UN official slams Lebanese politicians as banks smashed

UN special coordinator for Lebanon places blame squarely on politicians as Lebanon continues wait for formation of new government, bogged down by political complications.

BEIRUT - Public anger against cash-strapped banks boiled over in crisis-hit Lebanon where protesters - and some supporters of sectarian groups - armed with metal rods, fire extinguishers and rocks attacked branches in protest at controls that have trapped the savings of ordinary depositors.

The Red Cross said Wednesday that at least 37 people were injured in an overnight showdown during which protesters smashed windows of banks and scuffled with security forces in the capital's Hamra district.

Police said 59 people were detained, making it one of the largest wave of arrests since Lebanon's anti-government protest movement began on October 17 demanding a complete government overhaul.

As the movement nears the start of its fourth month, banks have become a prime target of demonstrators who charge them with driving the country towards its worst economic crisis since the 1975-1990 civil war.

On Wednesday morning in the commercial district of Hamra, a banking hub, almost every branch was left with smashed display windows, destroyed ATMs and graffiti-covered walls.

Banks opened their doors despite the wreckage, as cleaners wiped spray paint off walls and workers replaced window fronts. With some ATMs destroyed beyond repair, passers-by looked on in astonishment at the aftermath of the night-time assault on banks.

"There is a lot of anger," Alia told AFP in front a damaged branch. "You have to go to the bank twice to withdraw just $200."

Banking controls

Banks have since September arbitrarily capped the amount of dollars customers can withdraw or transfer abroad, in a country where the greenback and the Lebanese pound are used interchangeably.

Although no formal policy is in place, most lenders have limited withdrawals to around $1,000 a month, while others have imposed tighter curbs.

Sparked by a grinding liquidity crunch, the controls are increasingly forcing depositors to deal in the plummeting pound, amounting to what experts are calling a de facto banking "hair cut".

The local currency has lost over a third of its value against the dollar on the parallel market, plunging to almost 2,500 against the US dollar over the past week.

The official rate was pegged at 1,507 Lebanese pounds to the greenback in 1997.

Demonstrators accuse banks of holding their deposits hostage while allowing politicians, senior civil servants and bank owners to transfer funds abroad.

Banks have as a result transformed into arenas of conflict, where shouting and tears abound, as depositors haggle tellers to release their money.

Compounding the situation, debt-burdened Lebanon has been without a government since Saad Hariri resigned as prime minister on October 29 under pressure from the anti-government protests.

Lebanon's under-fire politicians have yet to agree on a new cabinet line-up despite the designation last month of Hassan Diab, a professor and former education minister, to replace Hariri.

The designated premier has pledged to form a government of independent experts - a key demand of protesters - but acknowledged last week that some parties were hindering his attempts.

'Don't blame the people'

Lebanese politicians are watching the economy collapse, the senior UN official in Lebanon said on Wednesday, rebuking a political elite that has failed to form a government as the country sinks deeper into economic and financial crisis.

Lebanon has been adrift since the government was toppled by the resignation of Prime Minister Saad al-Hariri in October as a result of protests against corruption and bad governance that are root causes of the economic crisis.

"Another day of confusion around the formation of a government," Jan Kubis, UN special coordinator for Lebanon, wrote on Twitter.

He also noted that central bank (BDL) governor Riad Salameh had requested extraordinary powers to manage the economy - an apparent reference to his request for more authority to regulate controls being implemented by commercial banks.

Hariri said on Tuesday that Lebanon must cooperate with the International Monetary Fund and World Bank, but that should be overseen by a new government and not the current caretaker cabinet.

The powerful Iranian-backed group Hezbollah and its political allies last month nominated Diab, a little-known former minister, to form a new government after efforts to forge a deal with Hariri failed. But efforts to form the cabinet have been bogged down in political complications.

Protesters are demanding a new government made up solely of independent technocrats, but that is a difficult goal to achieve in a country that has been ruled by a sectarian power-sharing system - the 1989 Taif agreement - since the end of its 15-year civil war.

Piling extra pressure on premier-designate Diab, demonstrators have returned to the streets since Saturday after a brief lull over the end-of-year holidays. They staged a demonstration Tuesday outside Diab's house at the launch of "a week of wrath".

But Hamra was the main target of Tuesday night's demonstrations, with protesters hurling stones and fire crackers at security forces who responded with tear gas.

They splattered walls with graffiti, vandalised street signs and sparked a blaze outside the Association of Banks head office.

Showing no sign of backing down, demonstrators called for another demonstration outside Lebanon's central bank building later Wednesday.

Main arteries were closed in north and east Lebanon and several schools stayed closed after the latest unrest.