By Tom Perry and Nafisa Eltahir
BEIRUT (Reuters) – Fears that Lebanon’s financial meltdown is tipping the country into anarchy have prompted renewed efforts to agree on a new government that can start addressing the two-year-old crisis.
The meltdown has hit a crunch point in the last week with shortages of imported fuel forcing hospitals, bakeries and other essential services to scale back or shut down.
At least 28 people were killed over the weekend when a fuel tanker exploded as people desperate for gasoline scrambled to get a share.
President Michel Aoun, the Maronite Christian head of state, is due to meet Najib Mikati, the Sunni Muslim prime minister-designate, on Monday. Aoun on Saturday expressed optimism that a government could be formed soon.
“It’s evolving positively. (There are) some issues to be tackled, mainly names,” a senior political source told Reuters. “The whole situation is deteriorating, the whole system is collapsing,” the source added, explaining the impetus.
Sayyed Hassan Nasrallah, the leader of the heavily armed, Iran-backed Shi’ite group Hezbollah, on Sunday urged the government to be formed in two or three days, saying this was the only way to prevent anarchy which had already begun.
He also said Hezbollah would begin bringing diesel and gasoline from Iran and the timeline would be announced soon.
Speaking after meeting Aoun, U.S. Ambassador Dorothy Shea said basic services had “reached the precipice of collapse”.
“Every day that goes by without an empowered government committed to and able to implement urgently needed reforms is a day in which the already dire situation slides further into humanitarian catastrophe,” she said.
The culmination of decades of state corruption and mismanagement, the crisis entered a new phase last week when the central bank said it would no longer finance fuel imports at subsidised exchange rates.
With its currency reserves depleted, the bank has said new legislation is needed to allow use of the mandatory foreign reserve for such imports.
The government demanded prices be left unchanged. There has been no resolution to the standoff.
The crisis has sunk the currency by more than 90% and sent more than half the population into poverty.
Despite that, the ruling elite has failed to agree a rescue plan, or to form a new government since Prime Minister Hassan Diab’s cabinet quit last August after the Beirut port explosion.
Mikati, a businessman-politician, was designated to form the government after Sunni leader Saad al-Hariri abandoned his attempts, saying he could not agree with Aoun. Each blamed the other.
(Reporting by Tom Perry and Nafisa Eltahir; Writing by Tom Perry; Editing by Alison Williams)
