Lebanon Government Aims to Rebuild Donor Trust and Obtain Reconstruction Funding

Beirut, Lebanon – As Lebanon continues to navigate the complexities of an economic crisis that has resulted in soaring inflation and a significant depreciation of the Lebanese lira, the government is now prioritizing one of its most critical infrastructure projects to date: post-war reconstruction efforts. According to estimates from the World Bank, Lebanon requires an estimated billion to rebuild after enduring 14 months of conflict with Israel.

Despite the clear need for significant financial support, experts express reservations about the willingness of international donors to engage with Lebanon’s political elite. This skepticism stems from a history of mismanagement, where funds allocated for reconstruction have often funneled into the pockets of politically connected businessmen.

The Recovery Landscape

The devastating conflict inflicted severe human and material costs on the nation, including over 4,000 lives lost and property damage affecting approximately 163,000 homes. In addition to this, infrastructure damage surpassed billion. With a frail economy already burdened by years of decline, both local officials and international observers acknowledge that foreign aid is essential for recovery, reminiscent of the support that followed the 2006 war.

However, the current geopolitical landscape complicates matters, as international attention is divided among Lebanon, Syria, and Gaza. Moreover, significant donors like the United States are tying financial assistance to conditions such as the disarmament of Hezbollah, previously the most influential political and military entity in Lebanon, which has experienced a decline in its operational capacity following the recent conflict.

The areas affected by Israel’s incursions, particularly southern Lebanon and parts of Beirut, house a significant concentration of Hezbollah’s supporters. Consequently, the reconstruction of these neighborhoods is viewed as a top priority not just for local residents but also for the party itself, placing it in a position of leverage when approaching foreign donors.

Challenges of Trust

A report from the local think tank The Policy Initiative highlights that companies affiliated with political figures significantly inflated costs for the state’s primary infrastructure buyer between 2008 and 2018, at an average markup of 35 percent. There are concerns that the previous system allowed for minimal oversight, as merely 5 percent of contracts were subject to Central Tenders Board scrutiny.

The catastrophic Beirut port explosion in 2020 further disrupted trust in national authorities, prompting donor nations to seek alternate means of oversight, including direct management of funds or collaboration with NGOs. With public investment plummeting to a mere million in 2020 from over billion in 2018, the need for comprehensive reform became urgent.

In response, Lebanon recently enacted significant reforms to its public procurement laws, consolidating various state agencies under a unified framework. This groundbreaking legislation established the Public Procurement Authority (PPA) and aimed to eliminate longstanding barriers for contractors lacking political ties. However, actual implementation of these reforms remains a challenge, as the PPA’s current staffing is insufficient to manage its expansive responsibilities effectively.

Moving Forward

Despite these setbacks, the potential for recovery exists. The Lebanese government is currently engaged in negotiations with the World Bank for a 0 million reconstruction initiative named LEAP, intended to facilitate critical rebuilding efforts. Although this funding would cover only a small fraction of the total projected costs, it signals a commitment to moving forward in alignment with international standards of transparency and reform.

Nevertheless, many Beirut residents are advocating for an inclusive approach that prioritizes the needs of diverse community stakeholders, ensuring that the reconstruction process addresses past inequalities and fosters shared citizenship. Urbanists like Abir Saksouk emphasize the importance of involving various ministry representatives and the community in rebuilding efforts to create a more equitable framework.

As Lebanon strives to reclaim its stability and integrity, the interplay of local politics, international support, and community involvement will be vital in shaping the nation’s path to recovery.

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