Donors gather to fund embattled Lebanese govt

International donors today gathered in Paris to drum up new funding for Lebanon’s embattled government, but there were concerns that recent violence there might dent nations’ willingness to donate.

The United States said it planned to more than triple its economic aid. US Secretary of State Condoleezza Rice said on the eve of the meeting that the Bush administration was seeking $770m (€590m) in new aid for Lebanon. The money, which must be approved by Congress, would finance long-term redevelopment and immediate rebuilding from last year’s devastating war between Hezbollah militants and Israel.

The conference comes as the US-backed government of Lebanese Prime Minister Fuad Saniora is locked in confrontation with Iranian-backed Hezbollah and its allies, struggling under mountains of debt and facing the task of rebuilding following last summer’s 34-day conflict that left parts of southern Lebanon in ruins.

Rice and Saniora met for breakfast this morning before the conference started. About 30 foreign ministers were expected to attend, along with the World Bank, the International Monetary Fund and the European Union.

Experts predict the funds offered – in the form of debt relief, low-cost loans and aid – will likely total $4-7bn (€3.1-4.5bn). That compares to Lebanon’s $40bn (€3.1bn) of state debt, equivalent to about 185 per cent of its annual economic output.

Although they insist that aid will be for the entire country – not just for one man or his government – the United States and other donor nations back Saniora and say Lebanon must be defended from meddling by Iran and neighbouring Syria, which occupied the country for nearly 30 years until 2005.

Yesterday, host France announced plans for a £330m (€500m) loan to Lebanon at “very advantageous” terms, while the European Union pledged £263m (€400m) in new aid and loans.

Saniora’s critics said donors would worsen Lebanon’s debt and be pouring good money after bad.

This week’s clashes in Lebanon between pro- and anti-government factions harked back to the country’s civil war days and offered a stark glimpse of how quickly events could spiral out of control if the confrontation between Saniora’s government and Hezbollah and its allies is not resolved. Nationwide violence claimed three lives and injured more than 170 people on Tuesday.

French President Jacques Chirac warned the violence could discourage donors.

Hezbollah gained new public support in its war last summer with Israel and is thought to have given out many millions of dollars worth of aid to residents of areas devastated by the fighting. Western powers hope to counter that influence by pouring in more funding of their own.

No Hezbollah representatives were invited to the Paris event. France and other donors said they were working only with the elected Saniora government, and it was up to him to work with opponents at home.

The worsening political turmoil has also raised concerns that the government may be too paralysed to fully rebuild even with newly injected funds.

Aid will come with conditions – mainly assurances that Saniora’s government will make good on economic and structural reforms announced this month, which have infuriated labour unions and Hezbollah supporters.