Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
LEBANON
FY 1998 Economic Support Funds .......... $12,000,000 Introduction
Lebanon is a non-presence country. USAID's assistance program, while very limited, is cast in the framework of demonstrating U.S. concern and commitment to help Lebanon recover and take part in the evolving Middle East peace process. Lebanon has achieved considerable progress in economic recovery since 1990, following the end of almost two decades of civil war and conflict in its border areas. It is important to the United States that Lebanon rebuild into a stable, responsible, and prosperous partner who shares our goal of peace. U.S. assistance is playing a targeted role in Lebanon's recovery by supporting private voluntary and nongovernmental organizations (PVOs and NGOs) engaged in critical reconstruction and relief efforts, including housing and village infrastructure, jobs training, rehabilitation of war victims, and efforts to strengthen public administration, and managerial and technical education.The Development Challenge.
The political instability and civil conflict that engulfed Lebanon since 1975 resulted in massive destruction of the country's infrastructure and economy (e.g., a 40% drop in industrial output) and marginalization of the government and public management systems. The strife caused massive suffering, flight, and increased impoverishment of the Lebanese people.
The end of the war provided an opportunity for many Lebanese to return to their homes and villages and to start rebuilding their lives. However, this return has been difficult. Thousands of homes, villages and businesses were destroyed or severely damaged during the war. Electricity, water and telecommunications networks were destroyed, directly affecting 1.5 million people and cutting off potable and irrigation water. Government health care and education also suffered. Lebanon is now in the process of extensive reconstruction, hindered by fiscal imbalance, income distribution issues, social problems, and fragile political stability.
As these elements begin to be restored and Lebanon progresses, new sustainable development efforts have become more feasible. More than 200,000 highly educated and technologically sophisticated Lebanese expatriates have now returned to the country, bringing with them advanced skills in the scientific, technical, financial, and entrepreneurial areas. In the first six months of 1996, the Lebanese economy grew by about 4 % per annum, after growing at a rate of 8 % in 1995. Nevertheless, the potential remains strong for rebuilding Lebanon into an upper middle-income country which plays a significant role in the Middle East region. Improved political stability, increased confidence, and an effective economic adjustment effort have spurred favorable macroeconomic developments in Lebanon, but the burden of reconstruction has significantly increased public debt and the budget deficit.
The lack of adequate infrastructure, weakening of the institutional and legal framework, and shortages of human and physical capital continue to constrain overall economic activity. Lebanon faces enormous problems to re-establish its economy and society. The war catalyzed an unequal development of different economic sectors, excessive urban concentration and polarization around Beirut, and destroyed regional structures. This imbalance must be redressed in order to guarantee balanced growth. The rural areas have lost their youth, their elite, and their fundamental social and economic structures. Emerging settlements of marginal groups have become a major problem in the urban areas. Unemployment and resultant social tensions and social ills are at a critical level. Economic recovery has been uneven, and there are wide income disparities and differences in living standards among the population. The public administration is weak, and social and education servicesare inadequate. U.S.-based universities have emerged from the war years to face needs for restoration of plant, equipment, and faculty. The depletion and degradation of land, water, air, coastal and natural resources, as well as pollution, are also of major concern in Lebanon.
Other Donors
In 1996, the United States provided 5% of all development assistance to Lebanon and was the sixth largest donor. The United Nations Relief Works Agency (UNRWA) is the largest donor at 31%, and France is the second largest at 22%. USAID grantees work closely with World-Bank-supported projects and United Nations Development Program coordinated activities. PVO grantees also mobilize and match funds with European NGOs.
FY 1998 Program
Lebanon faces enormous challenges in order to ameliorate the severe problems described above. USAID's strategy for helping Lebanon face these challenges provides resources in four areas: (1) community-level rehabilitation, (2) public administration improvements, (3) strengthening U.S. educational institutions in Lebanon, and (4) promoting expanded economic opportunities, an activity that includes poverty lending, microenterprise credit and capital market development components.
USAID has focused on these areas as a means to aid individuals to rebuild their lives and their communities; to assist in the reconstruction of infrastructure and public institutions; to strengthen the capacity of the government to effectively manage its resources; and to help build Lebanon's technical and managerial work force through restoring the quality of education, research and outreach in U.S. educational institutions that operate in Lebanon.
