Rome, Paris, and Brussels—Lebanon made a successful European tour for security as well as comprehensive economic support.
In 2018, Europe hosted three international conferences regarding support for Lebanon’s economy. Looking at the debt-to-GDP ratio, Lebanon has one of the highest in the world, at 150% as of April. Though political stability seemed to be on a positive trajectory since presidential elections in 2016, which ended Lebanon’s two-year stint without a president, vulnerabilities still weighed heavy on the ever-so-slowly growing Lebanese economy.
In recognition of both Lebanon’s progress and its many vulnerabilities, donors convened three times in the first half of 2018. In March, representatives from several countries and organizations such as the International Monetary Fund (IMF) and the World Bank met in Rome to discuss support for Lebanon’s security. With conflicts or concerns on many sides and adversaries such as ISIS, Hezbollah, and Israel, fragile security remains one of the top priorities. Even further within Lebanese borders, security is not as robust as most would like given the influx of Syrian refugees.
At the Rome II Conference, France, the EU, the UK, and the US pledged loans and/or grants to support the Lebanese Armed Forces (LAF) and Internal Security Forces (ISF). With both high debt but serious security and defense needs, international support is a welcome development. France pledged a EUR400-million line of credit for defense equipment as well as equipment transfers and trainings worth EUR14 million. France is by far the biggest donor; the EU pledged EUR50 million, the UK lent USD13 million, and the US a total worth USD39 million when factoring in the cost of pledged equipment with the monetary contributions.
Though not the most noteworthy donor from the Rome II Conference, the US has been a significant supporter of Lebanese security. According to a spokesperson for the US Embassy in Beirut, the US, since 2006, has given USD1.7 billion to LAF and USD160 million to ISF. International support for Lebanon’s progress regarding security is not limited to Europe and the US as Japanese officials were present at the conference and have been providing assistance for several years.
In April 2018, leaders convened in Paris for the Paris IV, also known as the Cedar or CEDRE, Conference on broader economic support for Lebanon. Stakeholders at the Paris meeting recognized Lebanon’s refugee burden and lauded its efforts host such large numbers despite various other ongoing vulnerabilities. Lebanon went home with USD11 billion pledged.
The IMF is providing assistance through Lebanon’s Capital Investment Plan (CIP), meant to help refugees and create jobs as well as improve water, power, and roads. At the conference, Deputy Managing Director of the IMF Tao Zhang added that CIP will reduce the debt ratio and encourage growth if paired with IMF’s structural reforms and proper budget measures. According to IMF analyses, CIP plus reforms would result in 150.3% debt-to-GDP ratio and 3.6% real GDP growth as opposed to 176% indebtedness and 3.1% growth with just CIP and no reforms.
The World Bank hopes to contribute USD500 million annually to CIP from its International Bank for Reconstruction and Development (IBRD) resources and will leverage its other resources for procuring private sector funding. On top of some additional commitments, the World Bank’s contribution totals USD4 billion over the next five years, as announced by World Bank CEO Kristalina Georgieva at the meeting. Georgieva also emphasized the need to pair CIP with necessary reforms for maximum impact. Shortly after, the EU hosted the Brussels Conference to address NGOs’ work in relation to the Syrian crisis and regional stability. However, responses to this more regionally focused rather than Lebanon-specific conference were more critical. Efforts to reach the EU’s goals to deepen the dialog between NGOs and the international community seem to have missed the mark. Nevertheless, Lebanon remains a critical economic and political player in the region. Many in the international community are keen to see effective assistance boost economic performance and enhance security in the eastern Mediterranean.
Special Report: Mallorca launch event
The Business Year: Mexico 2022 Launch Event - Closing Speech
The Business Year: Mexico 2022 Launch Event - Panel 2