Latest news with #KhalilGebara
Yahoo
06-05-2025
- Business
- Yahoo
Seeking funds to rebuild, Lebanon government works to regain donor trust
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Generate Key Takeaways Beirut, Lebanon – More than five years into an economic crisis that sent inflation spiralling and saw the Lebanese lira plummet, Lebanon's government is facing its biggest infrastructure project in years: Post-war reconstruction. After 14 months of war with Israel, Lebanon needs $11bn to rebuild, according to World Bank estimates. But, experts say, donors do not trust the Lebanese political class, which has a track record of funnelling construction contracting money to politically connected businessmen. The needs In addition to more than 4,000 deaths, the war took a vast material toll on the country already reeling from a multi-year economic crisis. About 10 percent of the homes in Lebanon – some 163,000 units – were damaged or destroyed, to say nothing of the more than $1bn in infrastructure damage. Most observers, and the new government formed in February, say Lebanon will again need foreign aid, as it did after a previous war with Israel in 2006. But that aid has been slower to arrive than in 2006, with donor attention divided between Lebanon, Syria, and Gaza, and major donors like the United States pushing for the Hezbollah group's disarmament as a precondition. Hezbollah, until recently the most powerful political and military force in the country, suffered severe blows during the war and has seen its power curtailed, although many Lebanese continue to support it. The country's south, east, and Beirut's southern suburbs bore the brunt of Israel's offensive. Together, they are home to most of Hezbollah's constituents, so restoring their homes and livelihoods is a priority for the party. That translates into leverage for foreign donor states. The problem Politically connected companies overcharged the state's main infrastructure buyer, the Council for Development and Reconstruction (CDR), by 35 percent between 2008 and 2018, a 2022 study by local think tank The Policy Initiative found. And the primary contracting regulation was so riddled with exceptions that as little as 5 percent of tenders were under the Central Tenders Board's oversight. All that came to a head in 2020, when a huge blast in Beirut's port tore through much of the capital and donors decided they wanted nothing to do with the state, according to Khalil Gebara, economist and former World Bank consultant who previously advised the Lebanese government. 'Donors stopped transferring money to national authorities or to the treasury,' he said, because they had 'a total lack of trust in national mechanisms'. Instead, donors controlled spending directly or via a World Bank-managed trust fund, or worked through NGOs, Gebara added. That year, the state, which was stalling on implementing International Monetary Fund conditions in exchange for a partial bailout, spent just $38m on its physical investments, down from more than $1.1bn in 2018, the year before the economic collapse, according to Ministry of Finance data. (Al Jazeera) Trying for solutions A year later, Lebanon passed what many considered a landmark reform to state contracting, one of the few reform laws passed in recent years. It dragged virtually the entire public sector into one unified framework, abolished a classification system that had frozen out contractors without political connections, and created a new regulator – the Public Procurement Authority (PPA). As crisis-ridden state agencies were corralled into the new system, public investment continued to fall, hitting below $10m in 2022. 