Agency Goal: Humanitarian Assistance
USAID has supported a wide range of reconstruction and rehabilitation activities implemented by eight U.S. PVOs and more than 30 Lebanese NGOs.
* Special Objective 1: Sustained rural community reconstruction and rehabilitation
Activities include: reconstruction of homes, villages, roads and irrigation and potable water systems; technical assistance and training to enhance the capacity of Lebanese NGOs to deliver services; and procurement of critical supplies and equipment needed in Lebanese schools, hospitals and other public institutions. The FY 1998 program will continue to shift resources to strengthen the capacity of Lebanese NGOs to anticipate community needs and plan accordingly, to raise and manage funds, and thus to upgrade the quality and quantity of their services.
Significant progress was made in USAID's program in Lebanon from 1993 through 1995. U.S. PVOs and the Lebanese Red Cross provided relief, including medical services and reconstruction services or materials, to individuals and families, including orphans, children and the handicapped. More than 300,000 Lebanese directly benefited. In addition, 200 infrastructure projects were completed and 3,000 displaced families were assisted in rebuilding their destroyed homes and in returning to their villages. The U.S. PVOs work through Lebanese NGOs which have well trained staff and operate effectively in Lebanon's complex social structure. The PVOs and their counterparts provide mutual support in certain locations to combine skills and resources to meet expressed community needs. In some instances, PVOs have been able to mobilize as much as three dollars of local contributions or resources from non-USAID sources for each dollar of USAID funds.
Agency Goal: Building Democracy
USAID supports public administration activities aimed at strengthening the capacity of selected institutions of the Lebanese government to recover from years of civil war. USAID targets its public administration efforts (chiefly training and installation of information systems) at key Lebanese government agencies and civil servants involved in the formation of public policy and in establishing the overall quality of government operations. Besides the Parliament, the four central control agencies are the Civil Service Board, the Government Accounting Office, the Central Inspections Board, and the Central Disciplinary Board. In 1996, USAID expanded the reach and utility of the computer systems in the Parliament (including an automated voting system) and established essential data bases in control agencies. USAID will continue to help modernize and streamline information systems as well as rules and procedures.
* Special Objective 2: Increased effectiveness of selected public institutions which support democracy.
Computer systems and operational software have been installed in the Parliament and the four central agencies. Two hundred technicians and users have been trained. More important to transparency and accountability, the agencies' procedures and systems are being reformed and streamlined. This latter activity, though still in a nascent stage, has been backed by the Cabinet, the Minister for Administrative Reform, the Parliamentary leadership, and the heads of the affected agencies. They plan to make the USAID program a model for all administrative reform being carried out by the Government of Lebanon.
Agency Goal: Encouraging Broad-based Economic Growth
USAID assists American institutions in Lebanon, most notably the American University of Beirut (AUB) and the Lebanese American University (LAU, formerly Beirut University College). The American universities are still recovering from the war years. In FY 1996 and FY 1997, the universities received additional assistance to help them restore their top-quality educational, training, and research and development capacities.* Special Objective 3: Enhanced capability of institutions of higher education to contribute to Lebanon's development.
During the war years, assistance to universities was directed to keep the universities open and operating. Now, USAID is seeking more direct development-related outcomes from its limited investments in these institutions. Both universities maintain executive offices in New York and representatives in Washington who are accessible for program and policy dialogue. Both universities are assessing their future roles and are seeking support for specific strengthening activities which can be monitored through key performance indicators. The effectiveness of this objective will be measured by the extent to which the universities are restructuring, equipping and staffing themselves to meet the needs of post-war Lebanon and a more peaceful Middle East region. USAID support for LAU will help them adapt their curricula to educate women for the changing labor market, and for AUB to provide technical assistance to government development programs such as analyzing and resolving pollution problems in urban and coastal areas.
* Special Objective 4: Expanded Economic Opportunities
With modest resource levels, USAID has adopted a two-pronged, mutually reinforcing approach to help Lebanon achieve its goals to develop financial markets and credit delivery systems. First, the strategy targets the poor directly by developing sustainable microenterprise financing; and second, it targets the financial markets by mobilizing savings and attracting private investment through capital markets development. The latter should contribute to a stable and growing economic environment which is essential to the success of enterprise development. In FY 1997, USAID will introduce targeted technical assistance and training to assist Lebanon to develop its capital markets, an area where American expertise can make modest, but unique contributions in financial market development. Efforts in this area are critical if Lebanon is to reintegrate into the global market place and if it is to enable its emerging domestic businesses to access credit and financial markets. Despite its recent positive economic performance, Lebanon must still overcome enormous problems to re-establish its economy and society, particularly correction of its fiscal imbalance. Private capital markets development will assist Lebanon to attract needed capital for reconstruction and business expansion. Successful development will help to build a national constituency to support reducing the government deficit and contribute to job creation and to overall economic growth.
