LEBANON

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Child Survival and Disease	$ 300,000	---	---
Economic Support Fund	$12,000,000	$12,000,000	$12,000,000

Introduction

Since the signing of the 1989 Ta'if Agreement that ended the civil war that engulfed Lebanon from 1975 until 1991, the country has been rebuilding itself, and living conditions have improved. It is important to the United States that Lebanon progress as a stable, responsible, and prosperous partner that shares our goals of peace, democratic society and market economies. Moreover, Lebanon is a critical link to achieving a comprehensive settlement in the Middle East peace process. USAID assistance is designed to assure that we contribute to these goals. The current strategy covers the period through 2002.

The Development Challenge

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 and many displaced have not been able to resettle. Lebanon is in the process of extensive reconstruction, hindered by fiscal imbalance, income distribution issues, social problems, and fragile political stability. Both Syria and Israel continue to occupy large parts of the country.

During the war, U.S. economic assistance was concentrated mainly on providing humanitarian assistance to victims of the civil conflict. After the Ta'if Accord, USAID provided more developmental assistance to non-government organizations (NGOs) to rebuild homes, restore basic infrastructure, and regenerate economic activity in rural communities. These activities affected over 200 villages and some 36,000 families. By the end of 1996, microenterprise credit programs provided capital to poor women in over 500 lending groups, accounting for 90% of all microenterprise lending in Lebanon. In 1997, as a result of the success of the programs and a decision to concentrate on rural areas being neglected by other donors and the government, USAID awarded grants to five NGOs to provide assistance to 29 "clusters" of approximately 230 rural communities over a five-year period. This assistance concentrates on returning the affected communities to economic and social viability through support for basic infrastructure, civic participation, income generation, and environmental protection. To date over 295 activities have been completed or are underway.

The depletion and degradation of land, water, air, coastal and natural resources were unabated during the war, and are now recognized as a major impediment to the restoration of Lebanon. By 1996, USAID had assisted the American University of Beirut (AUB) to establish a new graduate program to train environmental experts, develop a program to monitor pollution and engage in environmental research and generate public dialogue on the environmental problems facing Lebanon. USAID’s continuing investment in AUB and a 1997 environmental policy assessment assure that environmental actions are taken in rural communities and inform national efforts of the government.

The country's government also suffered during the war, as entire buildings and records were destroyed, staffs left, procedures fell into disuse, elections were postponed, and government legitimacy was questioned. USAID provided assistance through an NGO to the parliament, and to the central control agencies responsible for the civil service and integrity of accounts and procedures. In the parliament, bills can now be tracked through the Internet by the public, voting can be managed electronically, key committees and the budget process have been strengthened, and staff capacity has been upgraded. The control agencies now have modern information systems, improved case management procedures, and have gained the autonomy and legitimacy they need to do their work, resulting in more accountability, transparency, and effectiveness of the entire government. In 1997, USAID added support for local government, to complement the community participation it was fostering, and in anticipation of the 1998 municipal elections. The vote was the first such election since 1963. Seizing this opportunity, USAID will place major emphasis for the remainder of this strategy on improved local government.

While Lebanon has adopted macroeconomic stabilization measures, there remains a critical need for broad economic reform and structural adjustment. Country debt and budget deficits have been growing with the burden of reconstruction, and the Government of Lebanon (GOL) has been taking measures to bring these under control. USAID is helping the GOL to establish a modern regulated capital market, and is engaged with the government and other donors in the development of a comprehensive economic reform program. Through the Lebanese American University (LAU), USAID, in 1997-98, supported conferences to bring government, business, and academics together to focus on a series of development problems and investment opportunities. LAU facilitated industry cluster development plans, and in 1999 will shift its focus to economic policy reform.

In 1997, USAID revised and updated the strategy and objectives to best utilize increased funding and eliminate the humanitarian aid image of its program and placed a Mission Director in Beirut. The local staff was increased by one person in FY 1999 to implement and monitor the activities under three restructured objectives (economic growth, democracy and governance, and environment). The program staff remains one of the smallest in USAID.

