Oxford Analytica: 'With Syria under pressure, Mikati has 'breathing space'...

Oxford Analytica: Excerpts: "...  the formation of a pure March 8 government no longer looks inevitable, for a number of reasons: ..... Mikati insists that Aoun should get no more than eight ministers in a cabinet of 24 members. .... Mikati cannot afford to alienate the Sunni street and maintains that at least half of the Sunni seats should go to MPs close to Saad al-Hariri. Regional players with crucial importance for Lebanon's economy, most prominently Saudi Arabia, have warned against a government with no significant Sunni representation. ....... With March 8's regional backer Syria under increased pressure from protests, Mikati wants to avoid being colored too pro-Hizbollah, as he seeks to maintain good relations with the West and Gulf states.

Economic outlook. The prolonged government vacuum is putting strain on the economy. Since the 2006 war with Israel, Lebanon has enjoyed solid annual growth figures averaging 8%..... Figures from the first quarter of 2011 suggest that real GDP growth could now slump to between 3 and 6% in 2011:....  investors' fear of instability ....... Tourist arrivals are down due to regional turmoil ....... The housing market is starting to show signs of a downturn....  Impact of Syrian unrest. As always in Lebanon, much will depend on what happens in Syria. So far, politicians have reacted cautiously to the Syrian uprisings. Nevertheless, the destabilisation has already affected the negotiation process: Under increased pressure at home, Syrian President Bashar al-Assad may feel that he cannot afford to alienate Sunnis in Syria and Lebanon, nor his allies in the Gulf, by endorsing a Hizbollah-Aoun government. The inability of Aoun and other Syrian allies to put pressure on Mikati suggests that Damascus is too preoccupied at home to be actively engaged in the government formation. Prolonged deadlock may in fact suit Assad, as he hopes to ride out the uprisings before reinvesting effort in the Lebanese situation.....  Unity government? In light of the changed regional circumstances, the idea of a unity government has gained renewed currency in some camps: New Maronite Patriarch Beshara al-Rai, apparently with the backing of President Michel Suleiman, has declared that a government with no March 14 representation is unacceptable......  Druze leader Walid Jumblatt, whose decision to join March 8's withdrawal of ministers brought down the government in January, has in the last weeks signalled that his support for an Aoun-Hizbollah government is waning, particularly if it will be one in which he is marginal. ....... Hariri has toned down his very confrontation rhetoric,....  With a unity government again a realistic prospect, Hariri may return to the notion of a new national defence strategy, national dialogue, and approval of Hizbollah's weapons in exchange for Hizbollah reaffirming Lebanon's commitment to UN resolutions. (the latest verbal slugfest between Hariri, Iran & Hezbollah notwithstanding!) ..."