USAID's strategy in this area is to train Lebanese government and exchange officials by the U.S. Securities and Exchange Commission and to provide technical assistance in the design and improvement of the legal and regulatory framework for the Lebanese Stock Exchange. USAID will conduct in-country training on broker-dealer issues, clearing and settlement, and regulatory matters. Activities in sustainable microfinance service delivery will be enhanced and expanded.
LEBANON
FY 1998 PROGRAM SUMMARY
($000)
Encour-aging Economic Growth Stabilizing Population Growth and Protecting Human Health Protecting the Environ-ment Building Democracy
Humani-tarian Assistance Total USAID Program Objective 1. Sustained Rural Community Recon-struction & Rehabil-itation $3,000 $1,000 $1,000 $1,000 $6,000 2. Improved
Institutions
Which
Support
Democracy
$1,000 $1,000 3. Strengthen-ed U.S. Educational Institutions $1,000 $1,000 $2,000 4. Expanded Economic
Opportunity
$3,000 $3,000 TOTAL ESF
$7,000
$2,000
$2,000
$1,000
$12,000
Director, Office of Middle East, Kimberly Finan
ACTIVITY DATA SHEET
PROGRAM: LEBANON
TITLE AND NUMBER: Sustained Rural Community Reconstruction and Rehabilitation, 268-SO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $6,000,000 ESF
INITIAL OBLIGATION: FY 1996: ESTIMATED COMPLETION DATE: FY 1999
Purpose: To promote sustained rural community reconstruction and rehabilitation.
Background: The end of the war provided an opportunity for many Lebanese to return to their homes and villages and start rebuilding their lives. However, this return has been difficult. Thousands of homes, villages and businesses were destroyed or severely damaged during the war. Electricity, water and telecommunications networks were destroyed, directly affecting 1.5 million people and cutting off potable and irrigation water. Government health care and education also suffered. Lebanon is now in the process of extensive reconstruction, hindered by fiscal imbalance, income distribution issues, social problems, and fragile political stability.
USAID Role and Achievements to Date: Significant progress was made in USAID's Relief and Development program in Lebanon from 1993 through 1995. U.S. private voluntary organizations (PVOs) provided relief, including medical services and reconstruction services or materials, to individuals and families, including orphans, children and the handicapped. More than 300,000 Lebanese benefited directly from the program. In addition, 198 infrastructure projects were completed and 3,000 displaced families were assisted in rebuilding their destroyed homes and in returning to their villages.
Description: In FY 1998, funds will be used to continue programs begun in earlier fiscal years. USAID is supporting a wide range of reconstruction and rehabilitation activities that are being implemented by U.S. PVOs and Lebanese non-governmental organizations (NGOs). Activities which included community-level reconstruction of Lebanese Red Cross facilities and strengthening of Red Cross capacity to deliver emergency and basic health services, continue with the reconstruction of homes, villages, roads and irrigation and potable water systems; technical assistance and training to enhance the capacity of Lebanese NGOs to deliver services; and procurement of critical medical supplies and equipment needed in Lebanese schools, hospitals and other public institutions. The FY 1997 program will continue to shift resources to strengthen the capacity of Lebanese NGOs to anticipate rural community needs and to plan accordingly, to raise and manage funds, and thus to upgrade the quality and quantity of their services.
Host Country and Other Donors: The World Bank, the United Nations Development Program (UNDP), and a number of international private voluntary agencies are working in reconstruction. Additionally, the Government of Lebanon is gradually assuming more of the responsibility for repair of major infrastructure.
Beneficiaries: Rural residents of Lebanon are the primary beneficiaries. Apart from individuals and families who benefit from the general program, special assistance has been targeted at orphans, children and the handicapped.
Principal Contractors, Grantees, or Agencies: USAID implements activities through six U.S. private and voluntary agencies and more than 30 Lebanese nongovernmental organizations (NGOs).
