Paris (AFP) – International donors pledged billions of dollars in aid and loans for Lebanon at a conference in Paris on Friday, hoping to stave off an economic crisis in a country hard hit by the fallout from the Syrian war.
Some 40 countries sent representatives to the meeting which had aimed to come up with the first chunk of money for an investment plan expected to reach $10 billion (8.2 billion euros) over the next four years.
By midday they had received commitments amounting to $2.6 billion with more expected to follow throughout the day, much of it to be spent on upgrading Lebanon’s creaking infrastructure.
Lebanon said Saudi Arabia, which vies with arch-rival Iran for influence in the country, would renew a $1-billion line of credit to Beirut which had been agreed in the past but never used.
Iran, which backs Lebanon’s powerful Hezbollah Shiite militia, was not invited to the meeting.
“So far we are talking about $1.8 billion in concessional loans and around 800 (million) in grants,” said Nadim Mounla, an economic adviser to Lebanese Prime Minister Saad Hariri, who was at the conference.
“But the big money is coming in the afternoon,” he added.
The World Bank said it would “mobilise more than $4 billion over the next five years”, its chief executive Kristalina Georgieva announced on Twitter.
– ‘Model of pluralism’ –
Lebanon’s economy has been squeezed by repeated domestic political crises, as well as the war in neighbouring Syria which has sent a million refugees across the border — equivalent to a quarter of the Lebanese population before the conflict.
Economic growth has plunged from eight percent since the start of the war to around one percent, Hariri told the conference.
“Lebanon cannot succeed alone,” he appealed, adding: “It’s not just a matter of Lebanon’s security, it’s about the security of the region and the whole world.”
Opening the conference with a promise of 550 million euros, French Foreign Minister Jean-Yves Le Drian urged donors to dig deep to help keep the peace in Lebanon.
“In a Middle East shaken by crises, wounded by civil wars, Lebanon remains a model of pluralism, tolerance and openness which we need,” he said.
“But Lebanon is not an island. It’s borne the full force of regional tensions and the Syria crisis,” he said, adding that it was also grappling with the threat of terrorism.
Advisors to Hariri said Lebanon was hoping to raise $6 billion to $7 billion, with private investors funding the rest of the initial phase.
The EU rowed in with a promise of 150 million euros, the Netherlands offered 300 million euros and Italy pledged 120 million euros, France’s ambassador to Lebanon Bruno Foucher said.
France, which held mandate power over Lebanon for the first half of the 20th century, has been leading efforts to try stabilise the country.
When Hariri announced his resignation in November, a shock move in which many observers saw the hand of Saudi Arabia’s de facto leader Crown Prince Mohammed Bin Salman, President Emmanuel Macron intervened, inviting Hariri to Paris for talks before his return to Lebanon.
– Cash for reforms –
The Paris conference comes as Lebanon gears up for its first general elections in almost a decade in May with economic dark clouds gathering.
The government projects a deficit of $4.8 billion for 2018 — more than double the deficit in 2011, when Syria’s war started.
And while Lebanon has remained relatively stable compared to the turmoil raging around the region, it has also long been wracked by woes such as inefficiency and systemic corruption.
Economists say the state urgently needs to reduce its spending to avert a serious crisis.
But public services such as water supplies, electricity and waste management have suffered huge underinvestment, compounding problems that date back decades.
“The political idea behind (the investment plan) is that the Lebanese state could be able to provide services and infrastructure to the public, rather than others,” an aide to Le Drian said, referring to the social role also played by the controversial Hezbollah.
Lebanon will for its part sign up to a string of reforms including tougher measures to fight corruption as well as tighter regulation of the transport and telecoms sectors.
It will also have to find ways of reducing a huge budget deficit equivalent to more than 10 percent of GDP.
“Everyone is well aware that these investments will not work unless they are accompanied by major structural reforms,” Macron’s office said.