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USAID says its top priority is to create more jobs
Agency expects to launch projects within months
By Michael Bluhm
Daily Star staff
Tuesday, February 06, 2007

AWKAR: The United States Agency for International Development (USAID) will pump almost $400 million into Lebanon over the next two to three years on projects for economic growth, public-sector reform and education, as part of the US pledge of $770 million at the Paris III donor conference.

The US Congress has yet to approve the funds, but the USAID office here is expecting to launch the new projects in three to six months, said Raouf Youssef, mission director of USAID in Lebanon.

The majority of the money will go to the private-sector as grants, although release of funds to the government will be tied to specific reform benchmarks, Youssef said. Lebanon's staggering $41-billion public debt has led the agency to plan its first cash transfer directly to the government to improve the state's fiscal picture. No specific benchmarks or project amounts have been decided yet.

But for the disbursement of the aid, the country's roiling political crisis must cool down.

"You need political stability," Youssef told The Daily Star on Monday. "You need a government willing to let us work. You need receptivity.

"Political stability is very important for economic growth. We need political stability ... for the investment to come."

With the US a major player in the political arena, the agency's work is not free of political entanglements - many recipients, particularly in the South, resent cozy US-Israel ties and perceive the aid as advancing the US political agenda. The majority of USAID's prewar programs targeted the South, however, and its coming initiatives will be spread evenly throughout the country.

"I am determined to go back [to the South]," Youssef said. "We are the largest donor, but we did not get the credit. You know why.

"We went through a very negative perception period during and after the war. Bint Jbeil, they have no right to be angry with us - the only sewage system they have is funded by AID, the only computer center.

"Hizbullah gave them money for housing, but who's going to give them jobs? We are going to get them jobs. We go where the needs are. The perception is going to be improved."

Creating jobs will be the primary focus of USAID's projects. The Paris III monies will be roughly evenly distributed among projects promoting economic development, greater democracy and education.

Initiatives to further economic growth include money for small- and medium-size enterprises (SMEs), microfinance, agribusiness, environmental projects and information and communication technology. Youssef hopes to give $5 million for SMEs, $2 million in microfinance and to help agribusinesses find niche markets where Lebanese crops might have a competitive advantage, such as olive oil, apples or organic produce.

"Priority number one in absolute terms is creating jobs," he said. "Anything we can do to create jobs is really going to take this country forward. Once you deal with job creation, you are reducing the tensions of other issues.

"If after three years I don't [cut unemployment] by half, then I'll consider myself as having failed."

For example, USAID has already distributed over $40 million over the last 10 years to Cooperative Housing Federation International (CHF) for projects including rural development, industry revitalization, solid-waste treatment and to combat child labor, said Ayman Abdullah, head of CHF Lebanon.

Another economic priority is Lebanon's WTO membership, so Youssef will sign a contract Tuesday with Economy Minister Sami Haddad to provide another $500,000 to the US consulting firm Booz Allen for technical assistance in the ministry's preparations for WTO entry. USAID has already paid $5 million for similar work, Youssef said.

The agency also plans to computerize the justice system and train judges, as well as decentralize decision-making and strengthen the role of municipalities. Other projects should battle corruption with changes in the public-bid process and civil service. Funds are also earmarked for new political parties based on political rather than sectarian agendas, and there are plans to promote e-government.

Education funds should help reduce the gap between private and public schools by buying computers, lab equipment and by supporting clubs and vocational training.