By Maha El Dahan and Laila Bassam

BEIRUT (Reuters) – Lebanese leaders agreed a new government led by Sunni Muslim tycoon Najib Mikati https://www.reuters.com/world/middle-east/sunni-tycoon-mikati-leads-lebanons-first-government-year-2021-09-10 on Friday after a year of feuding over cabinet seats that has exacerbated a devastating economic collapse, opening the way to a resumption of talks with the IMF.

The breakthrough followed a flurry of contacts from France which has led efforts to get Lebanon’s fractious leaders to agree a cabinet and begin reforms since last year’s catastrophic Beirut port explosion, senior Lebanese political sources said.

There was no immediate comment from the French foreign ministry.

In televised comments, Mikati’s eyes welled up with tears and his voice broke as he described the hardship and emigration inflicted by the crisis, which has forced three quarters of the population into poverty.

The biggest threat to Lebanon’s stability since the 1975-90 civil war, the crisis hit a crunch point last month when fuel shortages brought much of the country to a standstill, triggering numerous security incidents, adding to Western concern https://www.reuters.com/world/middle-east/eu-worried-lebanons-fast-deterioration-says-time-has-run-out-2021-08-26 and warnings of worse to come https://www.reuters.com/world/middle-east/lebanese-security-chief-warns-crisis-could-be-prolonged-2021-08-27 unless something is done.

Mikati and President Michel Aoun, a Maronite Christian, signed a decree establishing the government in the presence of Nabih Berri, the Shi’ite Muslim speaker of parliament, the presidency said.

Mikati said divisive politics must be set to one side and that he could not go for talks with the International Monetary Fund only to encounter opposition at home.

He pledged to seek support from Arab countries, a number of which have shunned Lebanon because of the extensive influence wielded in Beirut by the heavily armed, Iran-backed Shi’ite Islamist group Hezbollah.

Lebanon could no longer afford to subsidise goods such as imported fuel, he said, adding the country did not have the hard currency reserves for such support.

Addressing the daily hardships, he described how mothers had been forced to cut back on milk for their children.

“If a mother’s eldest son leaves the country and she has tears in her eyes, she can’t buy a Panadol pill,” he said, referring to medicine shortages.

ELECTIONS ON TIME

Mikati also said parliamentary elections scheduled for next Spring would go ahead on time.

Like the outgoing cabinet of Prime Minister Hassan Diab, the new one comprises ministers with technical expertise who are not prominent politicians but have been named by the main parties.

Youssef Khalil, a senior central bank official and aide to governor Riad Salameh, was named finance minister in the proposed new cabinet line-up.

The heavily armed, Shi’ite Islamist movement Hezbollah, a political ally of Aoun which is designated a terrorist group by the United States, named two of the 24 ministers.

The crisis, which came to a head in late 2019, stems from decades of corruption in the state and unsustainable financing.

The steadily deteriorating situation worsened precipitously in August when the central bank announced it could no longer finance fuel imports at heavily subsidised exchange rates.

The failure to agree a cabinet has left Lebanon without any effective government as the country has sunk deeper into a crisis which the World Bank has described as one of the sharpest implosions of modern times.

Mikati, a politician-businessman who was designated prime minister in July, has previously said he would seek to re-start negotiations with the IMF once his government was formed.

Mikati was the third prime minister-designate to attempt to form the government since the government resigned over a year ago after the port explosion.

Mikati was designated after Saad al-Hariri, a former prime minister, abandoned his efforts.

Hariri traded blame for the failure with Aoun.

Aoun’s political adversaries have accused him and his political party, the Free Patriotic Movement, of seeking effective veto power in the new government by demanding a third of the seats. Aoun has denied this repeatedly.

Mikati said there was no blocking third in the government line-up.

(Reporting By Maha El Dahan; Writing by Tom Perry; Editing by Andrew Heavens, William Maclean)