What happened?
On 26 July, Lebanon's President Michael Aoun appointed Najib Mikati as the PM-designate, responsible for forming a new government for a country that has not had a functioning government since the crisis began in 2019. Mikati is a former two-time Prime Minister and one of the most successful business tycoons in the country. His appointment comes in the backdrop of Saad Hariri's resignation, citing differences with the President and accepting his failure to form a government. Post his appointment, Mikati stated: "alone I do not have a magic wand to achieve miracles. We are in a very difficult situation… it is a difficult mission that can succeed only if we all work together."

On 30 July, The European Union adopted a legal framework to impose sanctions on the Lebanese political elite, officials, and entities, for lack of governance and economic crisis. 

What is the background?
First, the political crisis. Failing economic policies clubbed with political instability has pushed Lebanon into a war-like situation in the absence of war. Since Hassan Diab resigned in August 2020, Lebanon has been facing a political crisis. Lebanese leaders have failed to reach a consensus and provide a stable government. In October 2020, Saad Hariri, a former Prime Minister (2009-2011 and 2016-2020) was appointed as the PM-designate after Diab's resignation. However, he also failed to form a government, due to differences with President Michael Aoun and Hezbollah’s role in cabinet formation. Hariri resigned in July 2021. Najib Mikati's appointment comes in the above background. 

Second, Lebanon's political arrangement with multiple power centers. Iran-backed armed political outfit Hezbollah, the Forward Movement, and Shi'ite Amal Movement decide the composition of the government. Alongside, the two Christian majority parties- the Free Patriotic Movement and the Lebanese Forces hold considerable sway in the system. Lebanon's political structure may also be a reason for the diverging interests that are evident currently. The Lebanese National Pact of 1943 provides for a Maronite Christian President, a Sunni Prime Minister and a Shi'ite Speaker for the National Assembly. 

Third, the economic crisis. The Lebanese economic policy has been chaotic due to extensive deficit expenditure, and unsustainable mismanaged monetary policies. The GDP and per capita income fell by 40 per cent in 2020, pushing half the population into poverty. The Lebanon Economic Monitor released by the World Bank in May 2021, concluded that the country's economic situation might be one of the worst crises in over 150 years. Marking the anniversary of the Beirut blast, France will hold an international donor conference along with the UN in August, to raise funds for the deteriorating situation in Lebanon. 

Fourth, the trigger and the protests. On 4 August 2020, Beirut witnessed a major blast at the port, killing more than 200 people and injuring thousands. The incident has left a trail of destruction in the capital city, and triggered massive protests on the streets demanding action and justice. Lebanon was in the midst of an economic crisis prior to 2020. However, the pandemic and the blast dealt a severe blow, challenging recovery in every aspect. 

Fifth, the protests and related social challenges. Mass protests challenged both the then government and the larger direction in which the country was headed to. UNICEF warned about the impending water crisis, with approximately four million people, including one million refugees are at the risk of losing access to safe water resources. Additionally, the population suffers from long blackouts, shortage of food, medicines, fuel, and exceptionally high rates of unemployment. 

What does it mean?
First, a hope in Najib Mikati. Most of the political parties have announced support for Mikati. Barring the two Christian parties, he has the support of the Sunni, Shia, and Druze politicians, which may pave the way for a government. With optimism in the market, in the form of a slight rise in the value of Lebanese currency against the US Dollar, there is hope in the right direction. He stated that the first priority was to implement the French roadmap for recovery. It must also be noted that Mikati does not hail from a political dynasty unlike other politicians, instead is a successful entrepreneur.  Second, a functioning government is a compelling necessity. Mikati is touted to form a government in a time of extreme crisis and is expected to take along the diverging political interests. It is time that the Lebanese political blocs come on the same platform to avoid further free fall of the economy and living conditions.