Other Donors

While U.S. assistance is approximately 5% of all bilateral donor disbursements, and only 2% of all donor disbursements, the renewed USG commitment announced at the Friends of Lebanon conference in December of 1996 has enabled USAID to assume an active role in donor coordination. USAID’s focus on rural development, which is not being covered by other donors, has given USAID access to key decision makers and a role in filling gaps in the overall donor effort. The largest amounts of assistance come from multilateral sources for reconstruction of urban infrastructure. Bilateral assistance is more varied, but also tilts toward infrastructure or trade financing. In 1998, Kuwait was the largest bilateral donor, followed by Saudi Arabia, the European Union, and France.

FY 2000 Program

USAID/Lebanon will continue to support Agency goals for economic growth, building democracy, and protecting the environment. In the rural development clusters, funding will support U.S. NGOs involved in reconstruction and expanded economic opportunities, civic participation, and improved environmental practices. On the national level, democracy and governance activities continue to strengthen the efficiency and effectiveness of the parliament, and provide support for the newly installed local governments and the ministry that supports them. Under the improved environmental practices objective, USAID will fund activities such as soil conservation, sustainable agriculture in the rural development clusters, and will deliver innovative, low cost solutions to problems of wastewater and solid waste. In addition, USAID will continue its programs with AUB on solutions to environmental, economic and water resource problems. LAU will shift its program emphasis to economic policy reform to take advantage of the significant investment already made. While USAID will coordinate closely with the government, all assistance will continue to be channeled through grants or contracts to NGOs or U.S. firms.

LEBANON

FY 2000 PROGRAM SUMMARY
(in thousands of dollars)

USAID Mission Director, James Stephenson

USAID Strategic & Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Developmnt	Humanitarian Assistance	TOTALS
S.O.1. Reconstruction & Expanded Economic Opportunity - ESF	9,000	---	1,000	---	---	---	10,000
Sp.O2 Increased Effectiveness of Democratic Institutions - ESF	---	---	---	1,000	---	---	1,000
Sp.O3 Improved Environmental Practices - ESF	---	---	1,000	---	---	---	1,000
TOTALS: - DA - CSD - PL 480/Title II - ESF	9,000	---	2,000	1,000	---	---	12,000

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ACTIVITY DATA SHEET

PROGRAM: LEBANON
TITLE and NUMBER: Sustained Rural Reconstruction and Expanded Economic Opportunities, 268- SO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $10,000,000 ESF
INITIAL OBLIGATION: FY 1994 ESTIMATED COMPLETION DATE: FY 2002

Summary: USAID supports a range of community-level reconstruction and rehabilitation activities designed to revitalize 230 rural communities located in 29 clusters of villages that were either heavily affected by the civil war or show a high incidence of poverty and government neglect. The intent is to make these communities viable for the return of displaced families, or to retain the population that might otherwise join the migration to overcrowded urban areas. In seeking to expand economic opportunities, USAID grantees extend credit to women in poverty; contractors provide technical assistance to modernize capital markets and support structural adjustment at the macro level; and a dairy improvement activity is working to restore the Lebanese dairy industry. Beneficiaries include the poorest families in rural areas (estimated 600,000) under the rural development clusters grants, as well as the investing community through modernized capital markets. The microfinance effort benefits women and small entrepreneurs in both rural and urban poor communities.

Key Results: Since 1997, the Rural Development Clusters program has provided 5 grants to U.S. nongovernmental organizations (NGOs) to carry out hundreds of activities that rehabilitate health care facilities, reconstruct or build roads, irrigation and potable water systems, and enhance local capacity to plan and manage reconstruction and community revitalization efforts. More than 400 activities will be completed by 1999 and 75 more are expected to be completed by the end of year 2000. USAID supported the first large-scale microenterprise group lending activity in Lebanon, which will eventually serve over 500 groups in all regions. Since 1998, an additional experimental microfinance activity has been added, to provide small scale loans to entrepreneurs through commercial banks, and a third activity is planned for FY 1999.

Performance and Prospects: In restoring and vitalizing normal life in rural areas, targets cited above will be met, and an additional 75 activities will be executed during year 2000.

