Salam’s Government on a Mission: Implementing World Bank Directives for Economic Transformation
As Lebanon grapples with ongoing challenges, the government led by Nawaf Salam has faced increasing scrutiny. Despite promises made five months ago, the government’s commitments have yet to materialize, particularly regarding the reconstruction efforts following Israeli aggression. This article delves into the current state of Lebanon’s electricity crisis and the involvement of the World Bank in the country’s financial dealings.
Since the formation of Nawaf Salam’s government, significant concerns have emerged regarding its effectiveness and the implementation of its ministerial statement issued on February 26. This statement emphasized the need to “accelerate the reconstruction of what was destroyed by the Israeli aggression and eliminate the damage.” Unfortunately, these intentions appear to remain unfulfilled.
One of the critical issues is the government’s unwavering compliance with the World Bank’s conditions. According to the World Bank’s official website, there are currently ten active projects in Lebanon, valued at approximately $4.4 billion. Of this amount, $2.46 billion has already been disbursed, while $1.34 billion has been canceled. Notably, the interest rate on these loans amounts to $786 million, which is equivalent to 3% of Lebanon’s GDP.
This year, under the guise of emergency reconstruction assistance, the World Bank has loaned Lebanon $250 million. Additionally, a loan of $257.8 million was provided to ensure water supply to the Greater Beirut area. For 2024, Lebanon is expected to receive another loan of $250 million, supposedly to promote an alternative energy system, along with $29 million aimed at managing the financial situation.
These loans highlight the challenges faced by Nawaf Salam’s government and its ministers, particularly Joe Saddi, the Minister of Energy and Water from the Lebanese Forces party. Saddi’s efforts to marginalize Electricité du Liban (EDL) have drawn criticism from various quarters.
Lebanon, a country long plagued by electricity crises and persistent blackouts, now appears to be embarking on a new “adventure” led by the Lebanese Forces party. This initiative involves the ambitious plan to extend an electrical undersea cable from Cyprus to Beirut, covering a distance of approximately 190 kilometers. However, it is concerning that no detailed official or technical studies have been presented to the Lebanese public regarding this project. Furthermore, neither the Lebanese nor the Cypriot ministries of energy have released clear positions on the project’s implementation or the supervising entity.
Leaks have surfaced, revealing violations that impose choices detrimental to Lebanon’s best interests. Contracts with service providers such as Murad, KVA, NEUC, and BUS were renewed via email, allegedly at the direct order of the World Bank. This action was justified as a means to “ensure business continuity.”
The World Bank has asserted that Electricité du Liban (EDL) is unprepared to regain control over the distribution and services sector. They claim EDL cannot ensure the continuity of billing, maintenance, or operation of several transformer stations. Additionally, the World Bank has set specific deadlines for the recovery of Lebanon’s electricity sector, which could extend for no less than two years.
The World Bank, often referred to as “The Devil’s Fund” by the Argentine people, has a history of drawing countries into debt traps, exploiting their resources to the fullest extent. This raises questions about Lebanon’s future under such financial arrangements.
Looking back at historical precedents, Malaysia’s former Prime Minister Mahathir Mohamad stands out as a leader who successfully navigated a financial crisis without resorting to international loans. During the Asian Tigers crisis, Mahathir refused to accept external financial assistance, allowing Malaysia to overcome the crisis with minimal losses compared to other nations.
In a revealing interview with Bloomberg, Mahathir stated, “When we borrow money from them, the condition they often impose is that they have a hand in the management of the economy of the country, including the finances.” His success in managing Malaysia’s economic crisis without relying on international financial institutions transformed the country into an economic powerhouse.
As Lebanon continues to face an uncertain future, the formal electricity sector is poised for collapse, a reality that seems to align with the World Bank’s interests. The question remains whether anyone in the current leadership will heed the lessons of history and seek alternative paths to recovery.
In conclusion, the ongoing challenges faced by Nawaf Salam’s government highlight the urgent need for effective leadership and innovative solutions to address Lebanon’s electricity crisis and overall economic situation. The involvement of the World Bank in Lebanon’s financial landscape raises critical questions about the direction of the country’s future and the potential consequences of continued reliance on external financial assistance.
