Lebanon parliament finally meets

Friday 20/11/2015
Lebanon’s Prime Minister Tammam Salam (4th L to R) speaks during a legislative session at Parliament in Beirut, Lebanon, on November 12th.

Beirut - Lebanon’s parliament met for the first time in a year and passed financial laws to avoid international boy­cott of domestic banks al­though that means curtailing the country’s decades-old banking se­crecy.
The laws fighting money laun­dering, terrorism funding and tax evasion were passed alongside World Bank loans about to expire and a law allowing people of Leba­nese descent to regain the citizen­ship of the country of their ances­tors.
The legislature’s meeting, No­vember 12th and 13th, was made possible by a compromise among key political players. Parliament was not supposed to legislate in the absence of a president of the repub­lic, as the constitution obliges it to focus solely on filling the country’s top post.
Held in response to pressure from international bodies and Leb­anon’s Central Bank, the legislative session permitted the government to borrow more foreign currency and release about $3 billion of ad­ditional funds to cover spending in 2016 and pay public employees.
“Lebanon proved, by approv­ing these laws, its commitment to the standards set by international agreements, especially in regard to the measures related to combat­ing money laundering and funding and fighting terrorism,” Lebanese Finance Minister Ali Hassan Khalil said.
Christian lawmakers threatened to boycott the session if it did not include the citizenship restora­tion law and a new parliamentary election law. The political compro­mise allowed for the inclusion in the legislative session of the first law, which was passed. The ses­sion created a committee to study 17 draft general election laws filed with parliament in recent years and come up with a compromise text within two months.
Since Michel Suleiman’s term as president expired in May 2014, par­liament has failed to have quorum to elect a successor due to lack of political agreement on the matter. With the current general election law spurned by key Christian par­ties as unjust for Christian voters and the lack of agreement on a new law, the government was unable to have parliamentary elections in 2009 and the legislature extended its tenure twice.
“Parliament had to meet and pass the World Bank loans or lose half a portfolio worth $1.1 billion if parliament failed to ratify loan agreements before December 31st,” a parliamentary source said.
“Also, year-end was a deadline by international financial authorities to pass the laws on issues includ­ing trans-border cash movements, cooperation to fight tax evasion and measures intended to cut off resources used for terrorism.”
Hezbollah, listed by the United States and other Western powers as a terrorist organisation, is not targeted by the law on fighting ter­rorism funding. “The law included a text, endorsed by the League of Arab States, discriminating be­tween terrorist groups and anti-oc­cupation resistance movements,” another parliamentary source said.
In 2011, the Central Bank ordered the Lebanese Canadian Bank (LCB) to sell itself to the Lebanese unit of the French bank Société Géné­rale after US authorities reported suspicions that some LCB manag­ers had assisted certain customers in a scheme to launder narcotics payments on Hezbollah’s behalf. In 2011, LCB agreed to pay $102 mil­lion in a legal settlement with the United States. The source would not comment whether the new law was enough to avoid a repetition of the scenario.
“Lawmakers who are members of Hezbollah or allied groups are present in every cabinet and eve­ry parliamentary committee and, you know, for draft laws to reach a parliamentary plenary session, it has to be studied and, if neces­sary, amended by the committee or committees in question,” the source said.
Banking laws passed during the two-day session shrink Lebanon’s banking secrecy, which allowed the country’s bank to long be a safe ha­ven for depositors from countries suffering from socialist-style na­tionalisations in the late 1950s and through the 1960s, such as Egypt, Syria and Iraq.
Now banks have to cooperate with foreign authorities about whether their depositors hold na­tionalities of foreign countries and do not pay taxes in these countries for their deposits here,” a banking source said.
“This is less banking secrecy, much less, but world banking regu­lations are changing, and we have to abide by the changes or face boy­cott or maybe sanctions,” she said, recalling similar concessions made in recent years by Switzerland, which is even more famous than Lebanon for banking secrecy.
Lebanon, without a budget since 2005 due to the country’s politi­cal deadlock, is among the most heavily indebted countries in the world, with an overall debt ratio to gross domestic product (GDP) of about 140%, according to domestic and international estimates. Some legislation was needed to sustain government spending without a budget, both sources said.
“We have a problem here,” a third parliamentary source said. “Spending is made according to es­timates in the 2005 budget. If the government needs to spend more for some reason, it can do so ac­cording to a cabinet decision, not a law passed by parliament. You can­not pass a law to add expenditures to a defunct budget.”
Khalil had insisted he would approve any additional spend­ing without a law as long as a new budget is hard to attain.
“Since the cabinet is not meet­ing due to disagreement among its ministers on how it should oper­ate in the absence of a president, the additional spending problem was delegated to parliament,” the source said. “This is Lebanon.”

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