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On July 31, Riad Salameh, the man with nerves of steel, will draw the curtain on a third of a century spent at the helm of the highest monetary authority in the country. The final act: Riad Salameh claims to have accomplished his mission and refrains from giving advice to his successor, whoever that may be.
Salameh wielded broad powers under Articles 75 and 83 of the Monetary and Credit Code, and built friendships on the international stage. He also faced animosity, rivalries, and envy. As a result, he remained under the scrutiny of a highly critical political opposition, even during times of success, and when he rang the bell at the world’s oldest stock exchanges. The scrutiny intensified when Lebanon was hit by the unprecedented and multifaceted crisis of October 2019.
Riad Salameh, the “financial engineer,” as the public likes to call him, is the most controversial figure of the Republic. He is either hated or revered by the Lebanese people, and he is praised or cursed by the rulers.
The Central Bank governor concludes his term in the midst of a crisis, leaving deputy governors in confusion, fear, and a resounding “transitional” flop.
The hustle and bustle of the last days of his fifth term’s end could give an idea of the magnitude of responsibilities he had to shoulder during his thirty-year reign at the highest monetary institution.
The Hariri-Salameh Duo
With his departure, the last leading figure from the era of Rafic Hariri — who aspired to play the role of the great builder of post-war Lebanon — steps down from the public stage.
Whether one is for or against Riad Salameh’s monetary policy, he followed the path that Rafic Hariri had destined for him. To rebuild the country, Salameh ensured stability, relying on the rehabilitation of confidence in the national currency and growth in GDP, supported by increased public spending and internal consumption. This monetary policy was funded by external funds channeled to Lebanon through maintaining a high-interest rate structure. The policy in question revolved around the reform of the banking sector.
Former Prime Minister Rafic Hariri introduced Riad Salameh, for the first time, to former President Elias Hraoui in the spring of 1993, while the latter was at his private residence in Hazmieh before moving to the Baabda Palace. Salameh was appointed Governor of the Central Bank of Lebanon on August 1 of the same year.
Before assuming the leadership of the Central Bank, he successfully managed Rafic Hariri’s portfolio at the investment bank Merrill Lynch.
Salameh’s Message to the Market
Addressing his critics, the poker-faced man points out that the markets continue to react to his statements, despite the absence of reforms. Proof of this is the stability of the foreign exchange market since March, when he announced that he could absorb the entire mass of Lebanese pounds in circulation, following a disrupted weekend (on July 8 and 9) marked by the announcement of the continuation of Sayrafa, the BDL platform.
According to academic circles, during the recent period of LBP stability, the Central Bank injected nearly one billion dollars into the foreign exchange market without depleting its reserves. This led supporters of his policies to emphasize that “if we learn what the magician knows, there will be no more magic.”
In an interview with This is Beirut, a person close to Riad Salameh highlighted the fact that he intends to recharge his batteries and assert all his rights to defense. Quoting his words, the source emphasized that a central bank’s role is to finance, not spend.
Riad Salameh leaves behind a great void at the BDL. Faced with this situation, the ruling political class ought to learn to “navigate” the Lebanese labyrinth alone, without its “magician.”
