Why The Financing Of The Bisri Dam Should Be Cancelled
ايلي عون: لماذا تمويل سد بسري يجب أن يلغى
Elie Aoun/June 17/2019
The harm from the World Bank’s financing of the Bisri Dam project are many fold. Firstly, there is vagueness and corruption in the financing. Secondly, the declared objective of the project could be achieved by pursuing more logical options.
THE LOAN AGREEMENT
If one looks at the “Loan Agreement” signed with the World Bank by Lebanon’s Minister of Finance, there is no clarity as to the lien, security, or collateral for the $474 Million – or the interest on that loan. How can a Finance Minister sign a loan agreement that lacks clarity on these terms?
Although the World Bank does not seek security for loans from its member countries, there are situations where a member country is required to place a lien on public assets to the benefit of the World Bank – as described in Section 6.02 titled “Negative Pledge” of the “General Conditions for IBRD Financing: Investment Project Financing.”
It is the responsibility of both parties to the contract to outline clear unambiguous terms and to provide specificity on whether there are liens on Lebanese public assets, and if yes, which assets. Section 6.02 and Paragraph 2 of the “Supplemental Letter” dated January 21, 2015 are vague and do not offer a clear answer – a measure which does not reflect good faith in the transaction.
There are three primary Lebanese entities involved in the World Bank Bisri Dam project:
·The Minister of Finance (a member of the Amal Movement) – signer of the “Loan Agreement”
·The Minister of Energy and Water (a member of the Free Patriotic Movement)
·Council for Development and Reconstruction (CDR) – signer of the “Project Agreement”
Both the “Loan Agreement” and the “Project Agreement” do NOT specify which law apply to the Agreements, which court has jurisdiction, or how to resolve disputes related to the Agreements.
Furthermore, in an attached Schedule, both Agreements include an “Anti-Corruption” clause which states that the signers have to ensure that the project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. However, no genuine “study” has been allocated to verify the adherence to the Anti-Corruption Guidelines prior to the approval of the financing.
As a matter of fact, if one looks at the personal financial history of the leader of the Amal Movement and the leader of the Free Patriotic Movement (before and after their political career), it would be clear that they could not have been transformed from paupers to ultra-rich and amassed their personal wealth if it was not for corruption practices.
If the Finance Minister believes that the Bisri Dam is a necessity, the leader of his political party is able to build the dam single-handedly without any need of financing from the World Bank or any other bank.
Over the years, tens of billions of dollars had been spent on the electricity infrastructure (an amount of money that could have probably provided electricity for the entire Arab World) and yet Lebanon still does not have an adequate electrical power system. Can anyone provide a reason other than corruption?
Lebanon is the 138 least corrupt nation out of 175 countries, according to the 2018 Corruption Perceptions Index. Will anyone honestly believe that Lebanon’s Finance Ministry and the CDR will themselves “ensure that the project is carried out in accordance with the provisions of the Anti-Corruption Guidelines” – as the contracts require? In a country ranked as the 138 least corrupt nation out of 175 countries, can anyone point out one politician being investigated for corruption practices?
Furthermore, what is the legal authority of the CDR to enter into a “Project Agreement” with the World Bank for $474 Million Dollars? What specific provision of a Lebanese law that authorizes CDR to enter into such an agreement?
THE DECLARED OBJECTIVE
The declared objective of the Bisri Dam is to increase the volume of water available to the Greater Beirut and Mount Lebanon area.
Firstly, how many projects had been financed so far for that same purpose, and what is their status?
Secondly, is the Bisri Dam the only method to achieve that objective?
On page 3 of its “Implementation Status & Results Report” dated May 16, 2019, none of the systematic operations risk-rating tool is classified as low. All risk ratings were high (political and governance; technical design of project; environmental and social), substantial (macroeconomic; fiduciary), and moderate (sector strategies and policies; institutional capacity for implementation and sustainability).
In World Bank report no. ISDSC5500, it is stated: “despite investments in infrastructure, the Government of Lebanon has not been able to deliver to date on its national goal of improved water service and sustainable and integrated water resources management.” Has there been an honest analysis as to the reasons why? If an honest analysis exists, it would be clear that there are logical options to achieve the stated objective better than building the Bisri Dam.