The problem of rebuilding Lebanon following the war with Israel is added to that of recovering a country in deep crisis since 2019. It is therefore interesting to look back at the most recent experiences in reconstruction, in 2006 and 2020, which did not allow Lebanon to put itself on a sustainable development trajectory despite significant international financial support.
Reconstruction following the war in the summer of 2006 had benefited from substantial external support.
The level of damage had been estimated at $3.2 billion (15% of GDP), concentrated above all in infrastructure (bridges, roads, airport, networks, factories) as well as in real estate. The Gulf countries had made a deposit of $1.5 billion in the Bank of Lebanon and provided donations exceeding $1 billion to finance compensation and reconstruction work.
Iran and Hezbollah had provided part of the effort to rebuild buildings, particularly in the southern suburbs of Beirut. The Paris III conference in January 2007 had raised commitments of $7.5 billion (including €500 million from France), but only half of which was reportedly disbursed, in a context of limited implementation of the agreed conditions for reforms.
The explosion at the port of Beirut on August 4, 2020, prompted a new international financial effort.
After the 2018 CEDRE conference, which had mobilized $11 billion in project aid that was ultimately not disbursed due to the lack of compliance with the conditionalities, donors decided to provide direct support to the population, in order to encourage the Lebanese State to adopt an IMF program (without success). The reconstruction of the disaster-stricken neighborhoods was thus carried out via multiple funds.
In the rest of the country, international aid, estimated at around $1.5 billion/year, was 90% intended for vulnerable populations through humanitarian aid and the financing of social safety nets, schools and hospitals.
At the same time, major public infrastructure has neither been rebuilt in the disaster areas (non-containerized zone of the port of Beirut, Electricité du Liban command center), nor rehabilitated in the rest of the country (airport, roads, electricity, water and telecommunications networks).
The funding available for reconstruction following the 2024 war remains uncertain.
The destruction is greater than in 2006, but it is concentrated in real estate and concerns less public infrastructure. The World Bank estimates that the war has caused physical damage of $3.4 billion by the end of October 2024.
These estimates will be revised upwards in a future study, as the war continued at high intensity for a month. According to initial estimates, the cost of clearing and reconstruction could exceed $7 billion (or 30% of GDP). The budgetary capacities of the Lebanese State are however very limited; only an envelope of $26 million has been planned at this stage.
The level of financing that will be provided by the diaspora is highly uncertain, as is the capacity of Hezbollah and Iran to mobilize and channel funds following the war and the fall of the Assad regime. Western and Gulf donors have not announced at this stage any additional financing intended for reconstruction, pending the new government and the implementation of reforms.
Opportunities could materialize on the circular economy issues related to reconstruction.
The significant volume of destruction and financial constraints argue in favor of a circular approach to recycling debris for reconstruction.
In the medium term, in the event of an overall recovery of the country, more significant economic opportunities will then emerge given the need to redevelop major transport, electricity, water and telecommunications infrastructures.
Source: French Embassy in Lebanon
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