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| 22 March, 2018

Lebanon's cabinet approves CEDRE blueprint to prop up economy

The CEDRE conference, set for April 6, is aimed at drumming up international support to shore up Lebanon’s economy

A money exchange vendor displays Lebanese pound banknotes at his shop in Beirut, December 6, 2016.

A money exchange vendor displays Lebanese pound banknotes at his shop in Beirut, December 6, 2016.

REUTERS/Mohamed Azakir

BEIRUT: Encouraged by the success of last week’s Rome II conference in support of the Lebanese Army and security forces, the Cabinet Wednesday approved the Capital Investment Program to be presented to the CEDRE conference scheduled in Paris next month aimed at boosting Lebanon’s ailing economy and frail infrastructure.

The CIP, Lebanon’s blueprint to the CEDRE conference, also known as the Paris IV conference, was a key topic on the Cabinet’s 35-item agenda discussed during a meeting chaired by President Michel Aoun at Baabda Palace.

The approval of the CIP came after the Cabinet took into account the ministers’ remarks over the program concerning its economic and financial impact and the distribution of projects in various Lebanese areas and sectors, acting Information Minister and Minister of State for Women’s Affairs Jean Ogasapian said after the meeting.

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The CEDRE conference, set for April 6, is aimed at drumming up international support to shore up Lebanon’s economy and infrastructure through investment projects and soft loans. It is one of three international conferences aimed at supporting Lebanon. A third international conference, to be held in Brussels later in the spring, will focus on support for Syrian refugees in the region.

During the session, Prime Minister Saad Hariri informed the Cabinet that the United States Congress had rescinded an embargo on specific weapons to the Lebanese Army.

“We were informed by the American side that Congress has lifted an embargo on the delivery of specific weapons to the Lebanese Army,” Hariri said, according to Ogasapian. The prime minister did not say what these weapons are, but he added that Washington would grant Lebanon military equipment valued at $110 million.Hariri said Tuesday that Lebanon was seeking $6 billion for a five-year infrastructure program at the CEDRE conference. The government’s 10-year program is reported to require $10 billion, of which Hariri said up to $4 billion would be through public-private partnerships.

Aoun told the Cabinet he will attend the Arab summit scheduled to be held in Riyadh on April 15, in an ice-breaking move following his criticism of Saudi Arabia during Hariri’s resignation crisis last year.

Hariri said he would accompany Aoun to the summit that is being held in an effort to block Israel’s ascension to the U.N. Security Council, which occurs by rotation.

Aoun briefed the ministers on his meetings with foreign officials in the past two weeks, in which he discussed the economic, security and health consequences of hosting Syrian refugees in Lebanon.

“The president stressed the need for a gradual return of the displaced Syrians to safe areas [in Syria] without waiting for a peaceful solution to the Syrian crisis,” Ogasapian said.

Lebanon is currently hosting 1.5 million Syrian refugees, according to government estimates, draining the country’s economy and infrastructure.

Both Aoun and Hariri called on Parliament to ratify the 2018 draft state budget as soon as possible to send a positive signal to donor conferences aimed at supporting Lebanon.

“The 2018 draft budget contains a lot of incentives and reforms that can help buttress Lebanon’s positions and strategy in the next stage,” Hariri said, expressing hope that Parliament would ratify it “as soon as possible.”

After it was endorsed by the Cabinet last week, the parliamentary Finance and Budget Committee has been meeting daily to finalize the draft budget before sending it Parliament’s general assembly for final ratification.

Hariri briefed the Cabinet on the outcome of the Rome II conference on March 15 that pledged financial aid to bolster the Lebanese Army and security forces, saying it was “very successful.”

“The Rome II conference translated into action international keenness on Lebanon’s stability and security,” Hariri said, adding that the French side had declared that France would provide a 400 million euro ($493 million) line of credit to purchase weapons and equipment for the Lebanese Army and Internal Security Forces.

“We have also begun negotiations with the Russian side which offered a credit line with a ceiling of $1 billion that will also be studied,” the premier said.

A major point of discussion at the Rome II conference, highlighted in foreign diplomats’ speeches, had been Lebanon’s National Defense Strategy, which is expected to address Hezbollah’s arms within a larger framework of national defense. Aoun has said the strategy would be discussed after parliamentary elections on May 6.

Hezbollah leader Sayyed Hasan Nasrallah weighed in on the Rome and Paris conferences as well as the proposed National Defense Strategy.

“We support bolstering the Lebanese Army at the Rome conference. No one has discussed with us the proposal for a national defense strategy,” Nasrallah said in a televised speech Wednesday night. “It’s the president’s natural right to call for discussing a national defense strategy.”

“We don’t have any sensitivity toward the call for discussing a defense strategy, especially since the call has come from President Aoun,” he added.

Nasrallah, however, warned that loans from the CEDRE conference would further increase Lebanon’s public debt, currently estimated at over $80 billion. “If the government is going to Paris to come back with aid to Lebanon, this is excellent. But we are going [to Paris] to get loans and debts. This issue needs to be discussed by Parliament and the Cabinet, especially since public debt now stands at $80 billion,” Nasrallah said.

Hariri underlined the importance of the CEDRE conference and its “positive impact” on the economic situation in Lebanon. He said the projects, included in the CIP, would be followed up and monitored by the World Bank. Hariri also highlighted the importance of public-private partnership and its impact on the proposed projects at the CEDRE conference.

Referring to reforms that will accompany the CEDRE conference, Hariri said: “There will be structural and financial reforms that will benefit the state and will be added to other reforms that have been approved ... These reforms will boost confidence in the Lebanese state and expand participation in the country’s economic revival.”

Ogasapian pointed out that Lebanon would get financial aid from the CEDRE conference in the form of loans, not grants. “Therefore, Lebanon will decide priorities of projects to be implemented through these loans,” he said.

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