Lebanon’s newly elected President Michel Aoun appointed Saad Hariri, a Saudi-backed businessman and former prime minister, to form a new Cabinet, building on momentum that has ended a two-year political vacuum.
Most parliamentary blocs endorsed Hariri for the premiership. Iran-backed Hezbollah, which supported Aoun for the presidency, was among the holdouts.
Two years of political deadlock ended on Tuesday when Aoun was elected to fill the presidential seat that had been vacant since Michel Suleiman ended his six-year term in 2014. Hariri’s decision to back Aoun’s candidacy paved the way for his own designation as prime minister two days later.
Hariri’s brief is to form a government that will bring together an assortment of groups often split along sectarian lines. That may be tough in a country enduring economic, social and political dislocation from the civil war next door, where Hezbollah fighters are backing Lebanon’s former master, Syria.
In a televised speech, Hariri vowed to work swiftly to form a national unity government that would overcome political divisions and restore the world’s trust in Lebanon’s economy. “We owe it to the Lebanese people to start working as soon as possible to protect our country from the flames burning around it,” he said.
Ghazi Wazni, economic adviser for the Finance Parliamentary Committee, forecast the political developments would give Lebanon’s $51 billion economy a boost.
“Saad Hariri means confidence for Lebanon,” he said, noting recent investor interest in Solidere, Lebanon’s largest property developer, founded by Hariri’s father, Rafik. The company’s shares rose nearly 36% in October, the most since June 2009, on talk of an agreement between Hariri and Aoun.
Solidere’s A shares rose as much as 2.9 percent to $12 on Thursday, while the benchmark BLOM Stock Index gained 0.5 percent.
Lebanon’s economy has struggled with the arrival of more than 1.5 million refugees from Syria, which has blocked the nation’s only overland trade route and kept Gulf Arab tourists away. Growth is expected to maintain the 2015 pace at 1.5- to 2 percent this year, maintaining the 2015 pace, Central Bank Governor Riad Salamehsaid in September.
Aoun’s election will increase confidence in the economy, Salameh said in a speech on Tuesday. A new Cabinet would attract foreign aid and mitigate the cost of hosting the Syrian refugees, estimated at 5 percent of output, he said.
The accord that brokered the end of Lebanon’s 1975-1990 civil war divided powers among the country’s main religious groups. Under the sectarian system, the president must be a Maronite Christian, the prime minister a Sunni Muslim and the parliament speaker a Shiite.
Hariri served as prime minister between 2009-2011, when his cabinet collapsed over political differences with Hezbollah and allied ministers. His new term comes amid rumors of financial woes and tension with his main backers in Saudi Arabia.
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Hariri’s Riyadh-based construction company Saudi Oger Ltd. reportedly faces the prospect of a multibillion dollar debt restructuring to stave off collapse after the Saudi government cut spending and delayed payments to contractors to help cope with a plunge in oil prices. The Hariri family has begun talks to sell a stake in its Dubai-based telecommunications unit as it seeks to avoid default on a $4.75 billion loan.
(An earlier version of this story misstated the refugee population)