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Decision time: Lebanon faces significant debt crunch

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Millions of Lebanese have been affected by unofficial capital controls imposed on their withdrawals from banks, as the government fears capital flight [File: Jamal Saidi/Reuters]

by aljazeera.com -- Leila Molana-Allen -- Lebanon has close to $1.5bn in public debt that it may decide to repay on Thursday. The country's escalating financial crisis and weeks-long anti-government protests are adding more pressure to an already difficult situation. At $86bn, Lebanon's sovereign debt is the world's third-highest relative to gross domestic product (GDP). The country's beleaguered economy is expected to contract by 0.2 percent this year. In an effort to calm protesters and to reduce the deficit from the current 11 percent to 0.6 percent by 2020, the government recently proposed a reform package. However, because talk of a tax on the internet partly fuelled the initial protests, ministers avoided tax increases on individuals and instead proposed using a bank contribution of $3.4bn to alleviate the deficit, alongside other proposals. For protesters however, many of whom want the wholesale removal of the prevailing political class, the move was too little, too late.

While anti-government protests have lowered confidence in the economy still further, the crisis was in motion well before the demonstrations began. The situation was compounded after Prime Minister Saad Hariri resigned on October 29, leaving in place a caretaker government without the bureaucratic powers to introduce the necessary economic reforms. On Tuesday protesters gathered around the central bank, wearing masks of Central Bank governor Riad Salameh's face and chanting "Thief, thief, Salameh is a thief!" The following day they were back, this time with a Beirut hairdresser offering free haircuts in front of the building "to show them how to give a haircut", according to a poster advertising the event. The scene references proposals by some economists that the central bank should confiscate a certain percentage from the highest depositors' accounts, a financial haircut on those who benefitted the most from high interest rates, in order to relieve the debt burden. "We have to find a solution, and the solution must not be [borne by] the poor people,' said protester Enas Sherry. "They benefitted from the interest, which was very high over the years, so they have to pay what they took from us."

'A regulated Ponzi scheme'

Lebanese Bitcoiners Show How to Talk About Crypto At Thanksgiving

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by coindesk.com -- Leigh Cuen -- News of Lebanese banks shuttering to prevent a bank run was met with predictable enthusiasm from the global bitcoin commentariat. People in Lebanon can no longer send foreign currencies, mainly dollars and euros, abroad. Further, due to heavily restricted banking access and limited liquidity provided by established grassroots networks, most Lebanese civilians also struggle to acquire bitcoin. Long-time bitcoiner Ali Askar, currently on the ground in Lebanon, told CoinDesk a few Telegram and WhatsApp groups for local traders have nearly doubled in size over the past year, with one such private group reaching roughly 300 members this past weekend. Following news of the banking limitations, the Beirut-based car dealership Rkein Motors promptly started accepting bitcoin payments this week. Clearly, awareness is spreading.

However, a stark disconnect between daily bitcoin users and the rest of the populace continues in a region plagued by economic and political conflict. “Bitcoin will not help the people. It will help the politicians because they are the filthy rich ones who have access to money,” one anonymous bitcoin trader with family in Lebanon told CoinDesk. He uses a European bank account to buy bitcoin, then sends it to people on the ground in Lebanon. “It [bitcoin] could help them, perhaps, if they were sitting at home with 24 hours worth of electricity and internet, and they could work online to get paid for their online work. That’s a utopian scenario,” he added. “In Lebanon, the internet is very expensive. Electricity doesn’t come often. We sometimes have electricity for just six hours a day.”

Untouchable No More: Hezbollah’s Fading Reputation

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By Rebecca Collard --- foreignpolicy.com -- BEIRUT—It was the sort of chant that, only a month or so ago, would have been all but unthinkable in Lebanon. “Terrorists, terrorists, Hezbollah are terrorists,” yelled some of the hundreds of anti-government protesters who stood on a main road in Beirut early Monday morning, in a tense standoff with supporters of Hezbollah and another Shiite party, the Amal Movement. Other protesters told the chanters to stop, but as widespread economic discontent and anger engulf Lebanon—and with Hezbollah leader Hassan Nasrallah defending the government—the sanctity around Hezbollah’s reputation is clearly broken.

