Karim Souaid named central bank chief in a Cabinet vote

Asset manager Karim Souaid was named as Lebanon's new central bank governor on Thursday, receiving 17 out of 24 votes in Cabinet, after Prime Minister Nawaf Salam's opposition to his appointment prevented consensus over the move.

According to Al-Jadeed TV, Souaid received the votes of the ministers of the Lebanese Forces, Hezbollah, the Amal Movement, the Progressive Socialist Party and the Kataeb Party, in addition to the ministers who are close to President Joseph Aoun.

Salam, Deputy PM Tarek Mitri, Culture Minister Ghassan Salameh, Social Affairs Minister Hanine al-Sayyed, State Minister for Administrative Development Fadi Makki, Economy Minister Amer al-Bssat and Education Minister Rima Karami meanwhile abstained from voting, MTV said, adding that Interior Minister Ahmad al-Hajjar voted for Souaid.

Aoun and Salam had failed to reach consensus over a candidate according to reports, despite holding a meeting prior to the session.

“The meeting between President Aoun and PM Salam did not lead to consensus over the appointment of a central bank governor and the president is insisting on putting the file to a vote in Cabinet,” Al-Jadeed said.

Al-Akhbar newspaper reported earlier on Thursday that Salam had threatened to take an “escalatory step” or even “resign” should the matter be put to a vote in Cabinet.

But ministerial sources told the daily that resignation is out of the question and that Salam only threatened it to “prevent Aoun from taking unilateral decisions that disregard the premier’s opinion.”

“Tensions had surged after the PM sensed that the chances of Souaid are high domestically and externally, knowing that local parties had launched a campaign against him over the past two weeks, accusing him that he is the candidate of banks and that he rejects any agreement with the International Monetary Fund,” Al-Akhbar said.

Media reports also said that he “lacks foreign support, specifically U.S. support, which was expressed by U.S. ambassador to Beirut Lisa Johnson to Finance Minister Yassine Jaber, when she called Jihad Azour a wonderful choice.”

LBCI for its part reported that “the Christian parties will try to prevent a vote in order to give a chance to reaching a consensus that would send a positive signal to the international community regarding the issue of reforms and governmental solidarity.”

Born in 1964, Souaid officially takes over after embattled former chief Riad Salameh's term expired in July 2023 with no designated successor.

Divided politicians had since failed to agree on a permanent replacement for Salameh, who has been accused at home and abroad of financial crimes.

First vice-governor Wassim Manssouri had been acting head of the central bank, a post that is traditionally reserved for a Maronite Christian in Lebanon's sectarian power-sharing system of governorship.

Souaid is the founder and managing partner at Gulf-based Growthgate, according to his biography on the private investment firm's website.

It says he previously worked at financial establishments including HSBC Bank and has been involved in privatization initiatives in a number of Arab countries.

He studied law at Lebanon's St. Joseph University and at Harvard Law School in the United States, according to the biography.

He has also worked as a corporate finance attorney in New York, and is a member of the New York State Bar Association, it says.

Some local media have reported that Souaid is close to the banking sector and members of Lebanon's entrenched ruling class.

Lebanon's new authorities need to carry out reforms demanded by the international community to unlock bailout funds.

The economic crash since 2019 has seen the local currency lose most of its value against the dollar and pushed much of the population into poverty, with people locked out of their savings.

In April 2022, Lebanon and the IMF reached conditional agreement on a $3-billion-dollar loan package, but painful reforms that the 46-month financing program would require have not been undertaken.

Earlier this month, the IMF welcomed the new Lebanese government's request for support in addressing the country's severe economic challenges.

In February, it said it was open to a new loan agreement with the country following discussions with its recently appointed finance minister.

Beirut-based think tank the Policy Initiative in a statement Wednesday said that the nomination of central bank chief would "test the new government's commitment to genuine reform."

"The next governor will shape Lebanon's urgent reform agenda, serve as the main counterpart to the International Monetary Fund, and directly engage in sovereign debt restructuring negotiations" alongside the finance ministry, it said.

The central bank governor in Lebanon is named by cabinet decree for a six-year mandate that can be renewed multiple times, based on the finance minister's recommendation.