Major Results Indicators: Each subproject grant has targets related to the activities being pursued, such as numbers of homes rehabilitated, families assisted, water systems restored, or medical service units equipped and staff trained. In addition, the grantees apply selection criteria for communities and families who are assisted to assure that all religious groups and geographic areas are equitably served.
ACTIVITY DATA SHEET
PROGRAM: LEBANON
TITLE AND NUMBER: Lebanon Relief and Redevelopment Project 268-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $1,000,000 ESF
INITIAL OBLIGATION: FY 1996: ESTIMATED COMPLETION DATE: FY 1999
Purpose: To increase the effectiveness of selected institutions which support democracy.
Background: USAID, through the Relief and Rehabilitation project, supports limited public administration activities aimed at strengthening the capacity of the Lebanese government to recover from years of civil war. The program emphasizes that an investment in Lebanon's public sector is an investment in Lebanon's overall recovery.
USAID Role and Achievements to Date: In FY 1996, USAID expanded the reach and utility of the computer systems in the Parliament (including an automated voting system) and introduced electronic data bases to control agencies for the first time. Additionally, USAID brought senior officials from four government agencies to the United States for training. USAID has helped, and will continue to help, modernize and streamline information systems, rules, and procedures within these entities.
Description: FY 1998 funds will be used to continue programs begun in earlier fiscal years. With limited resources, USAID targets its public administration efforts (chiefly training and installation of information systems) at key Lebanese government agencies and civil servants involved in the formation of public policy and establishing the overall quality of government operations that support democracy. These, besides the Parliament, are the four central control agencies: the Civil Service Board, the Government Accounting Office, the Central Inspections Board, and the Central Disciplinary Board.
Host Country and Other Donors: To assure communication and complementarity and to avoid duplication of efforts, USAID and its grantee work with the World Bank teams who are focused on the finance ministry and related agencies, and with the United Nations Development Program (UNDP) which is supporting the overall administrative reform effort. This is particularly important while establishing information systems and computer networks. The Government of Lebanon has supported this effort by developing a comprehensive needs assessment and by making public officials available for training.
Beneficiaries: Parliamentarians, law-makers, and civil servants are the primary direct beneficiaries.
Principal Contractors, Grantees, or Agencies: USAID implements activities through a grant to the Center for Legislative Development at the State University of New York in Albany.
Major Results Indicators: Progress is measured presently by numbers of computer and information systems installed and their use by trained personnel to conduct business and make informed decisions in the targeted agencies. Program results also measure the numbers of senior and mid-level managers with improved skills to manage modernized government operations. Policy reforms affecting the civil service, information technology and management are tracked at the level of the Council of Ministers.
ACTIVITY DATA SHEET
PROGRAM: LEBANON
TITLE AND NUMBER: Strengthened Higher Education Institutions, 268-SO03
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $2,000,000 ESF
INITIAL OBLIGATION: FY 1996: ESTIMATED COMPLETION DATE: FY 1999
Purpose: To enhance the capability of institutions of higher education to contribute to Lebanon's development.
Background: Through the Lebanon Relief and Redevelopment project and the American Schools and Hospitals Abroad program, USAID assists American institutions in Lebanon, most notably the American University of Beirut (AUB) and the Lebanese American University (LAU, formerly Beirut University College). The American universities are still recovering from the war years.
USAID Role and Achievements to Date: The program supports U.S.-based educational institutions in Lebanon. It has been successfully implemented to rebuild damaged structures, to provide scholarships for more than 200 low-income students of war-affected families, to improve services at one of the university's hospitals in support of war victims, and for general operating costs during the worst years of conflict when the universities were barely able to function. Today USAID supports these institutions in their efforts to design programs, such as a masters program in environmental studies, that will carry them into the twenty-first century.
Description: FY 1998 funds will be used to continue programs begun in earlier fiscal years. In FY 1996 and FY 1997, the universities received additional assistance to help them restore or improve their top-quality educational, training, and research and development capacities.
Host Country and Other Donors: The United States is the only international donor government providing assistance to the American University of Beirut and the Lebanese American University. The Government of Lebanon provides no donations to the universities; however, the AUB hospital receives fee payments for treatment provided to government and defense employees.