“Hezbollah is being seen as part and parcel [of] the main hurdle to change in Lebanon,” said Mohanad Hage Ali, a fellow at the Carnegie Middle East Center. The demonstrations have been mostly peaceful and unilaterally against the whole ruling class—all sects, all political parties. And until recently Nasrallah, who doesn’t have an official government position, was seen as above the endemic corruption that has helped push the country toward a collapse, particularly among Hezbollah’s Shiite support base. Hezbollah’s expulsion of Israeli troops from Lebanese territory in 2000 earned the group the moniker “the resistance” among Lebanese of all sects and political affiliations. Even after the 2006 war, which left swaths of Lebanon in ruins, the group enjoyed popular support for what many here saw as a victory against Israeli aggression by defenders of the country. In May 2008, Hezbollah fighters took over central Beirut after the government threatened to shut down the group’s telecommunications network and remove an ally in charge of airport security, pointing their weapons inside rather than toward the border for the first time.

And as Hezbollah sent thousands of fighters across the border to fight in Syria in support of President Bashar al-Assad in 2013, more people questioned exactly whom Hezbollah was defending. The group’s reputation has been fading further since the first days of protests in mid-October, which saw large crowds take to the streets in primarily Shiite areas such as Tyre and Nabatieh. Suddenly, with demonstrators there shouting similar anti-government slogans as protesters in Beirut—who want all the current sectarian political leaders gone and new elections under a new system— Hezbollah found itself part of the targeted establishment. The protests are seen as a direct challenge to the gains made by Hezbollah in the 2018 elections and a threat to the organization’s foreign-policy agenda, said Hage Ali.

Samir Khatib favorite for PM as Hariri bows out

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by dailystar.com.lb -- BEIRUT: Prominent contractor Samir Khatib has emerged as the favorite candidate to be named prime minister this week, hours after caretaker Prime Minister Saad Hariri withdrew his candidacy, Future Movement officials said Tuesday. “The Future Movement’s [parliamentary] bloc is set to meet Wednesday to outline its position on naming its candidate for the premiership after Hariri announced he was withdrawing his candidacy,” Mustafa Alloush, a member of the Future Movement’s politburo, told The Daily Star. “The tendency within the Future bloc is to support Samir Khatib for the premiership. Being a neutral and nonpolitical figure and a successful businessman whose name was not linked to allegations of corruption, Khatib meets all the qualifications demanded by the protest movement,” Alloush, a former Future MP, said.

He was referring to thousands of Lebanese who have taken to the streets since Oct. 17 in an unprecedented popular uprising, demanding an overhaul of the country’s decades-old sectarian ruling system, early parliamentary elections, the formation of a technocratic government to carry out economic reforms and fight corruption, and the return of “looted public funds.” Alloush said Hariri’s decision to bow out of the premiership was final. “If Khatib is chosen by the Future bloc as its candidate for the premiership, this means that Prime Minister Hariri and the bloc will nominate him during the binding parliamentary consultations to be held by President Michel Aoun,” Alloush added. “Contacts among the country’s main political parties, and also with Hariri, are focused on the nomination of Khatib for prime minister.” Earlier Tuesday, Khatib said he was ready to form a new government if there was consensus among the political parties on his nomination. “I was approached by different sides since I am close to everyone,” Khatib was quoted as saying by local broadcaster MTV. “I am ready to form a government and take over the premiership in order to serve the country during these exceptional times.” Khatib is an executive vice president of engineering company Khatib & Alami, according to its website. But shortly after, Hariri’s office released a statement saying he distanced himself from any names being circulated for the position and that his choice for premier would be announced during parliamentary consultations at Baabda Palace in a statement to be issued by him.

Impossible math: protests in Lebanon spotlight the plight of Lebanese families

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by Rhana Natour -- pbs.org --

Rawan Taha is having a horrible few weeks. This month, before her preschool students filed into the room at the daycare and education center in Beirut where she works, Taha spotted a white piece of paper on her desk. It was a letter from the school principal informing her and the entire teaching staff that their December pay might be slashed by half. “Let’s hope January will be better in order to prevent me from taking other measures,” the letter read. Taha was devastated, but not surprised.

In recent weeks, Taha’s friends have received similarly bad news–a sudden pay cut or no pay at all. In early November, Taha was told she would no longer be paid in U.S. dollars. Her paycheck is now paid out in Lebanese pound— a currency with a value that dropped by 40 percent in a one week span. Thirty-one-year-old Rawan Taha, who works as a preschool teacher, said people in Lebanon are protesting because they have "nothing to lose." Photo courtesy of Rawan TahaThirty-one-year-old Rawan Taha, who works as a preschool teacher, said people in Lebanon are protesting because they have “nothing to lose.” Photo courtesy of Rawan Taha It’s been over a month since massive protests broke out across Lebanon set off by a tax on WhatsApp calls and fueled by public discontent towards the Lebanese government which they blame for the country’s economic instability. The unrest has shuttered schools, banks and businesses. With limited employment options available, Taha and her colleagues feel forced to endure these measures. “We don’t have any alternative,” she said, “No one is hiring so we all have to just give in.” The protests are a result of long simmering economic anxieties from a citizenry that feels financially squeezed at every turn. A huge swath of Lebanese households are grappling with a crippling combination of high living costs, low wages and a government so financially indebted it can’t provide reliable public services. In a country where the minimum wage is $400 per month, baseline living costs have creeped up to levels that rival New York City, which has a monthly minimum wage that is six times higher.

