The skies of Beirut lit up with fireworks on Thursday night as Lebanon finally formed a government eight months after May’s general election.

Prime Minister Saad Hariri will head the 30-member government and has promised to initiate urgent economic and political reforms.

In a speech, Hariri said the economy would be the new government’s main challenge.

“Let’s get to work,” he said on Twitter.

In the absence of a government, Lebanon‘s economy, in decline even before the elections, deteriorated further. The World Bank had previously warned that conditional loans and grants worth $11bn might be redirected if Lebanon did not form a government.

The news that a government had been formed had an immediate, positive effect on Lebanon’s sovereign dollar bonds, reported Lebanese newspaper The Daily Star.

‘Turn the page’

Hariri said it was “time to turn the page” after the eight-month crisis, caused by arguments over the allocation of ministries in the cross-sectarian cabinet.

Gebran Bassil, the leader of the Christian-dominated Free Patriotic Movement, a Hezbollah ally, will retain the Foreign Ministry while Ali Hassan Khalil, from Hezbollah’s Shia ally Amal, will continue as the finance minister.

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Raya al-Hasan has become the first woman to hold the Interior Ministry portfolio. Three other women will also take charge of key ministries.

Despite pressure from the United States not to give Hezbollah, the Iranian-backed Shia armed group-cum-political movement, the Ministry of Health, the Hezbollah-affiliated Jamal Jabak has become the new health minister.

The ministry has the fourth largest budget and the US fears Hezbollah will use these funds to ease financial pressures on itself as sanctions on Iran may end of reducing support.

Hariri cedes to Hezbollah

After much wrangling, Hariri was forced to give in to Hezbollah demands that one of the six Sunnis backed by the group be given a cabinet position. The prime minister had originally rejected that demand outright. Hasan Mrad, the son of MP Abdel-Rahim Mrad, was given the post of minister of state in the new government.

“For over eight months, Hariri has been negotiating from a high ground, that all Sunni ministers should be his followers,” said Elias Farhat, a political analyst. “At last he gave in to a settlement.”

Thanassis Cambanis, the author of a book on Hezbollah and a senior fellow at The Century Foundation, said that Hariri and the rest of the Lebanese political class did not really have a choice, as Hezbollah was the single most powerful entity in the country.

He said it would have a say in the government formation, “whether it takes cabinet posts directly or allocates them to allies”.

The election results in May last year strengthened Hezbollah’s hold over Lebanon as its allies scored a majority of seats. Hariri’s Future bloc lost a third of its legislators, securing only 17 of the 27 legislative seats allocated to Sunnis.

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Although Hariri maintains his position as the political leader of the Sunnis in Lebanon, losing Sunni voters revealed his weakening grip on power.

He blamed the loss on the new electoral system of proportional representation introduced last year.

The politics in the tiny state of Lebanon is a microcosm of the bigger currents flowing in the region and can serve as an indicator of the rivalry between Saudi Arabia and Iran.

Hezbollah’s ability to put pressure on Hariri suggests that Iran and not Saudi Arabia currently has more influence in Lebanon.

In November 2017, Riyadh tried to strong-arm Hariri by making him resign, a move which ultimately had no effect on containing Hezbollah.

Long-time observers of the country like Cambanis said any adventurism in Lebanon by the Saudis or the US would only make the situation worse.

“Lebanon is in a precarious situation, hoping influential outside powers let its fragile power-sharing arrangement limp on because any alternative might prove far worse,” he said.

Winter of protest

On the streets of major cities across Lebanon, protests will not stop. Lebanon has witnessed a winter of demonstrations as thousands marched across the country, demanding jobs, better healthcare and an end to corruption.

“First thing now should be to kick off the economic wheel,” said Vicky Khoury, a member of the Sabaa Party which emerged out of the civil society movement in Lebanon and succeeded in securing one seat in the parliament. “People are concerned about the economic situation and about their basic needs such as free public healthcare, infrastructure, schools,” she said.

Nasser Yassin, director of research at the Issam Fares Institute for Public Policy and International Affairs in the American University of Beirut, said he found nothing original in the formation of the government, but welcomed it anyway.

“The much-awaited government did not bring any groundbreaking news, neither in most names of ministers nor in the limited shuffling of portfolios,” he said. “Still, it is a positive development.”