Lebanon’s IMF request a ‘necessary first step’, says senior US official

David Schenker expresses hope that Mustafa Al Kadhimi in Iraq can form government

Lebanon is facing a financial crisis after months of political instability. EPA

US assistant secretary for Near East affairs, David Schenker, has welcomed Lebanon’s request for help from the International Monetary Fund as a good first step in a long process to ease its economic crisis.

"It is good that they asked but it is not just about asking. It is a necessary first step," Mr Schenker told The National.

Hours earlier, Lebanese Prime Minister Hassan Diab said his government would ask the IMF for a $10 billion (Dh3.67bn) bailout to try to halt the economic slide.

The US is reviewing the plan and will be looking for major reforms.

“I don’t want to prejudge what the IMF may be looking for but it has to meet a level of transparency and a full commitment to this,” Mr Schenker said.

He said he expected rigorous conditions to be set by international institutions in implementing the reform plan, requiring commitment across the political spectrum in Lebanon.

Hezbollah, the Lebanese political and militant organisation, has in the past voiced reservations about requesting IMF help.

“Hezbollah is not known for its support for reforms," Mr Schenker said. "This is an organisation that funds its activities through illicit finance, corruption ….

"Reform at the ports that collects revenues is not going to be appreciated by everyone in Lebanon."

Controlling borders, closing illegal passages and fixing Customs procedures are some of the reforms for which the international community has been asking, and they could undermine Hezbollah’s influence.

Mr Schenker predicted a “lengthy process” for Lebanon to free itself from decades-long economic turmoil that led to the current crisis, which has sparked protests in the country for the past seven months.

They turned violent this week as banks were torched in Tripoli and one protester was killed in clashes with the Lebanese army.

The US has been supportive of the protesters’ calls for reform and an end to corruption.

Mr Schenker also welcomed Germany’s designation of Hezbollah as a terrorist organisation on Thursday, saying it “erodes Hezbollah’s legitimacy in some quarters in the world and the fiction over differences between military and political wings”.

He said he hoped other European countries would follow.

On Iraq, Mr Schenker appeared cautiously optimistic about Mustafa Al Kadhimi's chances of success in forming a Cabinet, a feat at which earlier designated prime ministers have failed.

“Nothing is done until it’s done but I am hopeful that Mr Kadhimi will be able to untie this Gordian knot,” he said.

Mr Schenker said Iran would continue to pose a threat to US personnel in Iraq, despite positive developments in forming a government.