Trump administration watching Lebanon developments but waiting for progress
Lebanon surprised many this year with the election of a reform-minded president and prime minister, raising hopes for long-overdue measures to combat corruption and curtail Iran-backed influence over government institutions. However, the United States—Lebanon’s top donor for security and economic assistance over the past two decades—is now waiting for tangible action on the promises made by President Joseph Aoun and Prime Minister Nawaf Salam.
The search for a new Central Bank governor
One of the most pressing issues facing the new administration is the appointment of a central bank governor. With Riad Salameh arrested on allegations of orchestrating a Ponzi scheme over decades, the selection of his successor has drawn considerable attention, though US officials insist they are not involved in the process despite persistent claims from Lebanese sources suggesting otherwise.
Senior US and European officials, along with sources familiar with their respective countries’ Lebanon policies, told Al Arabiya English that Washington, Paris, and Gulf nations are aligned in maintaining neutrality, refraining from backing any specific candidate for the position. Reports in Lebanese media suggested that the Trump administration had approved a particular candidate who recently met with US officials in Washington. However, officials have firmly denied any such claims, rejecting accusations of foreign intervention.
Ultimately Lebanese officials will need to negotiate amongst themselves and there will not be any US or other international veto given to one side over the other, according to officials. The new governor will face the daunting task of being part of negotiations with the International Monetary Fund (IMF), the World Bank, and the broader international community to develop an economic and financial roadmap to pull Lebanon out of one of the worst crises in its history.
Aoun’s first trip abroad was to Saudi Arabia where Riyadh expressed optimism and willingness to help Lebanon get back on its feet following the implementation of reforms and promises. France will be Aoun’s second visit in the coming days but no funds will be released from any institutions or nations without progress from within the Lebanese government, officials and sources said.
Banking sector reforms will be a key test for both the new cabinet and the incoming central bank chief, particularly regarding the distribution of nearly $70 billion in losses. While President Aoun reportedly favors Karim Souaid, the managing director of Growthgate Capital, sources indicate that Prime Minister Salam does not support his candidacy. At the same time, Salam and his allies have yet to present an alternative nominee. Other names in contention include Samir Assaf, a businessman with close ties to French President Emmanuel Macron; Jihad Azour, a former Lebanese finance minister and current IMF official; and Camille Abousleiman, a former labor minister and lawyer involved in the issuance of Eurobonds. However, Assaf has told people close to him that he has no interest in the role, and Azour is viewed as part of Lebanon’s entrenched political class.
Hezbollah and the Lebanese Armed Forces
In November, the United States brokered a ceasefire between Hezbollah and Israel, ending a yearlong conflict. The agreement, based on UN Security Council Resolution 1701, required Hezbollah to withdraw its fighters and weapons at least 20 miles from Lebanon’s southern border with Israel, to be replaced by the Lebanese Armed Forces (LAF). Israel, which pledged to withdraw from southern Lebanon as part of the deal, has accused Hezbollah of violating the truce and has yet to fulfill its commitment.
With Aoun, a former LAF commander, elected president, Washington anticipated swift action toward establishing state control over all weapons, including those held by Hezbollah. In his inaugural speech, Aoun pledged to do so while also committing to tackling corruption. However, US officials say they are still waiting for concrete steps to be taken. Frustration has also surfaced over Aoun’s choice of advisors, some of whom are family members serving within the presidential palace.
