nationwide protests against Lebanon's ruling elite. The country is grappling with its worst economic and financial crisis since the end of the 1975-90 civil war.

On Friday night, scuffles on a major avenue in Beirut intensified after Sunnis who apparently support Hariri closed it to protest Diab's nomination. When the army worked on opening the road in Beirut's western Mazraa neighborhood, the protesters hurled stones and fire crackers at troops and riot policemen, injuring at least seven soldiers, the Lebanese army said. The scuffles had begun Friday morning when protesters first closed the avenue in Mazraa where Hariri enjoys wide support. Hours after the avenue was reopened, protesters closed it again leading to the intense scuffles that lasted until shortly before midnight. Outgoing Interior Minister Raya El Hassan, a member of Hariri's Future Movement, issued a statement urging protesters to leave the streets “to avoid dangers and strife.”

The protesters had earlier blocked the main highway linking Beirut with southern Lebanon with burning tires, causing a miles-long traffic jam. The army opened the road briefly in the town of Naameh before protesters closed it again with flaming tires. The road closures in Beirut and Naameh were carried out by protesters angered by what they said was Hezbollah and its allies deciding who takes the country's top Sunni post. Hezbollah has backed Hariri for prime minister from the start, but they differed over the shape of the new government. "I ask (protesters) to give us a chance to form an exceptional government" that can work on resolving the country's many problems, accumulated over the past 30 years, Diab said. It was not immediately clear if the riots that broke out in Beirut will affect Diab's consultations with members of parliament scheduled for Saturday in preparation for the formation of the Cabinet.