A year and a half ago, Lebanon’s contractors were locked

in a rough-and-tumble wrestling match with the government

over roughly $400 million worth of unpaid

bills for public sector construction projects, some of which

extended back three years. When the government finally agreed to

pay up, it did so with three-year treasury bills that carried a 5.6%

interest rate. In order to pay back their creditors, contractors were

forced to sell the T-bills to banks at discount rates – the rate that

banks charge to buy T-bills before maturity – that ranged from 8%

to 10%. Couple that with the interest lost while they waited for their

money and some contractors were lucky to walk away with just

three-quarters of the original money owed to them.

The situation is a bit better now – a bit. There remains about $50 million

in unpaid bills, says Hayyan Haidar, counselor to the contractors’

association. Most of that amount should be paid in the coming

months, he adds. Bureaucratic government procedures continue to slow

the processing of bills. “Most projects are not paid on time,” says Fouad

Khazen, president of the contractors’ association. “This has caused a

lot of inconvenience.” But government red tape is nothing new.

What’s hurting contractors today is the same thing that’s hurting

everyone – the recession. But when Israel pulled out of the South

last May, a bright light suddenly appeared. The government

devised a five-year rehabilitation plan for the region, which calls for

spending close to $900 million on infrastructure. Coming at a

time when cement deliveries and the number of construction permits

issued are at a five-year low, the news was greeted as something

of a miracle.

There was just one problem: “They don’t have any money,” says

Khazen. They, in this case, is the government and the money refers

to foreign donations. So far there’s been just a trickling of funds,

including a $20 million grant from the Kuwaiti government, a $10

million grant from the Arab Fund and a $9 million reallocated loan

from the World Bank. The Lebanese government has given $50 million

to the Council of the South for the rebuilding of homes. The

Islamic Development Bank has proposed a $100 million soft

loan, but the offer hasn’t been finalized.

The government organized a donor’s conference last month to

attract foreign assistance. At about the same time, it permitted Unifil

to deploy in the area and, more recently, the internal security forces

and the army – fulfilling a condition that many donor nations

required before the funding tap would be turned on.

But no contributions came out of the conference. No need to worry,

says Wafa Sharaf al-Din, program administrator at the council for

development and reconstruction, the conference was intended to give

an idea of the government’s development plans and the area’s needs.

“We are receiving lots of missions and they’re reviewing the projects.

In October, the picture should be clearer.” That’s when a second

conference is scheduled. But even if the money starts flowing

then, projects will not be tendered before next year at the earliest.

And there’s a lot that could derail the whole project before then. A

resurgence of violence would leave a nasty taste in the mouths of

even the boldest of donors. Despite the presence of Unifil, the ISF

and Army units in the area, there’s a continuous exchange of rocks

and occasionally bullets between Israeli soldiers and Lebanese civilians

– a potentially explosive situation.

If the South remains calm and donations come through, some contractors

aren’t so confident that projects will be awarded to the most

qualified companies. In July, representatives of the contractors’ association

met with prime minister Selim Hoss, demanding that projects

be handled by the ministry of public works and awarded through open

tenders. “We hope that it will be done through proper channels,” says

Khazen. Some contractors say privately that political considerations,

rather than competence, will probably decide who gets what.

The ministry of public works will not handle all the projects. There

is a range of government offices and ministries charged with

awarding contracts, including the ministry of electricity and water

resources and the CDR. The Council of the South, which has been

charged with overseeing some of the infrastructure work, is an

agency that many contractors particularly dread. Ablan Ablan,

the council’s president, assures that contracts will be handled in a

professional manner. But one contractor, who claims that he waited

nearly five years to be paid by the council, says: “They have a

funny way of dealing with people. Whoever works with them

does so at their own risk.”

What would help contractors now, says Haider, are more lenient

credit facilities from banks. Projects need to be thoroughly studied

before work begins so that no surprise expenses pop up later. The ministry

of finance needs to streamline payment procedures.

Contractors, says Haider, represent a valuable asset to the country,

but many are on the verge of bankruptcy: “I would consider it a pity to loose such potential

“These people have been forced

to grow hash and be outlaws,

because this region has been

abandoned by the Lebanese

state and the regional and

international community,”

says Hamadan Dandash,

farmer from the Hermel district,

referring to those who

continue to grow illicit crops

despite the government’s

decade-long crackdown.

“If there weren’t patrols

everyone would grow it

because they are,

prisoners; the crisis

taken hold of them

more and more.” (,

Though still minute compared to what was grown during the war,

the last couple of years has seen an increasing number of farmers

in the Baalbek-Hermel region plant illicit crops, according

to the Internal Security Forces (ISF). “Each year the farmers try to

go back to planting hashish and poppies,” says colonel Michel

Chakkour, head of the ISF’s drug control unit, at his office in Ras

Beirut’s notorious Hobeiche building. “But we believe we destroy more

than 95% of the plantation.” Eradication of hashish crops this year was

slated to begin on July 24, but the plan was still delayed when

EXECUTIVE went to print. In mid-August there was a confrontation

between farmers and police on patrols to locate the fields. That’s not

an uncommon event, according to Chakkour, who estimates this

year has brought an increase in hash plantation. Last year the ISF

destroyed almost 8.2 million m2 (~18 hectares) of hashish and

24,520m’ of poppies. That’s up from 1998 figures of 3.3 million m’ and

2,000m’, respectively.

