Lebanon’s possible new government would still struggle

Significance

This comes as the worsening economic crisis today caused Central Bank Governor Riad Salameh to end fuel subsidies, abolishing a preferential exchange rate for imports. The EU is also threatening recalcitrant leaders with sanctions.

Impacts

• It remains possible that Aoun and his allies in Shia movement Hezbollah may instead opt to retain the caretaker government of Hassan Diab.
• The reforms required for large structural loans will not happen with current elites in charge, as they would endanger patronage networks.
• Spontaneous riots and violence are increasingly likely as the economic collapse continues.