August 21st, 2006


Humanitarianism for fun and profit.

The U.S. government has announced a $230 million in humanitarian, reconstruction and security assistance to Lebanon. What isn't clear as yet is the form in which this help is rendered. Cash? Loans? The devil is in the details.

Sounds benevolent?! Well, maybe not, especially when you consider that the U.N. estimates the total damage to the Lebanese economy could be somewhere around $24 Billion, over 100 times larger than the proposed U.S. contribution, and that Lebanon was destroyed by tens of millions of dollars worth of U.S.-made military ordinance, which Israel will have to pay U.S. companies to replace.  In many cases, these bombs, missiles, and shells rained down on targets which were clearly designed to impact upon Lebanon's economy, and not upon Hezbollah. 

It's also not particularly generous when you consider that Saudi Arabia has pledged over four times as much money for reconstruction, with Kuwait also pledging nearly as much. Even the reconstruction promises of Hezbollah -- to help rebuild an estimated 15,000 destroyed homes and businesses, and to house and feed those who need assistance -- are arguably far more generous than any proposed U.S. assistance.

But mostly, it's not particularly benevolent when Western help comes with strings, as is implied by Reuters in ANALYSIS-Donors may insist on Lebanese economic reforms. An Aug. 31 donor meeting in Sweden will seek to raise immediate reconstruction funds, but U.S. officials said donors may look for Lebanese "market reform" commitments, possibly under an IMF-backed program, before they are prepared to give economic support, especially when it comes to addressing Lebanon's debt load. Normally, Arab countries would be able to take on the financial obligations required for reconstruction, but there are concerns that the level of debt load may be too great for them to want to handle, forcing Lebanon to endure painful economic disturbances in order to meet IMF requirements.

Lebanon’s finance minister Jihad Azour appears to be telegraphing such sweeping structural changes in this interview, where he says: 

"It doesn’t mean that because we had this war on Lebanon that (economic / IMF-required) reforms have to stop, On the contrary some of them have to get accelerated, mainly the deregulation of certain sectors, allowing the private sector to operate in the energy, power sector, telecommunications..."

While deregulation can sometimes be a positive thing, often it just isn't. One of the things I am happiest about in living where I do is that it is one of the few cities around that hasn't privatized its electricity. As a result, our prices for electricity are substantially lower than those belonging to people living just a few miles away.  Service is also considerably more reliable, and provides well-paying jobs for local employees. During the California Electricity Crisis, local, underegulated power companies avoided the sky-high prices, undersupply, gouging, fraud, price fixing, and rampant corporate abuse, as typified by deregulated power companies such as Enron.

Currently, Lebanon's economy is shattered. Hundreds of businesses have been destroyed. Major factories have been bombed... and many Lebanese who return to Southern Lebanon will discover that their old jobs just aren't there any more. Under such circumstances, is this really the time to consider restructuring, layoffs and outsourcing, forcing an already devastated country to make hard choices between desperately needed reconstruction funds and economic sovereignity?

While it is too early to definitively state that deregulation and/or the IMF will be used as a weapon against the Lebanese people, the signs are already out there that indicate a need for the public to pay very close attention to the full details behind the proposed international assistance. Right now, what the people of Lebanon need most to rebuild is money, with no strings attached. Let's hope that they get all the help that they need, while doing our best to keep our government accountable, ideally avoiding the culture of greed, corruption, and profiteering that lies behind many of the reconstruction failures we've seen in Iraq.