Lebanon Prime Minister Hariri resigns as crisis turns violent

Beirut - Lebanese Prime Minister Saad

al-Hariri said he would submit his resignation on Tuesday,

declaring he had hit a "dead end" in trying to resolve a crisis

unleashed by huge protests against Lebanon's ruling elite.

The Sunni politician addressed the nation in a televised

address after a mob loyal to Shi'ite Muslim groups Hezbollah and

Amal attacked and destroyed a protest camp set up by

anti-government demonstrators in Beirut.

Lebanon has been paralysed by the unprecedented wave of

protests against the rampant corruption of the political class

that has collectively led Lebanon into the worst economic crisis

since the 1975-90 civil war.

"For 13 days the Lebanese people have waited for a decision

for a political solution that stops the deterioration (of the

economy). And I have tried, during this period, to find a way

out, through which to listen to the voice of the people," Hariri

said in his speech.

"It is time for us to have a big shock to face the crisis. I

am going to the Baabda (presidential) palace to present the

resignation of the government. To all partners in political

life, our responsibility today is how we protect Lebanon and

revive its economy."

In central Beirut, black-clad men wielding sticks and pipes

wrecked the protest camp that has been the focal point of

countrywide rallies against the long entrenched elite.

The turmoil has worsened Lebanon's acute economic crisis,

with financial strains leading to a scarcity of hard currency

and a weakening of the pegged Lebanese pound. Lebanese

government bonds tumbled on the turmoil.

The show of force in Beirut came after Hezbollah leader

Sayyed Hassan Nasrallah said last week roads closed by

protesters should be reopened and suggested the demonstrators

were financed by its foreign enemies and implementing their

agenda.

It is the most serious strife on the streets of Beirut since

2008, when Hezbollah fighters seized control of the capital in a

brief eruption of armed conflict with Lebanese adversaries loyal

to Hariri.

Lebanese Prime Minister Saad Hariri speaks during an address to the nation in Beirut. Picture: Hassan Ammar/AP

PROTEST CAMP TORCHED

Smoke rose as some of the protester tents were set ablaze by

Hezbollah and Amal supporters, who earlier fanned out in the

downtown area of the capital shouting "Shia, Shia" in reference

to themselves and cursing anti-government demonstrators.

"With our blood and lives we offer ourselves as a sacrifice

for you Nabih," they chanted in reference to Parliament Speaker

Nabih Berri, head of the Amal Movement. "We heed your call, we

heed your call, Nasrallah," they chanted.

Security forces did not initially intervene to stop the

assault, in which protesters were hit with sticks and were seen

appealing for help as they ran, witnesses said. Tear gas was

eventually fired to disperse the crowds.

LEBANESE POUND UNDER PRESSURE

Nationwide protests since Oct. 17 have paralysed Lebanon at

a time of worsening financial crisis - banks were closed for a

10th day on Tuesday along with schools and businesses.

Hariri's resignation would defy the powerful Hezbollah -

Nasrallah has twice said that he was against such a step, citing

the risk of a dangerous void.

According to the constitution, Hariri's cabinet would stay

on in a caretaker capacity until a new government is formed.

Hariri last week sought to defuse popular discontent through

a batch of reform measures agreed with other groups in his

coalition government, including Hezbollah, to - among other

things - tackle corruption and long-delayed economic reforms.

But with no immediate steps towards enacting these steps,

they did not placate the demonstrators, whose demands include

the resignation of his coalition government.

A senior official from outside Hariri's Future Party had

told Reuters earlier on Tuesday the premier would "most

probably" announce a government resignation on Tuesday. The

report weighed on Lebanese dollar bonds.

Central bank governor Riad Salameh called on Monday for a

solution to the crisis in just days to restore confidence and

avoid a future economic meltdown.

A black market for U.S. dollars has emerged in the last

month or so. Three foreign currency dealers said a dollar cost

1,800 pounds on Tuesday, weakening from levels of 1,700 and

1,740 cited on Monday.

The official pegged rate is 1,507.5 pounds to the dollar.

Salameh told Reuters on Monday the central bank would maintain

the pegged rate when banks reopen.

"Even if the protesters leave the streets the real problem

facing them is what they are going to do with the devaluation of

the pound," said Toufic Gaspard, an economist who has worked as

an adviser to the IMF and to the Lebanese finance minister.

"A very large majority of the Lebanese income is in the

Lebanese pound, their savings are in the Lebanese pound and

their pension is in Lebanese, and it is certain it has already

started to devalue," he said.