‘If They Want Me, They Will Call Me’

BEIRUT — Sitting in his office, Riad Salameh, governor of Lebanon’s central bank spoke to Lally Weymouth recently about how he is managing his country’s economy with an ongoing war next door in Syria and over 1 million refugees at home.

Excerpts follow:

Foreign Policy: Reportedly, you might be a future president of Lebanon.

Riad Salameh: My name is one of those listed, but I am not campaigning. I am giving priority to my job here. The central bank plays an important role. We have the task of maintaining a stable currency that generates confidence in the financial sector and therefore attracts deposits into the country, which helps fund the public and private sector.

FP: So the bank stabilizes the currency which in turn creates confidence?

RS: Yes, and that attracts deposits from the Lebanese diaspora to the Lebanese banks. This liquidity is important to fund the private and public sector at acceptable interest rates given the risks of the country. On the other hand, the Lebanese are profiting from this liquidity [because they are able to get] loans for housing, for green projects, for installing solar energy. We allow banks to invest in startups. This creates hope and job opportunities. We guarantee 75 percent of these investments.

FP: What is your assessment of the economy?

RS: We have been negatively impacted by the Syrian war. Before the Syrian war, our average rate of growth was between 7 percent and 8 percent. Now it is between 1 percent and 2 percent. The Syrian refugees are a weight on the economy. The World Bank said they cost Lebanon $1 billion per year. We also have less consumption and less investment. Also, we used to export through Syria to the Arab Gulf states. Now that is difficult.

FP: Will your economy deteriorate further as the war in Syria continues?

RS: It will impact the economy negatively. Before we have a solution in Syria, we cannot hope to jumpstart our economy.

FP: Could that be a long time?

RS: Nobody knows how long it will take. Until now, there have been no serious political meetings to solve the Syrian crisis.

FP: Now you have the Russians coming into Syria.

RS: Which is complicating matters.

FP: Reportedly, you’ve been helpful to the U.S. in regard to enforcing banking sanctions on Iran.

RS: Yes, we cooperate with the U.S. Treasury. We want Lebanon to remain fully integrated in the financial world. We have developed laws that help us remain compliant with the requirements of the U.S. Treasury.

FP: Will that change in light of the U.S.-Iran nuclear deal?

RS: The financial sanctions on Iran have not been lifted. On the U.S. part, there are also sanctions on Hezbollah.

FP: Because they are on the U.S. terrorist list?

RS: They are on the U.S. terrorist list; but in Europe, only the military wing is [sanctioned]. We make sure to have the proper regulations so as not to be in violation of the U.S. sanctions.

FP: Reportedly, the real income of the Lebanese people is not keeping up with the cost of living.

RS: The purchasing power of the Lebanese people has been maintained because we been able to create stability in prices and have a low inflation rate. But the nominal income is still low compared to other Arab countries. This is pushing the Lebanese to immigrate.

FP: So the smartest, the best educated…

RS: They leave. You have today a million Lebanese working between the Gulf countries and Africa, sending money to Lebanon, which is good for our balance of payments. But we are losing good potential [workers] to create dynamism in our economy.

FP: Is there a problem with monopolies held either by the government or by political elites?

RS: The fact that the major utilities are owned and managed by the government puts these utilities under the influence of the political parties who govern the country. It also delays progress in vital sectors, like communication. We need to involve the private sector more in these sectors. Electricity costs the government almost 5 percent of the GDP of the country.

FP: Why don’t they privatize it?

RS: There is opposition to that by a large part of the population and a fear that the companies that will take it over will exploit it commercially at the expense of the people. It touches also on oil and gas in Lebanon.

FP: You have oil and gas?

RS: Certain surveys say that in the economic territory of Lebanon, in the sea, you have gas and oil. It is not being exploited because there is no agreement on how to allow the private sector into that.

FP: What do you think of the ongoing protests?

RS: I believe that the people are fed up. There is no electricity or water, and the traffic is horrible. And now they want to make the people live with garbage. The people need someone to take care of these problems. Those who go to demonstrate are normal people — they don’t have a political agenda, they want to have a decent life.

FP: Don’t politicians notice?

RS: They are trying to react. They convened a dialogue.

FP: Is it all about contracts?

RS: Exactly. It’s all about contracts and lack of vision. They need put their act together. The people are fed up and the protests are for that. It is a normal reaction. Today, everyone is conscious of the dangers associated with garbage and the health damage that it can cause. If it rains, it will become more terrible. It cannot stay like this.

FP: Didn’t they start to take away some of the garbage?

RS: Yes, but there is an issue of where to put it. People are really alarmed. They fear for their health. The political class has to react. They cannot continue neglecting this.

FP: Will they react?

RS: They have to react. They are making a mistake. They want to say this is a political manipulation but there is a fact — you have garbage in the street. They have to remove it. Now, they take the garbage and throw it in the forest. So if it rains, it is going to infiltrate the soil and pollute everything. You cannot dispose of garbage without taking proper measures to isolate the toxins. It is a serious matter, and I hope the political class will take it seriously because people are not going to watch without reaction, and the reaction will grow.

FP: The protestors seem determined.

RS: They are determined, and they want to modernize the country. These movements are attracting the public because the public is fed up. This is what we try to explain to the people running the country: “Don’t underestimate the anger of the people.”

FP: Will the politicians react?

RS: They have to react in order to survive.

FP: But their business interests are mixed up in the situation…

RS: Sometimes you have to take collateral losses in order to continue. We are a small country that is not rich. We get support but not consistent with our needs.

FP: Your army is engaged in a war on your border.

RS: There are large numbers of refugees inside the country — not only Palestinian, but Syrian and Iraqi. They threaten the stability.

FP: Will anything come out of the talks to try and elect a president between Gen. Michel Aoun’s Free Patriotic Movement and the Hariri -led March 14 movement?

RS: It’s better to have dialogue than not to have it. Lebanon is also influenced by the regional powers.

FP: Meaning…

RS: The Saudi and Iranian influence are large. A solution here requires both the local and regional component. If the Saudis and Iranians agree on a person, you have a better chance to get a president.

FP: Do you personally have good relations with the Iranians?

RS: We don’t have relations that are bad with anyone, but we don’t have interaction with any of the external players because the central bank tries to remain neutral in order to protect the monetary stability.

FP: Do you want to become president?

RS: My name has been put on the table because of the achievements the Lebanese have seen. But I didn’t campaign for that. I don’t know where the decision will go. But they know I am here. If they want me, they will call me.

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