Germany will next week present a multimillion-dollar proposal to Lebanese authorities to rebuild Beirut’s port as part of efforts to convince the country’s politicians to form a government capable of averting financial collapse, two sources said.
A chemical explosion at the port last August killed 200 people, injured thousands and destroyed entire neighborhoods of the Lebanese capital, plunging the country into its worst political and economic crisis since the 1975-1990 civil war.
According to two diplomatic sources with knowledge of the plans, Germany and France are vying to lead the reconstruction efforts. Berlin will outline its proposal on April 7, which diplomats say will in principle include support from the European Investment Bank (EIB), to help finance the clean-up of the area and reconstruction facilities.
An EIB spokesman said it was aware of the proposal submitted by the Port of Hamburg and its team of consultants for the reconstruction of Beirut port and its surroundings.
“However, there is currently no offer of financing from the EIB. Any EIB financing would be subject to due diligence and would have to follow the Bank’s usual processes for such operations,” he said.
It would also have to comply with EIB procurement guidelines and environmental and social standards, he said.
“The Bank stands ready to support the Lebanese people and reconstruction efforts as part of Team Europe and together with its partners, the international community and all stakeholders.”
One of the sources estimated that EIB financing could range between €2 billion and €3 billion.
Germany’s ambassador to Lebanon, Andreas Kindl, confirmed that a proposal to redevelop the port of Beirut and nearby areas would be presented next week. The plan has been drawn up by several private companies that will hold talks in Beirut to present it, he said.
The consulting firm Roland Berger, which Kindl and the diplomatic sources said has been involved in drawing up the plan, did not respond to requests for comment.
The two diplomatic sources said the Lebanese political elite must first agree on the composition of a new government to fix public finances and root out corruption, a condition also insisted on by donors, including the International Monetary Fund, before unlocking billions of dollars in aid.
“This plan is not going to come without conditions,” one of the sources said. “Germany and France first want to see a government committed to implementing reforms. There is no other way and this is good for Lebanon.”
German Ambassador Kindl said Lebanon could only attract investor support if it enacted meaningful reforms.
Eight months after the port disaster, many Lebanese who lost their families, homes and businesses are still waiting for the results of the investigation into the causes of the explosion. Lebanon is on the brink of collapse, with shoppers fighting over goods, protesters blocking roads and businesses closed.
Foreign donors have said the new government must have a strong mandate to implement economic reforms, including an audit of the central bank and an overhaul of the wasteful energy sector.
However, Prime Minister-designate Saad al-Hariri and President Michel Aoun have been unable to agree on the ministerial lineup. The outgoing cabinet, which resigned after the explosion, has remained in an interim capacity.
The IMF has said there have been no program discussions with Lebanese officials, only technical assistance with the Ministry of Finance and some state-owned enterprises.
In addition to the port itself, Germany’s proposal seeks to redevelop more than 100 hectares of the surrounding area in a project that the two diplomatic sources said would follow the lines of Beirut’s postwar redevelopment of downtown Beirut.
As with that redevelopment, the plan would involve the creation of a publicly traded company, similar to Solidere, which was created by former Prime Minister Rafik Hariri in the 1990s and is still listed on the Lebanese stock exchange.
Sources put the cost of the project at between $5 billion and $15 billion, and say it could create up to 50,000 jobs.
The Lebanese official said France and French ports and container shipping group CMA CGM were also interested in the reconstruction project.
One of the diplomatic sources said France had sent several missions, including one in March that included CMA CGM, that showed interest in playing a role in the reconstruction. However, that mission focused on specific clean-up operations and not on broader reconstruction, the source said.
The French Foreign Ministry and CMA CGM declined to comment.
The Lebanese official attributed responsibility for getting the project underway to the Europeans agreeing on who will be the leader.
“At the end of the day it is a European decision, because they have to decide among themselves. Then, when the time comes, the Lebanese government can go ahead,” the official said.