Stockholm on our minds

Executive looks at the latest donor conference and the vote of confidence in Lebanon

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The most surprising development in this conflict may actually be the most positive – the unprecedented support of the international community for Lebanon, its government, and its people. As economist Marwan Iskandar notes, “This is the first time in the history of Lebanon that the country had received this kind of money.”

Although aid began to flow from the early days of the war, support was demonstrated most strikingly at a Conference for Lebanon’s Early Recovery held in Stockholm, Sweden, on August 31, where participants pledged $940 million dollars to Lebanon’s first stage of recovery, vastly exceeding all expectations.

Early recovery, the focus of the conference, is the initial step in Lebanon’s post-war strategy. It involves ongoing humanitarian assistance, particularly towards displaced and marginalized communities, and interim solutions for high-priority infrastructural damage, including pre-fabricated houses and schools, temporary bridges and bypasses for damaged roads. Emergency measures to minimize environmental damage and public health issues are also addressed.

Thus far, the government has been unable to fully assess the costs of this phase. However, in preparation for Stockholm, it drafted an appeal document highlighting a number of high-priority initiatives.

Speaking to Executive in late August, Mazen Hanna, a member of the Lebanese delegation to the Stockholm conference and economic adviser to Prime Minister Seniora, cautioned against high expectations. Although publicly, the government declared a $500 million target, Hanna doubted contributions would exceed $200-300 million. “Our expectation is not to raise a lot of money,” Hanna explained, several days before heading to Sweden. “This conference is a chance to flag out our needs; it’s a dialoging exercise—the first in a series of meetings to be held on Lebanon’s recovery. We expect only a modest amount of donations.” The true measure of success, he stated, would be a show of support from the international community for Lebanon, and commitments to participate in a broader conference in Beirut, tentatively slated for late 2006.

Exceeded expectations

Another delegation member, Secretary-General of the Higher Council for Privatization Ziad Hayek, also played down the issue of funding in the run-up to the conference: “We don’t expect to receive anywhere near the amount we need for early recovery, but of course, we’ll try to raise as much as we can. This conference is really an opportunity for the international community to come together to support Lebanon and the government, and an opportunity for us to tell the donor world that we’re going to have serious needs.”

So how did the delegation end up coming home with pledges for an amount over three times larger than Hanna’s most generous estimate?

“There is a lot of support for Lebanon and the Prime Minister,” explained Hayek, after the conference, noting that the delegation was far better-prepared than donors may have expected two weeks out of the war.

At present, only some of the aid generated in Stockholm has been specifically allocated. Donors were able to tag their money for individual projects: for example, Qatar’s contribution of $300 million will go towards the reconstruction of Bint Jbeil and Khiam, with any leftover funds to be distributed at the government’s discretion. However, most donors elected to leave the question of distribution to the Lebanese government.

According to Hayek, no conditions were attached to any donations: the government would not have accepted conditional offers. However, that does not mean that donor countries will not impose informal conditions, witholding the delivery of their pledges.

“We hope the funds will be available soon,” says Hayek. “But we’re not going to let people go without shelter because someone hasn’t gone through with their donation.” Regardless of whether pledged aid is forthcoming, the government will proceed with its early recovery plan: if donors drag their feet, Lebanon will simply incur greater debt, but it will not wait. In fact, the government has already started work on several urgent projects, most notably the clearing of rubble in badly-hit areas (including the southern suburbs) and building temporary bridges.

“This process could take longer than people think,” cautions Hanna. However, he notes that the time frame is not dependent on money – as Hayek suggests, the recovery phase will carry on at the same pace regardless of aid availability. Iskandar, on the other hand, sees the question as somewhat moot: he expects $600 million to arrive in Lebanon within the month.

Donors may also have been reassured by the independence and transparency of the two channels in place for their contributions: donations can be deposited in an independently-monitored fund (to be governed by a donor-elected board of directors), or channeled directly to aid agencies; no money will flow directly to the Lebanese government, minimizing the risk of its misuse and giving donors a maximum level of control on how their funds are spent.

Transparency needed

“The government is trying to give donors assurance, so they can verify how their money is being spent in a very transparent, above-board way,” explains Hanna.

Iskandar, however, plays down the concern: “With the Lebanese, people always rush to assume that there will be corruption. Is it the case that this is only an issue in Lebanon? Of course not. You can’t spend that kind of money and not have some wasted in one way or another – not necessarily corruption, but some kind of waste. The government is doing the best job it can, and it has earned a good reputation.”

According to Iskandar, the conference “was a success because other countries helped the Lebanese government to compete with Hizbullah.” The idea of competition between the government and political parties – in particular, Hizbullah – in providing relief and reconstruction is widespread both domestically and internationally. However, some feel the situation is being exaggerated.

“Obviously, everybody would like the government to be the leader in these areas,” states Hanna. “On another level, Hizbullah’s support isn’t really different from that of the over fifty donors at Stockholm. Hizbullah is one of many players in Lebanese recovery; any help is welcome.” Before the conference, he expressed similar sentiments, insisting that Hizbullah and the government had an open dialogue and were cooperating smoothly thus far. Hizbullah’s efforts, he explained, weren’t anything new – they’d always helped. Hanna was confident, moreover, that the government would lead reconstruction even within areas with strong Hizbullah support, like Dahieh.

One reason, according to Hanna, is that Hizbullah may have money, but they do not have the necessary equipment for recovery and reconstruction. The removal of debris in heavily bombed areas, for example, has been overwhelmingly dominated by the state, not Hizbullah.

Hayek does not see the situation as a competitive one, either. He believes that the Lebanese government must take care of its own citizens, regardless of what any other group does. The people who have already received compensation for damages from Hizbullah, Hayek notes, will still compensated by the government as well.

Competition or not, the past few weeks have seen a high level of cooperation between the government and Hizbullah – though it remains to be seen who is ultimately the senior partner. Sources note that Hizbullah is happy to work with the government, but it will not wait for them to take action. And certainly, the Party of God has been far quicker on its feet: thousands of people have already received an average of $11, 000 in compensation; although the government has promised the significantly larger sum of $33,000 per family, the money has not been forthcoming.

Recovery and reconstruction

Over the coming months, as early recovery plans are implemented, the Lebanese government will prepare for the next phase in the postwar efforts: reconstruction. The second conference will be held in the near future, mostly likely in Beirut. This conference will raise funds for long-term reconstruction, but it will also double as a stand-in for the “Beirut I” conference, seeking debt restructuring in return for pledges of economic reform.

Iskandar sees the current situation, ironically, as an opportune moment for such a conference, as the Lebanese government currently enjoys widespread international sympathy, and reforms will be necessary for effective postwar economic recovery. Should tensions between the international community and Syria and Iran continue unabated, support for a strong Lebanese government may further increase, compensating for any lingering hangovers from Paris I and II that might have spurred donor fatigue at Beirut I as originally planned.

Achieving commitments to participate in this second, vital meeting later in the year was a primary goal of the Stockholm conference. In this area as well, the Lebanese delegation was overwhelmed by the response it received from conference participants, says Hayek. Donors present gave their full support to both short- and long-term recovery plans, committing to ongoing partnerships and continuing financial assistance. Moreover, they firmly reiterated their support for Lebanon’s sovereignty, territorial integrity, and independence.

“The expectations were exceeded because there was a feeling this government should be assisted,” explained Iskandar. “There was a feeling that that they deserve a shot.”

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