As discussions intensified on preparing the Financial Settlement Law project—which addresses the financial gap and is part of the set of reform laws required internationally for Lebanon to regain access to borrowing after Hassan Diab’s government declared a halt on sovereign debt payments—divergences became apparent within the official team’s approach. These differences were noticeable from Lebanon’s delegation’s first participation in International Monetary Fund (IMF) meetings following the formation of Nawaf Salam’s government and the appointment of Karim Souaid as Central Bank governor by vote rather than by consensus.

During the appointment session and the Prime Minister’s subsequent objections, it became clear that the government offices and the economic team surrounding PM Nawaf Salam held economic views that differed from those of the Central Bank governor, much as had been the case previously with the Minister of Finance and his team.

The draft of the project underwent more than 19 amendments, incorporating recommendations from government offices, the Ministry of Finance, and the IMF. This process sparked intense debate over each party’s priorities and who the law ultimately aims to protect or affect. Throughout, all parties publicly rallied behind the populist slogan of protecting the sanctity of deposits, even as months passed and the erosion of funds continued largely unchecked.

Today, after Prime Minister Salam’s government managed to approve the project, albeit by a slim majority, it immediately faced a political backlash targeting it on two fronts. The first is constitutional: the head of the council questioned the legality of the project from the very day of its approval, even before it reached Parliament, arguing that it did not secure the required two-thirds majority. The second is political, closely linked to the constitutional argument, and centers on a dual campaign: one against the government and its head for endorsing a project criticized as undermining deposits and favoring the corrupt, and another against the Central Bank governor for his role in preparing the project.

Notably, at this stage, neither the Prime Minister nor any member of his economic team stepped forward to claim authorship of the project, leaving criticisms and objections to fall on the Central Bank governor. The governor’s original proposal had called for the Central Bank to immediately pay 20% of deposits up to $100,000 in cash—either in one or two installments—while the remaining amount would be shared with the banks on a 50/50 basis over one to five years through a combination of cash and credit card payments. However, this proposal was ultimately dropped and never implemented.

Rather than focusing on when Parliament would begin reviewing the project or which committees would handle it, the debate shifted to whether the project would be sent back to the government, whether it would face legal challenges, and who would be held responsible—at a time when Lebanon is facing mounting international political and financial pressure.

In fact, the project is not considered unconstitutional. A constitutional opinion confirmed that it does not require a two-thirds majority, as it qualifies as an ordinary law. Article 65 of the Lebanese Constitution stipulates that Council of Ministers resolutions are passed by consensus, or if consensus is not reached, by a majority of those present. A two-thirds majority is required only for fundamental issues specifically listed in the fifth paragraph of the article. The Gap Law does not fall under either ordinary financial and regulatory laws or the constitutionally defined essential issues, as it is not related to the general budget, a constitutional amendment, or any of the exceptional cases specified. Therefore, its approval by the Council of Ministers is governed by the standard majority rule. The Constitution refers to matters requiring a two-thirds vote as "essential issues," which include constitutional amendments, declarations of war or peace, the general budget, electoral laws, states of emergency, significant international treaties, administrative decentralization, and the reconsideration of administrative divisions. Since the Gap Law does not fall under these essential issues and is instead an organizational-financial law addressing the distribution of losses without altering the constitutional or structural foundations of the state—and given that constitutional exceptions are interpreted narrowly—there is no justification for requiring a two-thirds vote or for expanding its scope. The General Budget Law is explicitly recognized by the Constitution as an essential issue, requiring a two-thirds majority for approval, as it serves as the constitutional instrument through which the state’s overall financial policy and expenditure ceiling are determined.

The argument for requiring a two-thirds majority is rooted more in political considerations than constitutional ones, given the law’s significant impact on depositors, its social sensitivity, and its link to the IMF program. However, this rationale does not apply here, as the magnitude of the law’s effects does not change the constitutional rule.

Does this mean the project will face no challenge? Political sources say the matter now rests with Speaker of Parliament Nabih Berri, who must resolve the issue he initially sparked by referring the project to the relevant committees for review and then submitting it to the general assembly with any necessary amendments. These changes should preserve the project’s legal framework while establishing two key principles: genuinely protecting depositors and holding those responsible accountable, to prevent evasion of responsibility and ensure punishment.

Disclaimer: The opinions expressed by the writers are their own and do not necessarily represent the views of Annahar.