In an article published by the US magazine “Foreign Affairs”, Sam Heller maintained that the United States of America has to remedy its credibility if it wants to be a useful partner in fighting corruption in Lebanon.
The writer mentioned that the United States is seen as close to some of the Lebanese officials most responsible for the current crisis, recalling UN Secretary General António Guterres expression describing the crisis as “something similar to a Ponzi scheme”.
The article explained the central bank paid Lebanese commercial banks exorbitant interest rates for dollar deposits, and those banks in turn offered their own generous returns to lure more depositors, noting that everyone involved made a lot of money, even as the country’s financial sector stealthily took on huge systemic risk.
Heller clarified that he US anti-corruption sanctions were used to curtail Hezbollah influence by targeting its allies, adding that the central bank governor Riad Salameh, in particular, has long worked with the United States to counter Hezbollah financing.
“Washington will have to stress the necessity of reform to its Lebanese interlocutors, coordinating closely with allies such as France. U.S. officials should push Lebanon’s leaders to meet the IMF’s preconditions for assistance, including by taking steps to restructure the financial sector, consolidate its failing banks, and audit the central bank—measures that Lebanese elites have sought to obstruct. In addition, the United States should insist that any economic recovery plan must protect small depositors and provide social support for the country’s most vulnerable.”
“But really fighting corruption in Lebanon will require more than just condemning corruption in rhetorical terms and advocating for specific reforms. It will require Washington to break publicly with financial elites such as Salameh who bear responsibility for the country’s collapse. This is vital because the domestic political fight over who should be blamed for the crisis and who should bear its costs is still ongoing. Lebanon’s central bank and commercial banks deny responsibility for the country’s current predicament. They have argued that they should be made whole at the Lebanese public’s expense. In this internal debate, elites seeking to stymie reform draw strength from their ties with the United States—which is why they have consistently sought to portray interactions with U.S. officials as affirmation from Washington. The United States should not be seen as siding with the same elites who are resisting necessary reforms.”
“In addition to calling out Lebanese officials for their role in the current crisis, the Biden administration can signal its seriousness about fighting corruption by imposing new sanctions on corrupt Lebanese figures across the sectarian and political spectrum. It should follow up its October 2021 anticorruption sanctions by targeting additional politicians, bankers, and media figures implicated in public corruption, including individuals associated with traditionally U.S.-friendly parties.”
Source: Foreign Affairs