The microfinance activity focuses upon groups of women who guarantee each other’s repayment of credits. It also establishes bank accounts for the savings component and offers training to manage village banking operations, thus enhancing access to microfinance services for low income microentrepreneurs. In 1999 and 2000 the activity will focus on involving private commercial banks in the delivery of microfinance products. The number of borrowers under the group lending is currently 6,000 and is expected to reach 8,500 by the end of 1999, and 12,000 by the end of year 2000. In addition, 250 microentrepreneurs will receive loans through the commercial bank in 1999, and this number is expected to reach 1,000 in the year 2000.

In supporting the modernization of Lebanon’s capital market, USAID is creating a regulatory framework of international standard to increase investor confidence so that new capital is attracted to support Lebanon’s economic growth. Technical inputs for upgrading the capital markets include drafting of new legislation; developing the structures, bylaws, regulations and procedures for the regulatory body (National Council for the Securities Market in Lebanon) and strengthening of the clearance, settlement and depository functions of the country’s securities market (Midclear). This effort is currently being supported by a comprehensive economic/commercial policy assessment that should lead to fundamental economic and structural reforms, led by the private sector. During 1998, three economic sectors (clusters) were identified: Light and Agro-Industry; Financial and Regional Business Services; and Tourism and comprehensive plans were prepared.

Possible Adjustments to Plans: None.

Other Donors: The United Nations Development Program (UNDP) has contributed $185,000 to activities executed in the Baalbek/Hermel clusters. The World Bank has offered a $60 million loan to the GOL, which will complement the USAID rural development clusters model in other areas. The French government granted $2 million to rehabilitate irrigation canals in USAID Baalbek/Hermel clusters, and the GOL spent $ 400,000 to rehabilitate irrigation canals in Jabouleh cluster, in North Bekaa. The local communities' contribution to USAID executed activities reached 30 percent of total actual cost.

Principal Contractors, Grantees or Agencies: Rural Development grantees include Mercy Corps, YMCA, Catholic Near East Welfare/Pontifical Mission for Palestine, Cooperative Housing Foundation, and Creative Associates. Microfinance grantees are Save the Children, Catholic Relief Services and Cooperative Housing Foundation. Technical assistance for capital markets has been provided by Coopers and Lybrand/MetaMetrics. The economic/commercial assessment is being performed by Stanford Research Institute and Lebanese American University.

Cooperation with the GOL in the rural development activities includes the Ministries for the Displaced, Social Affairs, Agriculture, Environment, Water and Hydraulic Resources, and Municipal and Rural Affairs (MOMRA). In the capital markets work, the principal counterpart is the Banque du Liban (Central Bank). In economic policy, USAID works with the Ministry of Finance as well as the central bank, the Ministry of Economy and Trade and the Ministry of Industry.

Selected Performance Measures:

	Baseline	Target (2000)	Target (2002)
Number of Target Communities Revitalized: (measured by families resettled, additional cultivated land, and potable water systems improved)	0	60%	100%(230)
Number of Informal Sector Loans:	0	12,000	28,000
Transparent Capital Markets functioning	0	1	1

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ACTIVITY DATA SHEET

PROGRAM: LEBANON
TITLE and NUMBER: Increased Effectiveness of Selected Institutions which Support Democracy, 268-SpO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $1,000,000 ESF
INITIAL OBLIGATION: FY 1994 ESTIMATED COMPLETION DATE: FY 2002

Summary: This objective contributes to the rehabilitation and reform of the Parliament and local government to better manage a restructured central government and to carry out the country's redevelopment objectives. As part of this assistance, USAID introduces and reinforces concepts of transparency, accountability, integrity and effectiveness of government. The beneficiaries are the Parliament and the selected municipalities, as well as citizens and public servants they serve or represent.

The point of entry for this activity has been the installation of basic modern information systems (word processing, electronic mail, data bases) to simply put key agencies of the GOL back in business. In the process of meeting these needs, a number of other benefits have occurred. Outdated and cumbersome procedures have been streamlined; and staff has been trained in use and maintenance of information systems. Senior civil servants have traveled to the US for policy dialogue to learn about government reengineering, customer service, quality management, transparency of decision-making, and other contemporary public sector management values and concepts. USAID was asked by the GOL to work on information technology policy, civil service reforms, and financial planning and management. In the Parliament, information systems have opened the door to rationalizing the work of key committees and opening their work to public hearings; installing an electronic voting system; and setting up for the first time a data base of existing laws that improves the quality (and minimizes conflicts and duplication) of law-making. The progress of bills through the committees and debates can now be tracked electronically.

