Lebanon needs a new aid strategy. It will need generous support to recover when reforms are initiated. But it also needs all the help it can get now to alleviate its current misery. What is required is a donor strategy that walks on two legs: a first leg that offers a big reconstruction push conditioned on economic and institutional reforms and, in parallel, a second leg that provides urgent support to the Lebanese population.

The present strategy piles up the pressure on the government to engage in essential reforms as a precondition for development assistance. This is the right position, as past aid allowed successive governments to avoid reforms. But for this first leg to become more effective, international donors need to renew their pledges, clarify their conditionality, and stick to this course of action more systematically than is happening now.

Even so, none of that is sufficient; immediate support is also urgently needed. Recently, there has been growing attention paid to aid strategies in “estranged” settings, where states are cut off from regular international political and development cooperation, such as Afghanistan, Syria, or Sudan. Despite the inherent challenges of operating in such countries or areas, recent research conducted by New York University’s Center on International Cooperation stalwartly argues that there are “sound national interests, geopolitical, collective security, and ethical reasons for donors to stay engaged.”

The same argument applies equally powerfully to Lebanon. Not helping the population now will wound the country so much that the prospects for future recovery will grow ever more distant. Per capita GDP has fallen from $10,000 to $4,000; real wages have been divided by five; half of the population has fallen into poverty; a fourth of families have a child going to bed hungry; and inequality has shot up. This is happening in the context of state meltdown. Public expenditures have fallen by a factor of ten. Teachers and nurses are grossly underpaid, and many have stopped working. A whole generation is at risk: A third of kids have dropped out of public school, and an equal proportion are not receiving primary health care.

Beside reducing human suffering, the second leg — call it the “Protecting Basic Services Program” — would seek to prevent the current wounds from leading to terminal cancer. Specifically, this program would ensure that all households continue to have access to a minimal level of basic services, including health and education, livelihood opportunities, and a social safety net. By doing so, the foreign assistance program would reduce the grave risks now facing the country — rising crime, more illegal migration, and the aggravating of communitarian tensions.

The issue of Syrian refugees complicates the situation. The international support they receive is generating a sense of unfairness and anger among nationals, as the promise to extend financial support to poor Lebanese has not materialized in significant amounts, resulting in significant overall funding gaps. There is a dangerous rise in xenophobia, enflamed by politicians quick to push the blame for their failings on an ideal scapegoat.

Humanitarian aid, mainly in the form of grants and mostly aimed at Syrian refugees, amounted to around $1.8 billion for each of the past three years. We estimate that a well-structured Protecting Basic Services Program, opened to all people in need, would serve around 4 million, of which 55% are Lebanese, and would cost around $3 billion per year.

In effect, what is needed is to scale up and better organize humanitarian support as a coherent medium-term program, within a structure that keeps up the pressure for reforms. First, support is now fragmented and ineffective. For example, there are more than 100 separate cash transfer programs. This makes it impossible to ensure that some people do not access multiple programs while others lack access to any. Second, the current level of support is not sufficient: A much larger share of the population now needs basic services given its reduced ability to afford similar offerings in the private sector, and the needed basic safety net to prevent extreme poverty has become wider. Third, existing support is funded year to year, which does not reduce household insecurity. This exacerbates risks of kids dropping out of school, wanting to emigrate, even illegally, or falling into criminality. Finally, some support is now delivered through political and sectarian organizations, keeping citizens hostage to clientelistic obligations.

Even in the best of cases, support for basic services should continue several years after the economy is stabilized, given the poverty of the state. The disbursement of these funds will have to pragmatically look for capacity and accountability where this remains, in the public, private, and associative sectors. But the money must be structured in ways that both avoids political capture and builds useful capacities for the future. The best way to do this is to combine a direct transfer method to households with transfers to service facilities, such as to schools or clinics, all supported by full transparency and a combination of vertical and horizontal accountability mechanisms, in which the role of civil society groups would be preponderant.

Mechanisms in education should include direct payments to teachers, block grants to schools, and education grants to low-income students and onwards for those accepted at local universities. Similarly, safety nets should disburse cash directly to poor households, conditional on socially useful behaviors (such as school attendance). Support for livelihoods can operate through microcredit institutions. In the health sector, direct support should be provided to the poorest part of the population for preventive and curative care and for a rationalized package of hospitalization care.

The seed for such a program already exists. The current social safety net program funded by the World Bank provides direct and unconditional cash transfers, and the development of an electronic registry has done much to reduce middlemen and corruption. When key local prices were freed (including drugs, food, fuel, and electricity tariffs), and again, during the depth of the COVID-19 pandemic, the program played a major role in alleviating suffering. A new World Bank/UNICEF program provides a wage supplement to public school teachers conditional on teacher attendance. And block grants to schools are being rolled out by nationally based movements such as Nafda. What remains is to add a health component and to expand these efforts into a coherent medium-term program.

To build such a new program, donors need to coordinate their actions tightly. They would have to anchor the program with civil society organizations, which must rise to the occasion and act as the international donors’ main counterpart in local aid efforts, in addition to playing central roles both in service delivery and in the checks-and-balances processes. The experience of the multi-donor fund created after the Beirut Port blast has shown that this is feasible — but also challenging.

Beside an agreement by the state to a hands-off attitude, we would also attach one main macro conditionality to the program: that the fiscal deficit be kept small enough to get rid of fiscal monetization and hyper-inflation. Would such support reduce the regime’s incentives to deliver much-needed reforms? A well-organized second leg should consciously be structured in ways that prevent elite capture. By separating the support of basic services delivered directly to citizens from engagement with the state, it would strengthen the first conditional leg by making it more credible. Finally, we do not believe that a less miserable population would get the regime “off the hook.” Quite the opposite, the program should foster citizens’ ability to protest and keep up the pressure, especially as it empowers communities to play a more active role in managing basic services. In short, by protecting the country’s future until the political situation evolves sufficiently to allow for a breakthrough, a well-organized Protecting Basic Services Program, funded by the international community, is essential to preserve the possibility for Lebanon to recover again.


Ishac Diwan teaches economics at the École Normale Supérieure in Paris. He is additionally the research director of the Finance For Development Lab, a former director at the World Bank, and a Non-Resident Scholar with MEI’s Lebanon and Economics and Energy programs.

Haneen Sayed is a human development specialist living in Lebanon. Previously, she was a lead specialist at the World Bank working on human development and social protection in the Middle East and North Africa.

Photo by Francesca Volpi/Bloomberg via Getty Images

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