Lights out…again

Lebanese official slams clashes between political parties' supporters, civil society protesters

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BEIRUT, (Xinhua) -- Lebanese House Speaker Nabih Berri slammed on Monday the clashes that started a day earlier in Beirut's downtown between civil society protesters and supporters of two Shiite political parties, the National News Agency reported. Around 10 people were injured due to the clashes between civil society protesters who blocked Beirut's Ring Bridge and supporters of two Shiite political parties Hezbollah and Amal Movement. "What happened is condemned by all standards," said Berri, who is head of Amal Movement. He also called on the Lebanese army and security agencies to ensure that all roads are opened to facilitate the transport of citizens throughout the country. "We call upon the Lebanese army and Internal Security Forces to make sure that all roads are opened at all times in a bid to avoid violence," he said. The clashes lasted until Monday early morning while security forces had to use tears gas to disperse the two groups. Lebanese authorities have so far failed to put an end to nationwide demonstrations which started on Oct. 17 in Lebanon aimed at toppling the current political ruling class.

Lebanon clashes threaten to crack open fault lines

A Lebanese army soldier walks near a burning motorcycle amid clashes between supporters of the Shiite Hezbollah and Amal groups, and anti-government protesters in the capital Beirut. AFP

By BASSEM MROUE and ZEINA KARAM Associated Press -- BEIRUT (AP) — Increasingly violent clashes between Lebanese protesters and supporters of the militant Hezbollah group are putting Lebanon’s military and security forces in a delicate position, threatening to crack open the country’s dangerous fault lines amid a political deadlock. For weeks, the Lebanese security forces have gone to great pains to protect anti-government protesters, in stark contrast to Iraq, where police have killed more than 340 people over the past month in a bloody response to similar protests. The overnight violence — some of the worst since protests against the country’s ruling elite began last month — gave a preview into a worst-case scenario for Lebanon’s crisis, with Lebanon’s U.S.-trained military increasingly in the middle between pro- and anti-Hezbollah factions. By attacking the protesters Sunday night, Hezbollah sent a frightening message that it is willing to resort to violence to protect its political power, increasing the likelihood of more violence if the protests persist. Confronting the powerful Iranian-backed Shiite Hezbollah, however, is out of the question for the military — doing so would wreck the neutral position it seeks to maintain and could split its ranks disastrously. "The army is in a difficult position facing multiple challenges and moving cautiously between the lines," said Fadia Kiwan, professor of political science at Saint Joseph University in Beirut. She said the military has sought to protect the protesters and freedom of expression but is increasingly grappling with how to deal with road closures and violence.

Bernard Arnault could surpass Jeff Bezos and Bill Gates to become the world's richest person

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New York (CNN Business) By Paul R. La Monica-- Jeff Bezos and Bill Gates can clearly afford a lot of leather wallets from Louis Vuitton and little blue boxes from Tiffany. But the world's two richest people could soon find themselves worth less than the head of LVMH because of its takeover of Tiffany. Bernard Arnault, chairman and CEO of LVMH (LVMHF), is now worth more than $106 billion, according to real time wealth rankings tracked by Forbes. Arnault's net worth jumped more than 1% Monday along with LVMH's stock following his company's agreement to buy Tiffany (TIF) for more than $16 billion. Arnault and his family own more than 47% of the French luxury goods giant. The spike in LVMH shares puts Arnault within spitting distance of topping Microsoft (MSFT) co-founder Gates, who has a net worth of $107 billion, and Amazon (AMZN) CEO Bezos, who tops the Forbes list with a fortune of just under $110 billion. Arnault is trailing Bezos and Gates by a wider margin according to Bloomberg though, which has Arnault's net worth estimated at $100 billion while Gates and Bezos are listed at $109 billion. Bloomberg updates its tally only once a day at the end of the market close.

Arnault, Bezos and Gates are all comfortably ahead of other mega-billionaires as well. According to Forbes, Berkshire Hathaway's (BRKB) Warren Buffett is worth $86 billion while Facebook (FB) CEO Mark Zuckerberg has a net worth of about $75 billion. Oracle's (ORCL) Larry Ellison and Spanish retail magnate Amancio Ortega, the co-founder of Inditex, which owns the Zara fast fashion chain, are each worth just under $70 billion.