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Beirut port explosion

Germany is set to propose Beirut port reconstruction with ‘strings attached,’ sources say

Germany is set to propose Beirut port reconstruction with ‘strings attached,’ sources say

Vehicles pass the site of the Aug. 4 explosion at Beirut port. (Credit: Mohamed Azakir/Reuters)

PARIS/BERLIN/BEIRUT — Germany will next week present a multi-billion-dollar proposal to Lebanese authorities to rebuild the Port of Beirut as part of efforts to entice the country’s politicians to form a government capable of warding off financial collapse, two sources said.

A chemical explosion at the port last August killed 200 people, injured thousands and destroyed entire neighborhoods in Lebanon’s capital, plunging the country deeper into its worst political and economic crisis since the 1975–90 Civil War.

According to two diplomatic sources with knowledge of the plans, Germany and France are vying to lead reconstruction efforts. Berlin will on April 7 outline a proposal that the European Investment Bank has agreed to help fund that would clear the area and reconstruct facilities, they said.

Germany’s ambassador to Lenanon, Andreas Kindl, confirmed a proposal would be made next week to redevelop Beirut port and nearby areas. The plan had been drawn up by several private companies who would hold talks in Beirut to present it, he said.

He identified the companies as HHLA, HPC, Roland Berger and Colliers. There was no statement from the companies.

An EIB spokesman said it was aware of the proposal put forward by the port of Hamburg and its consultancy team for the reconstruction of the port of Beirut and surrounding areas.

“However, there currently is no financing offer by the EIB. Any EIB financing would be subject to due diligence and have to follow the Bank’s usual processes for such operations,” he said.

It would also need to comply with the EIB’s procurement guidelines, environmental and social standards, he said.

“The Bank stands ready to support the Lebanese people and reconstruction efforts as part of Team Europe and alongside its partners, the international community and all stakeholders,” he added.

One of the sources estimated EIB funding could be in the range of 2 billion to 3 billion euros.

A senior Lebanese official confirmed that Germany was due to present a comprehensive port reconstruction proposal.

Neither the German Foreign Ministry nor consultancy firm Roland Berger, which the diplomatic sources said put the plan together, responded to requests for comment.

The two diplomatic sources said Lebanon’s political elite first need to agree on the makeup of a new government to fix public finances and root out corruption, a condition which donors, including the International Monetary Fund, are also insisting on before they will unlock billions of dollars in aid.

“This plan is not going to come without strings attached,” said one of the sources. “Germany and France want first to see a government in place committed to implementing reforms. There is no other way around it and this is good for Lebanon.”

In his statement, Germany’s ambassador Kindl said Lebanon could only attract support from investors by enacting meaningful reforms.

Eight months after the port disaster, many Lebanese who lost family, homes and businesses are still waiting for the results of an investigation into the causes of the blast. Lebanon is on the verge of collapse, with shoppers brawling over goods, protesters blocking roads, and businesses shuttered.

Foreign donors have said the new government must have a firm mandate to implement economic reforms, including a central bank audit and an overhaul of the wasteful power sector.

Prime Minister-designate Saad Hariri and President Michel Aoun have been unable to agree on a ministerial lineup, however. The outgoing cabinet, which quit after the explosion, has stayed on in a caretaker 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.

Germany’s proposal

In addition to the port itself, Germany’s proposal would look to redevelop more than 100 hectares in the surrounding area in a project that the two diplomatic sources said would be along the lines of the postwar reconstruction of central Beirut.

As in that redevelopment, the plan would involve the creation of a publicly listed company similar to Solidere, which was set up by former Prime Minister Rafik Hariri in the 1990s and remains on the Lebanon stock exchange.

The sources put the project cost at anywhere between $5 billion to $15 billion, and said it could create as many as 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 noted that France had sent several missions, including one in March that included CMA CGM, that showed an interest in playing a role in the reconstruction. That mission focused on specific clear-up operations rather than a broader redevelopment, however, the source said.

The French Foreign Ministry and CMA CGM declined to comment.

The Lebanese official put the onus for getting the project underway on the Europeans agreeing who would be the lead.

“This is a European decision at the end of the day, because they have to decide on it among themselves. Then when it comes to it, the Lebanese government can go ahead,” the official said..


PARIS/BERLIN/BEIRUT — Germany will next week present a multi-billion-dollar proposal to Lebanese authorities to rebuild the Port of Beirut as part of efforts to entice the country’s politicians to form a government capable of warding off financial collapse, two sources said.A chemical explosion at the port last August killed 200 people, injured thousands and destroyed entire neighborhoods in...