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Lebanon conference urges support Lebanon pleads for world support
(about 2 hours later)
A major donors' conference to help rebuild Lebanon has opened in Paris with French President Jacques Chirac urging international support. Lebanon has appealed to foreign donors for further financial aid towards its reconstruction following last year's conflict between Israel and Hezbollah.
Ahead of the summit the US and France pledged $1.4bn (£711m; 1.08bn euros) in aid and loans. Prime Minister Fouad Siniora told a donors' summit in Paris that without outside economic help Lebanon could face an uncertain political future.
Lebanon hopes to raise up to $9bn to recover from last year's conflict with Israel and massive public debt. Some $3bn in aid and loans have already been pledged by donors including the US, France, the EU and Saudi Arabia.
The forum, attended by 40 countries, comes amid anti-government protests in Beirut led by pro-Syrian parties. Lebanon hopes to raise up to $9bn for reconstruction and repaying huge debt.
Lebanon "more than ever needs the unanimous support of the international community," said the French leader. In his opening comments, Mr Siniora thanked the participants from some 40 countries for their support:
"We know that financial stability is essential for political stability in Lebanon and so controlling the debt levels which after the hostilities of last year amounted to 180% of the entire national wealth is the first and most urgent task to be tackled." "Your support to our medium-term programme in the form of contributions and loans at concessionary rates with considerable front-loading that extends over the programme's duration is what is needed.
Mr Siniora has powerful friends abroad but faces protests at home DONORS' PLEDGES US: $1bn (including $770m aid package) France: $648m "soft" loan EU: $518mSaudi Arabia: $1.1bn class="" href="/1/hi/business/6169402.stm">Rebuilding Lebanon
In his opening comments Lebanese Prime Minister Fouad Siniora thanked the participants for their support: "Failure to achieve the programme's objectives could well jeopardise the broader goals of political and social stability and a strong democratic system."
"Such solidarity empowers Lebanon in its quest to regain its unique role as a bridge builder rather than a battleground, a place of encounter rather than a place of faultlines."
He added that Lebanon, which had been on the path to economic recovery before the conflict, was "now on the verge of a deep recession".He added that Lebanon, which had been on the path to economic recovery before the conflict, was "now on the verge of a deep recession".
Three people were killed and more than 100 were injured in some of the worst street violence in the Lebanese capital for years on Tuesday, when a general strike brought the country to a standstill. The French President Jacques Chirac, who is hosting the conference, said Lebanon was being reborn from the ashes and needed the international community's support.
The Islamic Hezbollah movement, which called the strike, has warned of more unrest unless Mr Siniora steps down. "We know that financial stability is essential for political stability in Lebanon and so controlling the debt levels which after the hostilities of last year amounted to 180% of the entire national wealth is the first and most urgent task to be tackled."
France has offered to lend Lebanon $648m at a concessionary rate, while the European Union is promising another $518m in new aid and loans.
US Secretary of State Condoleezza Rice confirmed the promise of a new $770m aid package (to be approved by the US Congress), saying the pledge would bring the level of US aid to Lebanon since last summer to more than $1bn.
Saudi Arabia in turn pledged an additional $1.1bn in aid.
Debt-ladenDebt-laden
Large parts of Lebanon's infrastructure were destroyed during Israel's attempt to wipe out Hezbollah last year.Large parts of Lebanon's infrastructure were destroyed during Israel's attempt to wipe out Hezbollah last year.
DONORS' PLEDGES US: $770m aid package France: $648m "soft" loan EU: $518m class="" href="/1/hi/business/6169402.stm">Rebuilding Lebanon Mr Siniora has powerful friends abroad but faces protests at home
The country is also heavily indebted from the effects of 15 years of civil war in the 1970s and 80s.The country is also heavily indebted from the effects of 15 years of civil war in the 1970s and 80s.
Donations and soft loans are needed to generate confidence, stimulate investment and break the circle of public debt that saddled the country with a massive $40bn burden, says the BBC's Jim Muir in Beirut.Donations and soft loans are needed to generate confidence, stimulate investment and break the circle of public debt that saddled the country with a massive $40bn burden, says the BBC's Jim Muir in Beirut.
On Wednesday, US Secretary of State Condoleezza Rice promised Lebanon a new $770m aid package as she left for the conference. The forum comes amid anti-government protests in Beirut led by pro-Syrian parties.
She said the pledge would bring the level of US aid to Lebanon since last summer to more than $1bn. Three people were killed and more than 100 were injured in some of the worst street violence in the Lebanese capital for years on Tuesday, when a general strike brought the country to a standstill.
Hours earlier, Mr Chirac offered to lend Lebanon $648m at a concessionary rate, his spokeswoman said. The Islamic Hezbollah movement, which called the strike, has warned of more unrest unless Mr Siniora steps down.
The European Union is promising another $518m in new aid and loans.
Cost of not helpingCost of not helping
Economists in Beirut say the Paris conference is extremely important, coming at a time when the alarm bells are ringing on the financial markets there.Economists in Beirut say the Paris conference is extremely important, coming at a time when the alarm bells are ringing on the financial markets there.
The cost of helping Lebanon... is much less than the cost of not helping Lebanon Fouad SinioraLebanese prime ministerThe cost of helping Lebanon... is much less than the cost of not helping Lebanon Fouad SinioraLebanese prime minister
Speaking to the BBC, Lebanese Economy Minister Sami Haddad said any money raised would help clear the deficit.Speaking to the BBC, Lebanese Economy Minister Sami Haddad said any money raised would help clear the deficit.
"Most of it will go to reduce the debt and debt service... The grants that we will hopefully receive will reduce the debt principle."Most of it will go to reduce the debt and debt service... The grants that we will hopefully receive will reduce the debt principle.
"We will probably also get some project finance, ie funding related to implementing some infrastructure projects.""We will probably also get some project finance, ie funding related to implementing some infrastructure projects."
Speaking after lunch with Mr Chirac, Prime Minister Siniora warned potential donors that "the cost of helping Lebanon, however expensive that might seem, is much less than the cost of not helping Lebanon". On Wednesday, Mr Siniora warned potential donors that "the cost of helping Lebanon, however expensive that might seem, is much less than the cost of not helping Lebanon".
Economists say that anything above $3bn or $4bn in soft loans and grants would be good news.Economists say that anything above $3bn or $4bn in soft loans and grants would be good news.
Below that level, he adds, the gathering would be seen as having failed to demonstrate confidence in Lebanon. Below that level, the gathering would be seen as having failed to demonstrate confidence in Lebanon.