'Procurement is going to be a big thing … and absolutely the test for the procurement system and for the regulatory authority,' said Lamia Moubayed, head of an in-house research and training institute at Lebanon's Finance Ministry. Rana Rizkallah, a procurement expert at the same institute, says the law is solid, but it's up to the government to implement what it promised, adding that a crucial part of that is staffing the regulator. The PPA is supposed to be a board of five members backed by a team of 83 staffers but, three years after the law went into effect in 2022, it has a single member and five employees overseeing 1,400 purchasing bodies. A four-member complaints board that the law established also has yet to be formed, so complaints still go to Lebanon's slow, overburdened courts. Jean Ellieh, the regulator's president and sole member, says the state doesn't have the 'logistical capacity' to recruit dozens of regulators in one fell swoop, but he's put in a request for new hires. 'We will work with determination and resolve, regardless of our capabilities,' Ellieh told Al Jazeera. 'We will not give anyone an excuse to evade the application of the law.' He added that donors have expressed 'satisfaction' with the PPA's abilities. Bonanzas to the well-connected After several lean years in which the state had to keep spending to a bare minimum, the contracting scene remains dominated by the large companies that built up enough resources from earlier rounds of investment to stay afloat. Wassim Maktabi, economist and co-author of the 2022 report on cartel behaviour in construction contracting, said it would be a tall order to ensure that reconstruction isn't another bonanza for the well-connected. 'Rest assured that these political elites will not let this slip,' he said. In addition, years of high-value contracts mean politically connected firms have accumulated the capital to be, in most respects, bigger and more experienced than competitors. 'Even if political influence was not a factor and you awarded these contracts purely based on merit,' he said, these firms 'would still get a large piece of the pie'. Despite a ceasefire, Israel has continued attacking Lebanon, increasing the damage (Al Jazeera) Regardless, Maktabi says, reconstruction is simply too important to stall in pursuit of perfection. Al Jazeera has identified 152 reconstruction contracts totalling more than $30m that are already under way, via the PPA's online portal. Of the top four contract winners in dollar terms, two have political connections mentioned in media reports. The top four companies, Beta Engineering and Contracting, Elie Naim Maalouf Company, Al Bonyan Engineering and Contracting, and Yamen General Trading and Contracting, have won contracts totalling $10.6m, $4.7m, $1.8m, and $1.4m, respectively – 60 percent of the total amount awarded in the PPA contracts examined. Pushing for reformist credibility The new government is negotiating with the World Bank on a $980m plan, known as LEAP, to kick-start reconstruction and be funded by a World Bank loan and foreign assistance. But LEAP would only take care of a fraction of the total reconstruction costs. The government also started hiring for a long-stalled electricity regulatory board and new faces on the CDR board. A woman walks through the damage an Israeli airstrike caused, in Beirut on April 1, 2025 [Mohamed Azakir/Reuters] Moubayed says refreshing the CDR board is a World Bank requirement to approve LEAP, which would be a vital win for a government pushing to gain reformist credibility. The World Bank declined to comment on whether refreshing the CDR board is a requirement. It's still unclear how the programme might be structured, but the government has endorsed the creation of a trust fund for post-war reconstruction, 'characterised by transparency'. But, Beirut residents were unhappy with a similar model used in 2020 for the Port blast reconstruction, architect and urbanist Abir Saksouk of Public Works Studio says. A lack of equity between residents, based on which organisation took over repairing each area, further eroded a sense of shared citizenship, she says, calling it an experience that shouldn't be repeated. She is one of many calling for an inclusive reconstruction process led by all stakeholders, including people who have suffered damages, and with the involvement of relevant ministries, because they are a vital part of the process. 'We need a reconstruction framework where state institutions are present… But we also need other representation,' she said.
