Hezbollah, Amal supporters wreck Beirut protest camp, Hariri looks set to quit

BEIRUT (Reuters) - A mob loyal to Shi’ite groups Hezbollah and Amal attacked and destroyed a protest camp set up by anti-government demonstrators in central Beirut on Tuesday, as Prime Minister Saad al-Hariri looked set to resigned.

There was no comment from Hariri’s office. He was to deliver an address at 4 p.m. (1400 GMT), an official Twitter account said. Two official sources earlier told Reuters that Hariri was likely to resign.

In central Beirut, black-clad men wielding sticks and pipes destroyed the protest camp that has been the focal point of countrywide rallies against a political elite accused of rampant corruption and steering Lebanon toward economic collapse.

The turmoil has worsened Lebanon’s deep economic crisis, with financial strains unseen since the 1975-90 civil war leading to a scarcity of hard currency and a weakening of a weakening of the pegged Lebanese pound.

The show of force 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.

Smoke rose as some of the tents were set ablaze. Hezbollah and Amal supporters had earlier fanned out in the downtown area of the capital shouting “Shia, Shia” in reference to themselves and cursing protesters.

“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.

Nationwide protests since Oct. 17 have paralyzed 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 anger through a set 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 toward enacting these steps, they did not satisfy demonstrators whose demands include the resignation of his coalition government.

One of the sources, a senior official from outside Hariri’s Future Party, told Reuters the premier would “most probably” announce the 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.

(The story is refiled to remove extraneous word from headline)