World Bank to set up Lebanon trust fund

The World Bank will set up a trust fund to raise hundreds of millions of dollars to help Lebanon bear the cost of hosting a human wave of refugees from Syria, the bank’s regional director said yesterday.

The trust fund will seek to attract $300m to $400m in donations for the most urgent priorities, including education and poverty reduction, World Bank Middle East director Ferid Belhaj said.

The trust fund is now being put together as we speak and  should be up and running within four to six weeks, he said in his office in central Beirut.

Lebanon, the smallest of Syria’s neighbours with a population of just 4 million, has the largest Syrian refugee population — the United Nations puts the figure at 800,000 but the World Bank says it is over 1 million, and growing.

The refugee influx has burdened its already strained infrastructure and services, and is set to cost the country $2.6bn in lost revenue and extra expenditure over a three-year period, according to a report compiled by the bank.

The establishment of a fund overseen by the bank is aimed in part at overcoming Western aversion to giving money directly to Lebanon’s caretaker government.

The government, which includes ministers from the militant Hezbollah — designated a terrorist organisation by Washington and its allies — says the reluctance to offer bilateral support is politically motivated.

Paralysed by a political stalemate which has stopped the parliament meeting for several months, the government was shaken this week by the arrest of the head of a state aid organisation on embezzlement charges.

Because it is run and managed by the bank, we need to make sure this (fund) is bullet-proof when it comes to its fiduciary dimension, Belhaj said.  And it is going to be bullet-proof.

A meeting with representatives of potential donor countries last yesterday secured sufficient pledges and signals of commitment for the bank to proceed with setting it up, he said.

Norway has pledged, the UK has given very strong signals, the Netherlands has pledged, Belhaj added, without specifying the amounts involved. We are confident we will be getting money to start this trust fund.

Lebanon is also seeking larger, longer-term development support to address a major shortfall in electricity generation which causes daily power cuts, as well as help to build up infrastructure and transport facilities.

This is where the bulk of the financing will come, Belhaj said. Unlike the trust fund, made up of grants, the long term support would involve concessionary loans and cannot not be agreed until Lebanon overcomes its political impasse.

There needs to be a government … and a parliament willing and able to ratify those loan agreements,  he said.

The political deadlock has been exacerbated by the Syrian crisis, with Lebanon s Sunni and Shia communities supporting opposing sides in the civil war.

President Michel Suleiman has said the burden of hosting the mainly Sunni Muslim refugees has lent the crisis an  existential dimension  in Lebanon, which fought its own 1975-1990 civil war.

Belhaj said that if the current flows continued, Lebanon could have 2 million Syrian refugees on its soil by the end of next year — swelling its population by 50 percent and shattering a fragile sectarian balance.

Reuters

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