Arab News
30-04-2025
- Business
- Arab News
Why this year's Spring Meetings were unusual
For many, the International Monetary Fund and World Bank's Spring Meetings might seem like routine calendar fixtures — occasions where finance ministers, central bank governors and senior executives convene to address global economic concerns. But this year's meetings stood out, coinciding with President Donald Trump's 'Liberation Day' tariffs, which appeared to be steering the world toward trade or currency wars, posing the risk of long-term damage to the international economic order. Few institutions are more central to that order than the IMF and the World Bank. Established in the aftermath of the Second World War, these institutions were tasked with reorganizing the global financial architecture — promoting fiscal discipline, enabling coordinated monetary responses and encouraging economic integration, particularly in times when retaliatory tariffs or competitive devaluations were seen as triggers for conflict and even global wars. Lebanon is no stranger to these gatherings. In fact, its delegations — typically comprising officials from various ministries and the offices of the president and prime minister — have been regular participants. This institutional diversity reflects the cross-cutting nature of Lebanon's challenges and a deeper structural reality: the country's fragmented and often incoherent decision-making process. In many ways, the makeup of the Lebanese delegation mirrors the sectarian power-sharing arrangement at the heart of the Lebanese state — where representation in international forums often prioritizes political inclusion over strategic relevance. Lebanese representatives reiterated their interest in reaching a comprehensive reform agreement with the IMF Dr. Khalil Gebara At this year's meetings, held last week, Lebanese representatives reiterated their interest in reaching a comprehensive reform agreement with the IMF in exchange for financial assistance. This marks the third time a government has pursued such a deal since Lebanon's economic collapse in October 2019. While the international community continues to detect resistance from entrenched political and economic elites and internal divergences within the delegation, there may now be slightly improved prospects. A broad consensus appears to be emerging among international actors: securing an IMF agreement is indispensable to unlocking financial support for a country ravaged by a financial crisis estimated to exceed $80 billion — an implosion that wiped out the savings of both Lebanese and non-Lebanese depositors. Adding to these losses is the burden of the most recent conflict, with the World Bank estimating damages at $14 billion. An agreement would signal a long-overdue commitment to fiscal discipline and structural reform — after decades of economic mismanagement. What stood out in this year's meetings was the participation of Syria — Lebanon's deeply intertwined neighbor. Despite the many challenges and the complex relationship between the two countries, their trajectories inevitably overlap and intersect. Syria's return to the international stage was among the most significant developments of this year's meetings. For the first time in decades, an official Syrian delegation — including the ministers of foreign affairs and finance and the newly appointed central bank governor — attended the meetings. They held side discussions with representatives of international financial institutions to explore avenues for economic recovery and postwar reconstruction. This reengagement would not have been possible without Saudi Arabia and Qatar's support, as they paid $15 million on behalf of the Syrian government to settle long-standing arrears with the World Bank, effectively opening the door to future grants and technical assistance. As a direct outcome of the Syrian delegation's participation, the IMF appointed a new mission chief for Syria. The challenges facing Syria are daunting. The list of urgent needs is long and prioritizing them is no easy task. Questions about the features of the potential economic model, the scope and function of the public sector and the role of the private sector remain unresolved. Syria's return to the international stage was among the most significant developments of this year's meetings Dr. Khalil Gebara However, reconstruction in Syria is not merely about rebuilding physical infrastructure. It also entails reviving a collapsed economy, restoring public services, reinvesting in human and social capital and addressing the deep societal trauma and mass displacement caused by the conflict. Financial estimates vary, but the price tag is consistently staggering: from $180 billion just to return to preconflict gross domestic product levels to broader recovery costs ranging between $250 billion and $400 billion. A persistent item on the Syrian agenda is the demand for relief from international sanctions. Any effort to secure aid or reintegrate into the global financial system is constrained by sanctions, which remain one of the most significant barriers to postconflict stabilization. For example, the implementation of the UN Development Programme's $1.3 billion aid plan for Syria is already constrained by the existing sanctions regime. Sanctions are typically intended as tools for influencing political outcomes. However, in Syria's case, their ongoing presence risks preventing the very conditions needed for any viable political resolution. Sanctions prolong instability by obstructing economic recovery, impeding the restoration of services and sowing uncertainty. This environment empowers spoilers, deepens grievances and diminishes the prospects of a sustainable peace or a functional state. They also hamper meaningful dialogue with Syria's neighbors on the return of refugees — an issue critical to easing the political, social and economic burdens placed on host countries. Lebanon and Syria are both seeking to reintegrate into the international economic system, while facing the urgent need to rein in their cash-based economies and dismantle entrenched patterns of illicit trade, money laundering and extortion networks that have flourished in the absence of effective governance. As both countries navigate the fragile path from collapse to recovery, this year's Spring Meetings served as a powerful reminder that international engagement is essential — not only for economic stability but also for saving lives. Neither country can confront the magnitude of its challenges without the sustained support of committed international partners.