Key Results: Success in this activity is measured by a parliament that is both more responsive to its constituents, and a more effective partner in governing the country. The Parliament will pass better laws, pass them faster, and conduct responsible oversight of government budgets and operations. Local government will be revived with modern information systems, elected council members with awareness of their powers and their responsibilities toward their communities, and skills and information resources to carry them out.

Performance and Prospects: While other donors have supported restoration of Lebanon's devastated postwar government, many in the GOL consider the USAID-supported activity to have been the one that has set a standard of quick response, sensible problem-solving, educational value for key decision-makers, and systems that can be put to work in key governmental functions.

The focus of this activity has shifted away from assisting the "control agencies", which have now gained new autonomy, effectiveness and legitimacy. Work with the Parliament continues as it moves into a new building and takes on an expanded role in responding to constituents and oversight of budgets and programs. Municipal elections -- the first in over 30 years -- took place in May 1998, and new legislation was recently passed that gives added authority to local government. USAID assistance has been extended to strengthen local government. This will include cooperation with the MOMRA and with approximately 68 selected local governments, particularly in areas where the rural development clusters program under SO 1 is operating. The cooperation will include creating essential information systems, training elected and appointed officials, and putting decentralization into practice.

Possible Adjustments to Plans: It is uncertain that MOMRA will maintain its independence since the current government placed one minister over it and the Ministry of Interior. The effect of the decisions and changes will be discussed with the new Government.

Other Donor Programs: Democracy in Lebanon is a field that has now attracted many donors. The World Bank and the United Nations Development Program have been supporting administrative reform, but their managers and technicians often turn to the USAID program for technical advice in areas such as civil service performance evaluation, standardizing the government-wide budgeting system, and models of quick problem-solving. Part of the World Bank $55 million loan for administrative reform will fund a study to improve the current municipal financial system. The Canadian government invested 30,000 Canadian dollars to promote education and democracy through one of the local NGOs. A Parliamentary Center is being established where the Lebanese Parliament and the NGOs can directly discuss legislative issues. The Center is jointly funded by the EU for 120,000 Euro dollars and by the Canadians for 170,000 Canadian dollars.

Principal Contractors, Grantees or Agencies: All work so far has been performed under a cooperative agreement with the Center for Legislative Development at the State University of New York/Albany (CLD/SUNY). In the next phase, CLD/SUNY will continue to play a key role, building on the excellent track record and relationships that have been set in place, though other organizations may be involved in technical aspects of local government. There is also close coordination with the NGOs involved in the rural development clusters under SO1. The counterparts in this program are the Minister of State for Administrative Reform, the MOMRA, and Speaker's Office in the Parliament.

Selected Performance Measures:

	Baseline (1998)	Target (2000)	Target (2002)
MOMRA Capacity improved MIS system functions to provide technical assistance and information to municipalities	0	100 staff	300 staff
Municipalities have developed budgets and plans Pilot municipality plans and budgets in place and local authorities are able to interact with central agencies and provide citizen services	0	10	20 *
*(48 municipalities are being funded through the Rural Community Development Clusters with SUNY supervision).

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ACTIVITY DATA SHEET

PROGRAM: LEBANON
TITLE and NUMBER: Improved Environmental Practices, 268-SpO03
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $1,000,000 ESF
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2002

Summary: The purpose of this special objective is to help Lebanon to better understand its environmental problems, point the way to policy reforms, and through demonstration activities, illustrate selected environmental solutions at national and local levels. Thousands of families in urban and rural areas will benefit from more sustainable land use, clean water and reduced pollution by developing their ability to manage environmental resources.

