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Last Updated: Wednesday, 30 August 2006, 11:49 GMT 12:49 UK
Donors looking to rebuild Lebanon
By Bill Wilson
Business reporter, BBC News

Lebanese firemen extinguish fire at a factory hit with an Israeli air strike in the Bekaa Valley in eastern Lebanon 23 July 2006
Several Lebanese factories have been destroyed by bombs
More than 60 nations and organisations are to meet in Stockholm to raise $500m (263m; 392m euros) to rebuild Lebanon, damaged by 34 days of conflict.

The one-day meeting on Thursday is the first donors' conference to be held since the conflict between Hezbollah and Israel broke out in July.

The European Commission has pledged 42m euros ahead of the conference.

The UN says access to medical care, key roads and bridges, opening markets, and removal of bombs are key priorities.

Damage is put at $3.6bn, affecting 15,000 homes, 80 bridges and 94 roads.

'Catastrophe'

Lebanon has said it needs up to $500m in short-term help for rebuilding schools, social projects, and removing Israeli-fired cluster bombs from farmland.

The international community now has to give its support to Lebanon's recovery and to the Lebanese people who have been severely affected
Jan Eliasson, Swedish Foreign Minister

Fully-operational water and electricity supplies are also needed.

Lebanon's ambassador to Sweden, Mounir Talhouk, said the events since mid-July had been a "catastrophe".

Lebanon's economic ministry says about one in five of the country's million or so refugees have been rendered homeless by the military actions.

The country has already received emergency aid of $500m from Saudi Arabia and $800m from Kuwait.

"The international community now has to give its support to Lebanon's recovery and to the Lebanese people who have been severely affected," said Swedish Foreign Minister Jan Eliasson.

And European Commission external relations commissioner Benita Ferrero-Waldner said: "We are 100% committed to helping Lebanon in its physical rehabilitation.

"But a successful long-term recovery will also require political and economic reforms."

'Good value'

Among those expected to attend the donor conference are Lebanese Prime Minister Fouad Siniora, and ministers from many EU countries and several EU commissioners, as well as representatives of South Korea, Japan, Brazil and Morocco.

Lebanon has only a limited manufacturing base, some of which has suffered severe damage in the recent attack
Jim McCredie, KPMG

Officials from the US and the UN, the World Bank, International Monetary Fund, Red Cross and the World Health Organization are also expected.

According to Jim McCredie of KPMG, delegates in Sweden and the Lebanese government will "wish to see the reconstruction carried out as rapidly as possible, while obtaining good value for money and high levels of probity".

"Those three requirements are not necessarily mutually compatible and a strong management organisation is required to implement the programme of work," he added.

Mr McCredie, who assisted the Lebanese government in the Lebanese Reconstruction Programme between 1993 and 1997, said the economic rebuilding cost would be heavy for a country with debts of $35bn.

Houses destroyed in Southern Lebanon
Homes, bridges, roads and schools are a rebuilding priority

"With its huge debt burden, the country now has a fragile economy and relies on its service sector as well as a very large inflow of funds from some 18 million Lebanese living abroad," he said.

"It has only a limited manufacturing base, some of which has suffered severe damage in the recent attacks."

Dozens of factories have been crushed in bombing raids, and commercially-driven construction sites have been deserted as foreign investors have fled.

'Procurement process'

Mr McCredie said the damage inflicted by Israeli bombing appeared to be much more concentrated geographically than in previous actions (this time principally in the southern regions), and the severity of the attacks was much heavier.

But, he believes, overall, the country is in a better position to carry out the reconstruction work required now than it was in 1993, "having the skills and management experience so necessary with such a major undertaking".

However, the Lebanese government has refrained from issuing new projections for economic growth, as it waits to see when Israel will remove a sea and air blockade.

Mdeirej bridge
Rebuilding infrastructure may prove easier than restoring confidence

Restoring economic confidence very much depends on progress in implementing the UN ceasefire resolution, and reassuring potential aid donors that the Lebanese government, and not Hezbollah, is in the reconstruction driving seat.

"International aid providers naturally want to know that their funds are being put to good use and they usually dictate how the money is to be spent," Mr McCredie said.

"For some, this is the opportunity to impose changes designed to enhance the economic performance or improve the social infrastructure provision in the country.

"It will also be an opportunity to exert regional influence though Lebanon's strategic location in the Middle East."

'Start again'

The government had been planning economic reforms including the privatisation of its power and telecoms sectors, tax rises and a tighter grip on the government's purse strings. These plans may now have to be shelved.

As for the country's tourism industry, which until early July had been forecasting more than 1.6 million visitors this year, there are no hopes of a quick recovery

"How the conference will assist the in the reconstruction programme remains to be seen." said Mr McCredie.

"What is certain is that tourism and new industries were on the verge of revitalising a country that has seen so many conflicts.

"Now, sadly, much of that process will have to start all over again in the face of reduced confidence in long-term peace in the region."


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