High on the Hermel plateau, much of which has been abandoned

and lies fallow, plots of swaying green cannabis dot the landscape.

On top of the high profits, the appeal of hashish is that it literally

grows like a weed with little care and no irrigation, while a market

is virtually guaranteed. And lines of credit are readily available

through dealers at better terms than the rare bank loans that are provided

for legitimate crops. That’s a pretty attractive combination

for an impoverished, underdeveloped region where water is scarce

and large swaths of land are not irrigated.

Emerging from the civil war, Lebanon came under intense US and

international pressure to crack down on what had become a highly

organized system of drug production and trafficking under militias,

although hashish plantation does predate the war. The eradication

program resulted in the area cultivated with illicit crops being

reduced from about 800 million m’ to 3 million m’ and Lebanon

being removed from the blacklist.

But the tragedy is that almost nothing has been done to help the region

and its farmers substitute what had been a lucrative source of income

despite this country’s success in curbing drug cultivation. It is estimated

that drug cultivation brought $80-100 million a year to the Baalbek Hermel

region and $500 million to the nation as a whole. “Lebanon

after the war was a very very weak country and state,” says Riad Saade,

agronomist and director of the Lebanese Center for Agricultural

Research and Studies (CREAL). ‘Those who wanted at that time to

eradicate prohibited crops should have simultaneously considered how

this weak and unorganized country should be structurally helped.”

What should have been done was the installation of mass irrigation

and other agricultural infrastructure, the creation of a proper marketing

system along with training and the encouragement of

agroindustry. All that should have come within the framework of a

comprehensive development program that would also aim to diversify

the region’s economy.

But the planning stage of projects intended to develop the region didn’t

even begin until after eradication. The main project aimed at the

development of the Hermel-Baalbek region was launched by the

United Nations Development Program (UNDP). The United States,

Europe and Japan were expected to be major donors to the program,

which was initially projected at about $55 million. But the money was

not forthcoming. So far just $12 million has been scrimped together

– eight years since the planning stage began. And more than two-thirds

of that amount was supplied by the Lebanese government. The UN

funding is declining and threatens to scupper the project, according

to Ghassan Seblani, the CDR representative to the program.

Though the UNDP says no concrete promises were made, it undertook

the project at the request of both the Lebanese government and

the international community. ‘There were implicit promises for the

rehabilitation of the area as has been the case in other countries that

made attempts to eradicate illicit crops,” says Christian De Clercq,

senior advisor to the UN resident coordinator in Lebanon, who was

involved in the project from the start. “Other countries may not have

succeeded but received large-scale assistance,” he explains. But Zena

Ali-Ahmad, who heads the program, says the attitude off armers must

also change: “Nothing will compare to what they made from drug cultivation.

If this is what’s expected nothing will ever be done.”

Government initiatives were meant to compliment the UN project

and would be aimed at large-scale infrastructure development

in Baalbek-Herrnel. Hariri’s Horizon 2000 plan included promises

of $300 million in funds, while the current government allocated

about $200 million, according to Seblani. But the outlying areas

have yet to become a real priority and the bulk of that money never

materialized. The largest government plan being implemented –

only to include irrigation infrastructure – is the $57 million development

project of 12 villages in the Yammoune area.

With such limited funds the projects have had almost no impact

on a region that covers about 28% of the Lebanese territory and has

a population of 250,000. “All projects to compensate or treat the

eradication of prohibited crops are folkloric and not serious,”

says Saade. “Up to now they’ve been wasting their time.” Oddly

the ISF has taken up the reigns of crop substitution – such as saffron

and pistachios – but with little thought on finding markets or

when these new plants will produce.

Not surprisingly, Dandash and other farmers are feeling disillusioned

and deceived by both the government and the international

community. “I’m not waiting for them to do anything,” he says. “I

don’t believe they will.” He has given up on the government’s

promises to install an irrigation system in the Henne! district,

spending about $8,000 to build his own well with plans for a second.

But that’s a hefty investment most locals simply cannot afford.

All this at a time when the agricultural sector is already in crisis.

Farmers in the region largely switched to common crops, but the

lack of proper regulations, norms or marketing bodies means

farmers get Little in return for their efforts, according to Saade. The

ministry of agriculture’s resources – under 0.4% of the total budget

– underscores the sector’s neglect. Improving the lot of the

inhabitants of Baalbek-Herrnel will require greater funds, which

the government doesn’t have. And many believe that significant aid

from the international community is an unlikely prospect without

a comprehensive peace settlement. In the meantime, without alternatives

for desperate farmers, the ISF may find itself with a lot more

work to do.