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Reconstruction and Chaos, 1984-87

Western indulgence with Lebanon ended in February 1984. The bombing of the United States Marines barracks in Beirut on October 23, 1983, with the loss of 241 American lives, and the death of some 59 French peacekeeping troops in a similar blast that day, proved how unstable the reconstruction environment was (see Internal Security and Terrorism , ch. 5). Fighting in the Shuf Mountains during the autumn of 1983 illustrated the difficulty of asserting government control even when occupying forces pulled back. Most of the MNF troops pulled out with the partition of Beirut and the renewed fragmentation of the Lebanese Army, although the French and Italians delayed their departure for humanitarian reasons.

The MNF withdrawal was accompanied by the effective termination of United States economic and military assistance programs. The AID program was frozen, and US$130 million in aid was suspended. One effect of the aid suspension was a halt in work on an AID-financed telecommunications rehabilitation project in Beirut. Officials from the United States embassy said, however, that the United States would honor its US$18 million development aid commitment.

Despite persistent instability, the CDR pressed ahead over the next three years with efforts to secure external financing for the country's reconstruction. Some Lú4.3 billion was spent between 1982 and early 1986 on reconstruction (equivalent to between US$500 million and US$700 million).

In 1985 the CDR's new chief, Malak Salam, confirmed that Italy would make US$130 million available for reconstruction assistance, of which US$30 million would be on concessionary terms. The EC was to consider about US$15 million in funding and France around US$54 million. Some US$5 million was pledged by Belgium. Whereas United States and Arab aid rose and fell according to political circumstances and the vagaries of the international oil market, West European aid, usually given on a more modest basis, was fairly steady.

Between 1978 and 1985, Lebanon secured about US$76 million in grants and interest-free or low-rate loans from the EC's European Investment Bank and some US$85.5 million in special reconstruction aid. In March 1986 it secured a further US$15.4 million to upgrade schools. In April 1987, the EC agreed to provide Lebanon with US$84 million under a five-year protocol to run from 1987 to 1991, of which US$23 million would be grants and the balance concessionary loans.

President Jumayyil periodically urged the industrialized nations to draw up a "Marshall Plan" for Lebanon's reconstruction. He traveled extensively to Western capitals to secure assistance but generally received negative responses. EC officials noted in 1987 that their attempts to disburse existing aid funds had sometimes proved unsuccessful.

The CDR did not confine its efforts to the developed world's principal financial institutions. In 1982 the CDR held talks on reconstruction assistance with Hungary and in 1986 with Beijing's China Harbors Engineering Company on a possible US$500 million protocol for construction work. In 1985 Czechoslovakia promised US$50 million, mainly in tied aid, and Romania said it was willing to lend US$100 million in trade credits.

Aid also trickled in from other sources. Iran social relief funds were disbursed to largely Shia areas. The Pasdaran in Baalbek, their Martyr Foundation, and affiliated groups furnished health and social services.

The EC provided emergency food aid and funds for school repairs. The Netherlands pledged aid for a factory to make artificial limbs. Canada lent money for water projects in Beirut and Tripoli. Britain gave the Red Cross money for humanitarian assistance. In the southern border strip, Israeli forces provided some humanitarian assistance. The FAO provided emergency food aid. The UNIFIL provided extensive medical, social, and, in some cases, even infrastructure services during the years following the 1982 invasion. Overall, the relief effort was just as much a patchwork as Lebanon itself.

By late-1987, there were few signs of centralized reconstruction efforts. The assassination of Prime Minister Rashid Karami on June 1, 1987, led to the reappointment as prime minister of Salim al Huss (also spelled Hoss), a Lebanese politician with a reputation for personal and public integrity. Al Huss, an economist, moved immediately to develop a radical financial reform package, including the abolition of fuel subsidies and the pledging of 20 percent of the country's gold reserves as security for an international loan. His efforts were largely undermined by Minister of Finance Camille Shamun, who demanded that reductions in government spending include a reduction of the bread subsidy. Huss renewed his reform efforts after Shamun's death in August, but he and Naim were unsuccessful at getting banks to increase deposits with the Central Bank.

The reform spirit was clearly alive, but the government was unable to negotiate agreements with key sectors of Lebanese political and economic life or impose its will on any part of the country. As Jumayyil's unhappy period of office drew closer to its September 1988 termination date, there were still a few who hoped that a new president might be able to forge ahead with reconstruction effort. But in late 1987, reconstruction seemed unlikely.

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The most important sources available in 1987 were Marwan Iskandar and Elias Baroudi's The Lebanese Economy in 1981-82 and The Lebanese Economy in 1982-83. The Middle East Economic Digest has been equally vital. Both these sources, it should be noted, depend on a wide range of information furnished by Lebanese journals, newspapers, banks, and institutions. The original sources, such as Le Commerce du Levant and the quarterly and annual reports of the Central Bank, should receive much of the credit for attempting to portray a coherent picture of the Lebanese economy during more than twelve years of civil and international strife. The data used originated in Lebanon itself; the analysis is written from safety outside.

Reporters such as Nora Boustany of the Washington Post and Peter Kemp of the Middle East Economic Digest, directly or indirectly, have furnished a mass of useful information under extremely trying circumstances. The work of the Centre for Lebanese Studies in Oxford, Britain, also should be noted. (For further information and complete citations, see Bibliography.)

Data as of December 1987

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