Lebanon needs French initiative 'more than ever' a year after Beirut blast

Lebanese leaders promised Emmanuel Macron reform after explosion but failed to deliver

Hundreds of Lebanese flocked to meet French President Emmanuel Macron last year when he toured the devastated streets of Beirut, just two days after the deadly port explosion.

Mr Macron hugged traumatised residents who cried in his arms in the destroyed neighbourhood of Gemmayzeh, where he promised he would take action for their country.

Reform has been far too slow given the depth of the crisis
Jaap van Diggele, EU official

He urged Lebanese leaders to form a “new political order” to save Lebanon from economic collapse and to rebuild the capital. Their neglect is widely blamed for the man-made disaster that killed at least 214 people.

Three days later, Mr Macron launched an international aid conference for Lebanon and in September he revealed the French initiative — an ambitious economic and political plan to get the country back on its feet.

Beirut could access billions of dollars in loans and debt relief if politicians form a government capable of reform.

One year later Lebanon is still without a government and politicians have made no significant reforms as the country sinks deeper into economic collapse.

Jaap van Diggele, a European official working with international lenders and donors in Lebanon, said Lebanon did take one step towards reform since the port explosion. The government approved a public procurement law, which has yet to be fully enforced.

“Reform has been far too slow given the depth of the crisis,” Mr van Diggele said. “Passing that law is an important but small step.”

Mr van Diggele works for the Reform, Recovery and Reconstruction Framework (3RF), a joint UN, World Bank and EU initiative launched in December to help Lebanon after the blast. The 3RF engages with the Lebanese caretaker government, international donors and civil society.

But in the absence of a fully functioning government and reforms, international lenders and donor countries have limited their support and contributions to humanitarian aid while Lebanese leaders compete for ministerial portfolios in the next cabinet.

“Unfortunately the assistance we offer for reconstruction and recovery will matter very little if no one wants to take responsibility for reforms,” Mr van Diggele said.

Lebanese leaders had promised to carry out France’s ambitious plan, which was meant to overhaul the country’s broken political and economic system.

Senior European officials, diplomats and aid workers say the port explosion should have been a wake-up call for political leaders, but expectations for reform and change, one year on, are low.

Past attempts at reform

Mr Macron’s French initiative is the latest in a series of efforts to push Lebanese leaders to adopt reforms in exchange for economic assistance.

The CEDRE economic development conference raised more than $11 billion for Lebanon, pending reforms in 2018, a year before the country sank into financial crisis.

The funds were never disbursed because the government could not implement any reforms.

“The Lebanese state’s response to the crisis is null at best and wilful at worst,” a senior European official said, at a meeting with Arab and Lebanese officials in Paris to discuss the Middle East.

A transcript of his remarks was obtained by The National.

He said there was a concerted effort to maintain “a bankrupt economic model” that profits an elite seeking to preserve its interests.

The same political dynasties have ruled Lebanon since a sectarian power sharing deal ended a 15-year civil war in 1990. The international community has accused them of prolonging a severe economic crisis since late 2019, despite efforts spearheaded by France and supported by the EU and international lenders to save the country.

The French plan set out a roadmap for politicians to form a government of specialists within 15 days and schedule negotiations with the International Monetary Fund.

The new cabinet was meant to work on reforms, ranging from overhauling the country’s failing electricity sector to anti-corruption and good governance measures, with deadlines staggered over a three-month period.

Lebanon met none of the deadlines, despite the urgency of the situation.

After nearly one year of threats, the EU announced a framework for sanctions targeting Lebanese leaders accused of corruption or undermining democracy in a bid to pressure them into forming a government capable of reform.

The port blast as a turning point

The port explosion killed more than 200 people, injured at least 6,500 and destroyed large parts of the capital.

“The explosion at the port was, in a way, also a metaphor for the explosion of the Lebanese state,” the senior European official said.

Lebanon could receive $9 billion in loans from the IMF, almost half of Lebanon’s current gross domestic product, paving a way out of crisis, the European official said in Paris.

The Lebanese pound is officially pegged at 1,507 to the dollar. Its real value fell to roughly 8,000 pounds to the dollar last August and it is now trading at more than 20,000 per dollar.

“People should demonstrate in the streets in favour of an IMF programme,” the official said.

The Lebanese government briefly entered negotiations with the IMF last year but the talks broke down after the Lebanese government, parliament and the central bank engaged in open disputes over who should take responsibility for the bank’s enormous losses.

“The end of those exchanges, which I will not qualify as negotiations, was another blow to any confidence the international community may have had in Lebanon’s political system,” he said.

In the absence of political action, the official said France and the international community are limited to providing donations instead of loans, which are inevitably smaller.

France gave €86 million ($102 million) to Lebanon in 2020, €50 million more than was planned before the blast.

Mr Macron announced on Wednesday an aid package for Lebanon of €100 million, or almost $120 million.

“I don’t think the French initiative has become irrelevant because Lebanese leaders failed to reform,” a senior European official told The National.

“On the contrary, it has become more necessary than ever as the crisis deepens.”

As government formation stalls, donors have grown increasingly impatient. Many are now opting to work with civil society instead of going through the Lebanese state’s opaque institutions, European officials told The National.

A Reuters investigation in June revealed that at least $250 million in UN humanitarian aid to Lebanon’s poor was lost to banks selling the local currency at highly unfavourable rates to donors while they pocketed the difference.

Even if Beirut is granted billions of dollars, it will not be able to rebuild itself on the political and economic model it has espoused since the end of the civil war, the senior official said.

“Lebanon is not a failed state, it is a nation facing bankruptcy,” he said.

France hopes to secure more than $350 million in humanitarian funds for Lebanon at a conference it is co-hosting with the UN on Wednesday.

“We are pushing the international community not to fall into indifference, but Lebanon’s problems cannot be resolved through foreign help,” he said.

“Lebanon needs a vision going forward, a new model.”

Updated: August 4th 2021, 2:46 PM