Donors pledge billions for Lebanese government

Families of kidnapped IDF soldiers requested Chirac to raise the issue of releasing the soldiers at the donor conference.

jp.services2 (photo credit: )
(photo credit: )
Families of kidnapped soldiers Eldad Regev and Ehud Goldwasser requested that French President Jacques Chirac raise the issue of bringing about the release of their loved ones during a donor conference for Lebanon in Paris on Thursday. In a letter to the French government, the families asked that Chirac seek the help and involvement of donating countries present at the event. International donors pledged some US$7.6 billion (€5.84 billion) in aid and loans on Thursday for Lebanon's US-backed prime minister and his economic reform program for the war-scarred country. The money was pledged at a donor conference in Paris. The host, Chirac, announced the dollar figure after more than 40 nations and financial institutions attending took turns over four hours in announcing their contributions. The aid was toward the top end of what analysts had expected. It offered a boost for Lebanese Prime Minister Fuad Saniora as his government is locked in a power struggle with Iranian-backed Hezbollah and its allies, struggling under debt and facing the task of rebuilding following last year's war between Hizbullah and Israel that left parts of southern Lebanon in ruins. "Your support will be essential in seeing Lebanon through," Saniora told the conference. "The cost of failure is too great to contemplate." He added that Lebanon is "on the verge of a deep recession." Chirac played auctioneer, pressuring participants to give. He gently chided Japan for not giving more than US$11 million (€8.5 million), checked whether other pledges were in dollars or euros, and asked his aides "How much?" "Be brief, be good and be generous," he said. That donors gave billions showed that recent violence in Lebanon did not significantly dent international support for Saniora's government. Chirac opened the meeting with a plea that Lebanon "more than ever" needs international support. World Bank President Paul Wolfowitz described Lebanon as being at a "critical crossroads." Denmark's representative said Saniora would return home "knowing that you have friends around the world." The war caused US$2.4 billion in direct damages, and US$700-US$800 million in indirect damages, said Wolfowitz. He said Lebanon's economy, instead of growing as expected last year, shrank by 6 percent. Lebanon's US$40 billion (€31 billion) of state debt is equivalent to about 185 percent of its annual economic output, making it one of the world's most indebted nations. Many praised Saniora's reform proposals. Wolfowitz called them "ambitious, comprehensive and coherent." The new UN secretary-general, Ban Ki-Moon, urged donors to "favorably and generously" support the plan. Saudi Foreign Minister Prince Saud al-Faisal said his country would channel US$1 billion (€770 million) in development funding and an additional US$100 million (€77 million) grant for the Lebanese government. Chirac said half of a new €500 million (US$650 million) loan from France would be extended this year. The European Commission, the EU's executive arm, pledged some €500 million (US$649 million) in loans or aid. US Secretary of State Condoleezza Rice confirmed that the Bush administration would seek US$770 million (€592 million) for a new comprehensive package of which a substantial part would be grants, not loans. That money must be approved by US Congress, and would more than triple US economic aid to Lebanon. "This is a package that is for Lebanon," Rice said when asked if the money is contingent on the survival of a US-backed government in Beirut. "Lebanon is a democracy." The European Investment Bank announced €960 million (US$1.2 billion) in funds, while the Islamic Development Bank proposed US$250 million (€192 million). Wolfowitz said the World Bank's total package would be about US$1 billion (€769 million), mostly new aid. Reflecting continuing tensions in his nation, Saniora on Thursday abruptly abandoned plans to attend an international gathering this week of world political and business leaders, the World Economic Forum in Davos, Switzerland. Although they insist that aid will be for the entire country - not just for one man or his government - the United States and other donor nations back Saniora and say Lebanon must be defended from meddling by Iran and neighboring Syria, which occupied the country for nearly 30 years until 2005. Saniora's critics said donors would worsen Lebanon's debt and be pouring good money after bad. This week's clashes in Lebanon between pro- and anti-government factions recalled the country's civil war days and offered a stark glimpse of how quickly events could spiral out of control if the confrontation between Saniora's government and Hezbollah and its allies is not resolved. Nationwide violence claimed three lives and injured more than 170 people on Tuesday. Hizbullah gained new public support in its war last July and August with Israel and is thought to have given out many millions of dollars worth of aid to residents of areas devastated by the fighting. Western powers hope to counter that influence by pouring in more funding of their own. No Hizbullah representatives were invited to the Paris event. Aid will come with conditions _ mainly assurances that Saniora's government will make good on economic and structural reforms announced this month, which have infuriated labor unions and Hezbollah supporters.