Beneficiaries: The student bodies and faculties are the primary direct beneficiaries of this assistance; however, the benefits of a better educated society go beyond immediate recipients as newly trained technical and managerial leaders work toward Lebanon's recovery.
Principal Contractors, Grantees, or Agencies: USAID provides direct grants to the universities. Both universities maintain offices in New York and representatives in Washington who are accessible for program and policy dialogue.
Major Results Indicators: Both universities assessed their future roles in 1995 and have helped design USAID-funded activities which can be monitored through key performance indicators. This includes monitoring the progress of LAU to incorporate the Institute of Women's Studies in the Arab World research into formal education and occupational curricula, and AUB's ability to develop an environmental center for research and technical assistance.
ACTIVITY DATA SHEET
PROGRAM: LEBANON
TITLE AND NUMBER: Expanded Economic Opportunities, 268-SO04
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $3,000,000 ESF
INITIAL OBLIGATION: FY 1996: ESTIMATED COMPLETION DATE: FY 1999
Purpose: To promote integrated financial market development.
Background: Efforts in the area of financial market development are critical if Lebanon is to reintegrate into the global market place and if it is to enable its emerging domestic businesses to access credit and financial markets. Despite its recent positive economic performance, Lebanon must still overcome enormous problems to re-establish its economy. Private capital markets development will assist Lebanon to attract needed capital for reconstruction and business expansion. Successful development will help to build a national constituency to support reducing the government deficit and contribute to job creation and overall economic growth.
USAID Role and Achievements to Date: USAID began implementation of the microenterprise credit component of this activity in 1995. Two grants were awarded to U.S. private voluntary organizations (PVOs) to begin rural-level, credit-delivery programs that will be fully operational in 1997. Grantees have now selected country directors, developed work plans, opened offices in Lebanon and are making loans. With modest resources, the capital market development of this activity has begun.
Description: FY 1998 funds will be used to continue programs begun in earlier fiscal years. In FY 1997, USAID is introducing limited and targeted technical assistance and training to assist Lebanon to develop its capital markets, an area where American expertise can make modest, but unique contributions in Lebanon's financial market development. It will train Lebanese government and exchange officials by the U.S. Securities and Exchange Commission and provide technical assistance in the design and improvement of the legal and regulatory framework for the Lebanese Stock Exchange. USAID will conduct in-country training on broker-dealer issues, clearing and settlement, and regulatory matters. USAID will adopt a two-pronged, mutually reinforcing approach to help Lebanon achieve its goals to develop financial markets and credit-delivery systems. The strategy also targets the poor directly: first, by developing sustainable microenterprise financing; and second, by mobilizing savings and attracting private investment through capital markets development. The latter should contribute to a stable and growing economic environment which is essential to the success of enterprise development.
Host Country and Other Donors: The International Monetary Fund provides the government with policy analysis and advice, primarily in the fiscal and monetary areas, that support the development of integrated financial markets. The International Finance Corporation has announced plans to provide five of Lebanon's leading banks with long-term credit for lending to small businesses. This will complement USAID's credit program, but does not duplicate USAID's lending efforts to micro-enterprises in rural areas.
Beneficiaries: This effort will develop sustainable microfinance service delivery linked to the formal financial sector. Promotion of sustainable microenterprises will benefit the poor, including women and other disadvantaged groups, enabling them to participate in the growing economy. The financial markets development element of this activity will benefit the overall economy of Lebanon by mobilizing savings and attracting private investment.
Principal Contractors, Grantees, or Agencies: USAID implements the microenterprise credit component of this activity through two U.S. private voluntary organizations, Catholic Relief Services and Save the Children Foundation (U.S.). Capital markets development will be implemented through contractors orgrantees and will draw upon the U.S. Securities Exchange Commission for a portion of the training needs.
Major Results Indicators: This activity will contribute to the Agency's goal of encouraging broad-based economic growth and will support the following program outcomes: (a) Sustainable microfinance service delivery systems in place and linked to the formal financial sector; and, (b) Capital markets and stock exchange functioning to attract private investment and enterprise growth.
ANE/ME:jstephenson:u:\jstephenson\docs\cp982.leb:01/25/96 Revised 02/03/96
Clearance:
ANE/ORA:PGall draft Date 1120//96
ANE/ME:KFinan_________ Date________
ANE/ORA:MLewellen_____ Date_______
LPA:CKiranbay (draft) Date 12/3/96
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