Lebanon is at an inflection point. With a new government, led by President Joseph Aoun and Prime Minister Nawaf Salam, and potential new allies in the region, important questions have been asked over what direction the country is taking, and if the country’s legal institutions will help or hinder business and investment.
As President Aoun reaches out to his counterparts for assistance and seeks improved ties with Gulf countries, he must contend with the stumbling blocks Lebanon faces as it tries to grow its economy and re-affirm its regional status.
President Aoun’s recent visit to Qatar comes as Lebanon has begun receiving aid from both the Qataris and France to support its military. Notably, Qatar has recently announced a second shipment of fuel to Lebanon, following one in March this year, in an attempt to ease some of the country’s chronic fuel shortages that have also been aided by supplies from Iraq.
This follows from the $10m that Saudi Arabia designated in relief grants to implement projects and improve ties between the two countries.
As Lebanon tries to get back on its feet, unforeseen shocks such as the 2020 port explosion in Beirut have done extensive damage to the country. But many of the other problems the country faces are of their own making.
The country continues to struggle for stability amid political, economic and social plight. While the inflation rate has only returned to double digits in the first quarter of this year, falling from 221% in December 2024.
Despite occasional success stories in the private sector, the country is faced with substantial economic burdens. Not least the cost of rebuilding infrastructure and re-instating basic services that collapsed in recent years.
The problems do not end there. Alongside material damage, legitimate questions have been raised over the prevalence of corruption in the country’s parliamentary and judicial bodies. Clearly, these concerns impede the country’s regional and global aspirations at a time when competition for influence offers an opportunity for a new economic leader to emerge.
The arrest of the former Central Bank Governor, Riad Salameh, on charges of embezzlement again made headlines recently as a Lebanese judge referred the case for trial following Salameh’s initial arrest in September 2024.
Judge Bilal Halawi published a ‘presumptive decision’ in early April concluding that Salameh had engaged in ‘illicit enrichment’ over the alleged embezzlement of $44 million of the bank’s funds that preceded the country’s financial collapse in 2019.
This, alongside other notable court cases, draw into sharp focus the thread of corruption that weaves through Lebanon’s economic and judicial systems. The case of IBL Bank vs Iraq Telecom highlights this better than most.
The extended dispute between IBL Bank and Iraq Telecom over the misrepresentation of an unsecured loan by IBL Bank saw Iraq Telecom awarded $3m, a decision that was later confirmed by courts in New York.
But IBL’s appeal was permitted by Beirut’s Court of Appeal in a rare decision that has brought concerns about judicial integrity to the forefront, especially as Lebanon’s Court of Cassation is soon to issue a final judgement.
If the Court aligns with lower courts and upholds IBL Bank’s annulment appeal, it will signal that, despite having a clear opportunity to do so, the country is not yet ready to renew its legal landscape and overcome its struggling reputation.
If, instead, the Court upholds the award to Iraq Telecom, the ruling will indicate the judiciary’s alignment with standards established by the new government. This would also demonstrate the country’s commitment to safeguarding its reputation as a place to do business and for cross-border dispute resolution.
Reform is rarely a quick process, but in a speech in January, then PM-designate Salam stated that his ‘hands were extended to everyone’ as he looked to focus his attention on rebuilding the country’s image, economy, and global standing.
Upholding the award to Iraq Telecom is a clear way that the country can take concrete steps forward and, as Salam has stated, stop wasting opportunities to repair both the relationship that Lebanon has with its neighbours, and that it has with its own people.
The case of IBL Bank and the arrest Riad Salameh are two examples of the entrenched corruption that must be addressed for the country to achieve its political and economic goals. Steps are clearly underway to address the damage of Salameh’s actions, and the judiciary must follow suit in upholding the award to Iraq Telecom if they are to be taken seriously in their efforts to reform.
Clearly, regional prowess may be a distant hope for Lebanon, but it is one that can only be achieved through extensive internal rehabilitation.