Until 1997 USAID funded AUB to equip and organize environmental laboratories, and to establish a multi-faculty research, teaching and outreach program involving the departments of public health, engineering and agriculture. USAID completed a participatory assessment of national environmental challenges, currently planned solutions and needed policy reforms to identify areas where USAID could work through contracts or grants to tackle broader environmental problems. AUB now has three laboratories that support environmental research, testing of air and water, and teaching for undergraduate and graduate students. This gives the university new capacity to conduct water quality testing and air pollution monitoring, and to provide policy and technical leadership on some of Lebanon's most pressing problems, especially in the heavily populated coastal zone. Beginning in 1997, USAID included environmental activities under the rural development clusters activity, focusing on integrated water resources management activities (mainly solid/liquid waste disposal and treatment pilot projects), and in 1998 began funding specific solutions in seven rural communities. These will have benefits both at the national and the community level by demonstrating low cost methodologies for waste disposal and treatment, as well as productive agriculture that is environmentally sustainable. Through sustained community action, and then disseminating the results and methods, local solutions can be replicated on a national scale. In 1998 USAID added complementary community action and education support for the Lebanese Armed Forces’ (LAF’s) demining program. This will open up additional lands for development and production.

Key Results: Under this activity, USAID seeks to educate about environmental problems, and demonstrate innovative solutions that can be supported and replicated by the GOL and other donors. By focusing on initiating waste management projects in rural areas, USAID is demonstrating to rural villages and to other public and private entities the most effective and least expensive methodologies to solve environmental problems. USAID also intends to establish the grounds for environmental concerns and awareness among rural communities. This will be reflected in any project the villages might initiate in the future. USAID’s aim is to lead these communities to improve their capabilities to manage their environmental conditions in a more efficient manner.

AUB’s activities are not limited to delivering technical services. AUB will disseminate information on environmental conditions and provide expert advice on solutions to environmental problems for private and public sectors. Efforts are being exerted to strengthen the educational and advisory role of AUB.

Through its landmines accident prevention program, USAID focuses on providing understanding and awareness at both national and community levels related to land mines location and to the social and economic problems incurred from mine injuries. It also supports the military efforts to remove landmines.

Performance and Prospects: AUB’s studies of the country's surface and subsurface water resources (quantity and quality) are under way, which will provide needed data and analysis to the country's decision-makers. AUB is also involved with solving solid waste problems.

At the community level, environmental activities are varied. These include building or restoring retaining walls, reforestation, upgrading potable and irrigation water systems, improving road drainage to reduce erosion, tackling community solid and liquid waste disposal problems with low-cost technologies, and in some areas, introducing new crops that serve both income and environmental objectives. The NGOs are becoming increasingly skilled, and their services actively sought after by communities and now by local governments, to carry out these projects. USAID hopes to demonstrate a number of low-cost solutions to both solid and liquid waste problems, and enlist other donors in the effort.

In demining, cooperation between the NGO and the LAF’s special units has been steadily improving, so that existing minefields are identified and eliminated, communities can prevent accidents and deaths, and victims can get proper treatment and rehabilitation.

Possible Adjustments to Plans: USAID called for the advice of a USAID environmental expert to review and refine the environmental indicators so that they would best reflect the expanding activities and help achieve the targeted results in the rural communities. The consultant’s report will be incorporated in future performance monitoring and reporting.

Other Donor Programs: The World Bank and other donors have assessed environmental problems, and proposed programs for coastal resources management, solid waste management, wastewater treatment, and national reserves. The World Bank has provided a $55 million loan for a Solid Waste Management Project to construct landfills in seven different locations all over the country. The U.S. Department of Defense is supporting physical removal of mines with training and equipment for the LAF.

Principal Contractors, Grantees or Agencies: USAID supports AUB, Mercy Corps, Catholic Near East Welfare, YMCA, Cooperative Housing Foundation, and Creative Associates. The Ministries of Environment, Water, and Agriculture will cooperate in these efforts. The World Rehabilitation Fund is carrying out education, organizing, and information work on demining with the LAF.

Selected Performance Measures:

	Baseline (1997)	Target (2000)
AUB provides environmental testing services to GOL and private sector - Number of technical assistance activities conducted - Level of utilization of Core Environmental Lab - Number of spot check samples of water quality - Number of samples monitoring hazardous substances	0 0 0 0	25 14 (students) 500 300
Demonstration village wastewater treatment plants operating	0	10 (70 by 2002)

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