World Bank allocates $400m for war-devastated Lebanon and Syria reconstruction

Funding is allocated for infrastructure repairs and reconstruction of electricity grid

The World Bank funding will also help Lebanon to carry out sustainable management of rubble in conflict-affected areas. AFP

The World Bank is extending about $400 million (Dh1.45 billion) to help with the reconstruction of the battered electricity grid in Syria and the emergency repair of vital infrastructure in Lebanon.

The executive board of the multilateral lender has approved two separate programmes, with $146 million in funding going to Syria and $250 million allocated to Lebanon to repair and re-establish lifeline services as well as to carry out sustainable management of rubble in conflict-affected areas, the World Bank said on Wednesday.

The Lebanon Emergency Assistance Project (Leap) will prioritise recovery and reconstruction projects in areas that suffered intense Israeli bombardment during the Israel-Hezbollah war.

Exclusive'No bank left behind': Syria's ties with foreign lenders to resume within weeks

Read More

“Given Lebanon’s large reconstruction needs, the Leap is structured as a $1 billion scalable framework with an initial $250 million contribution from the World Bank and the ability to efficiently absorb additional financing – whether grants or loans – under a unified, government-led implementation structure that emphasises transparency, accountability, and results”, said Jean-Christophe Carret, the World Bank's Middle East division director.

“This framework offers a credible vehicle for development partners to align their support, alongside continued progress on the government’s reform agenda, and maximise collective impact in support of Lebanon’s recovery and long-term reconstruction.”

Lebanon's economy, which plunged into the worst crisis in its history after the Covid-19 pandemic, suffered another blow after Israel bombed the country heavily during its fight against Hezbollah. The bombing campaign that ended last year severely damaged critical infrastructure and devastated residential neighbourhoods in several areas of the country.

The World Bank is part of the coalition of Middle East countries and multilateral institutions, including the International Monetary Fund (IMF), that met in Paris this year and agreed to establish an informal co-ordination group to provide financial support for the economic recovery of regional countries devastated by conflict.

Israeli strikes rattle Lebanon as PM rejects notion of normalising ties

02:02

Members of the Arab Coordination Group (ACG) are combining efforts to identify institution-building priorities along with gaps in policies needed to create lasting recovery in conflict areas.

The World Bank said its latest financing package for Lebanon will support "immediate response activities required to accelerate recovery and create the conditions that favour a return to normality, including the safe and well-planned management of rubble that maximises the reuse and recycling".

It will also provide "critical support" for rapid repair and recovery of essential services, such as water, energy, transport, health and education.

The funding package will focus on the reconstruction of "severely damaged infrastructure", starting with designs and environmental and social assessments.

The Leap programme will be implemented in co-ordination with Lebanese ministries, and the Ministry of Public Works and Transport will be responsible for project execution, the World Bank said.

Syria support

In Syria, the $146 million grant will come through the International Development Association (IDA) platform to help restore reliable and affordable electricity.

The package will focus on restoring damaged transmission lines and transformer substations, as well as providing technical assistance to speed up the development of the power sector.

Years of conflict and civil war have crippled Syria’s national grid, limiting electricity supply to two to four hours a day. This has undermined critical services and dented growth across health care, agriculture, food and housing.

The power sector has struggled for years to meet demand, leading to energy insecurity, the World Bank said. Key substations in many areas have been destroyed or left in disrepair and the lack of maintenance, spare parts and investment has compounded the deterioration.

“Among Syria’s urgent reconstruction needs, rehabilitating the electricity sector has emerged as a critical, no-regret investment that can improve the living conditions of the Syrian people, support the return of refugees and the internally displaced, enable resumption of other services such as water services and health care for the population and help kick start economic recovery," said Mr Carret.

• 

  Stacks of Syrian banknotes are piled on a currency trader's stall at a market in Manbij, in Syria's northern Aleppo province. All photos: AFP

• 

  People queue outside the main headquarters of the country's central bank in Damascus as they wait to exchange US dollars at prices lower than the black market.

• 

  A Syrian fruit seller in the north-west Idlib province.

• 

  A busy shop in Al Dana, in Idlib province. The Syrian pound has been disappeared from the markets since the fall of the Assad regime.

• 

  A market stall in Aleppo province in 2021, 10 years after the uprising against former president Bashar Al Assad began.

• 

  People queue outside the main headquarters of the central bank in Damascus. Mr Al Assad's government fell in December.

• 

  Since the downfall of the Assad regime, general prices of goods have come down by up to 30 per cent in large urban centres including Damascus.

• 

  Petrol is sold by the side of a road in Damascus.

• 

  Use of the US dollar is starting to increase in Syria, as confidence in the national currency remains low.

• 

  A man sells petrol in Damascus. The HTS-led government aims to show it can fuel an economic recovery in Syria.

• 

  A currency trader exchanges Syrian pounds for customers in Damascus. The value of the currency has fluctuated in recent weeks.

“This project represents the first step in a planned increase in World Bank/IDA support to Syria on its path to recovery and development.”

Among priority projects is the restoration of high-voltage transmission lines damaged during the conflict that are connected to Jordan and Turkey.

”This is the first World Bank project in Syria in almost four decades," said Yisr Barnieh, Syria's Finance Minister.

"We hope it will lay the ground for a comprehensive and structured support programme to help Syria on its path to recovery and long-term development.”

Earlier this month, the IMF concluded its first staff mission to Syria since 2009, as the country's new government seeks to rebuild its economy following the fall of Bashar Al Assad's regime in December.

Syria will need “substantial international assistance” to help revive its economy, meet humanitarian needs and rebuild infrastructure, the fund said in a June 12 statement, following the staff's visit from June 1 to 5.

Estimates to rebuild the economy range from $250 billion to $500 billion.

“Syria faces enormous challenges following years of conflict that caused immense human suffering and reduced its economy to a fraction of its former size,” Ron van Rooden, the IMF's mission chief to Syria, said at the time.

The World Bank previously estimated Syria's economy had contracted by 60 per cent since 2011, with the UN reporting more than six million Syrian refugees now live in neighbouring countries.

Financing for Iraqi railways

Separately, the World Bank on Wednesday also approved $930 million in financing to help improve Iraq’s railway performance, boost domestic trade and help economic diversification away from oil.

In 2023, Iraq announced plans to transform the country into a vital transport hub by connecting the Gulf region through Iraq to the Turkish border, extending into Europe through the Iraq Development Road (IDR) initiative.

However, the country's rail sector has suffered from limited connectivity, disrepair and underfunding and requires investment to boost national and regional connectivity, the World Bank said.

Once connectivity is enhanced with existing ports and infrastructure, the IDR can significantly increase trade within Iraq and the region.

"As Iraq shifts from reconstruction to development, enhanced trade and connectivity can stimulate growth, create jobs, and reduce oil dependency," said Mr Carret.

The World Bank funding will focus on modernising 1,047km of existing railways linking Umm Qasr Port to Mosul through Baghdad, phasing out the ageing fleet of locomotives, refurbishment of the Baiji maintenance workshop and procurement of spare parts.

"By 2037, the revived railway line is expected to carry 6.3 million tonnes of domestic freight, 1.1 million tonnes of exports/imports, and 2.85 million passengers, including bulk commodities (such as grains or construction materials) and containerised commodities such as industrial and consumer goods," the World Bank said.