Lebanon foreign minister resigns, warning 'the ship will sink' amid financial crisis

Lebanon's foreign minister resigned on Monday, blaming the government for failing to act to address a financial crisis he said threatened to turn the country into a failed state.

"I participated in the government under the logic of serving one boss, which is Lebanon, but I found that in my country there are many bosses and contradictory interests," Nassif Hitti said in a statement.

"If they don't unite in the interest of the Lebanese people... then the ship, God forbid, will sink with everyone on board," he said, adding that the government had not made progress implementing reforms demanded by international donors.

Beirut turned to the International Monetary Fund for assistance after the debt-laden country defaulted on payments for the first time in March.

The current crisis has seen the economy collapse precipitously but its causes were decades in the making. Since the end of the 1975-1990 civil war, a sectarian power-sharing system has maintained the peace by allocating posts according to sect rather than merit.

An entrenched political elite has pillaged nearly every sector of the economy. The system has been sustained by Lebanese banks offering high interest rates even as the country accumulated alarming levels of debt, which experts likened to a national-level Ponzi scheme.

An attempt by the government last year to levy tax on the WhatsApp messaging app brought to a head decades of simmering anger at the corruption, sectarian-based self-dealing and incompetence.

Widespread protests were followed by a run on banks, which responded with informal capital controls limiting dollar withdrawals or transfers.

The shortage of foreign currency caused the Lebanese pound, long pegged to the greenback, to shed 80 percent of its value on the black market.

Prices for staple goods spiralled upwards in the country where most food and goods are imported.

Amid hyperinflation, widespread layoffs and closing businesses, many people’s savings were quickly wiped out, and the poverty rate has risen to half the population.

As the country swelters through a humid summer, mains electricity is supplied for just a few hours a day, uncollected rubbish putrefies in the street and Lebanese are forced to queue for fuel and bread. Hospitals, trapped between the economic crisis and the pandemic, are struggling. 

During a visit last month, French Foreign Minister Jean-Yves Le Drian told Lebanon international aid would not be forthcoming until the government addresses corruption and increases transparency.

"Help us to help you," he said.

But talks with the IMF are stalled by disagreements over the scale of financial losses the country should accept and nine months into the current crisis, politicians are yet to deliver promised reforms.

“On the contrary, they have pursued a malign business-as-usual approach as they hedge their bets on a system that is no more,” said Maha Yehia, director of the Carnegie Middle East Center.

“Lebanese politicians are pushing their country over the precipice,” she wrote in a recent analysis.

Hours after Mr Hitti's resignation, President Michel Aoun's diplomatic adviser Charbel Wehbe was appointed to replace him.