19 May 2016

BEIRUT: All eyes are focused on Central Bank Governor Riad Salameh as the debate over the controversial U.S. law targeting Hezbollahs finances takes center stage.

Salameh, who issued an important statement Tuesday to clarify the position of the Central Bank on Circular 137, is expected to return to Lebanon soon to meet with all concerned parties, including officials from Hezbollah and the government, in a bid to ease the tension between the party and the banking sector.

Hezbollah claims that some banks are closing certain accounts without referring the case first to the Central Bank and the Special Investigation Commission, an allegation denied by banks.

Some news media reported Tuesday that the Central Banks clarification on the U.S. law targeting Hezbollah has apparently soothed some of the concerns of the party at least for the time being.

In his statement, Salameh stressed that banks need to notify and explain to the financial authorities and the Special Investigation Commission any measure they intend to take against any suspicious account.

Banks wishing to close accounts held by persons or institutions that they believe to infringe the U.S. act must justify this before closing the account. The justification must include the account movement [frequency/significance], Salameh said in the statement.

He added that the bank must wait for the SIC response before closing the account.

In case no response is received within 30 days, then the bank shall act at its own responsibility. If needed, the banks and the SIC might refer to the Higher Banking Commission whose decisions, pursuant to the Lebanese law, may not be subjected to any review, Salameh said.

Also Wednesday, the president of the Association of Banks in Lebanon Joseph Torbey and Hezbollah lawmaker Ali Fayad met at the Parliament building to discuss the issue of the U.S. law and its ramifications.

The meeting was held away from the watchful eyes of the media, suggesting that both sides agreed not to make any statements to the press or make any public comment.

Finance Minister Ali Hasan Khalil said during a franchise conference that Prime Minister Tammam Salam has been very active in reviewing proceedings of the issue and expressed that he is pleased with some clarifications Salam made on the matter while reinforcing the importance of preserving citizens banking and monetary interests.

We must maintain calm and responsible political discussions that protect the interest of the Lebanese people all the Lebanese regardless of their political leanings or parties, from any negative impact, Khalil said. Bankers who spoke to The Daily Star on condition of anonymity stressed that the U.S. law which was passed by the Congress and signed by President Barak Obama made it explicitly clear that Hezbollah should not be allowed to use any international currency, including the Lebanese pound.

There was a law issued in the United States and we are committed to it. Furthermore, Central Bank Circular 137 called on Lebanese banks to implement the U.S. law and thats what we did, a banker told the newspaper.

The banker insisted that banks are not interested in politics and what they are doing is simply abiding by international rules, which include the U.S. law on Hezbollah. He didnt understand the reason behind the media commotion over the implementation of the U.S. law, adding that all sides realize that this law has been prepared by the U.S. Congress over the last three years and became effective this year.

The bankers stressed that these measures were not targeting any sect in Lebanon, a clear reference to the Shiite community.

Another banker expressed confidence that the whole issue would simmer down once Salameh and Salam meet with all concerned parties and explain the mechanism of the U.S. law.

A source close to the party said Hezbollah realized that it was nearly impossible to reject the U.S. law. The party acknowledges that the cost of not fully complying with Washingtons decisions will cause havoc on the banking sector and economy, a price no one is willing to pay.

Copyright The Daily Star 2016.