October 2018
CEDRE Aid: An Integrated Infrastructure Development Plan, Not a Random Laundry List

Lebanon’s forthcoming, long-awaited government will face myriad challenges once it finally receives a vote of confidence, not least among them uncertainly concerning the national economy. It will likely bank on aid investment promises that were made at the CEDRE conference in Paris. This, of course, will depend on Lebanon meeting the conditions imposed by donor countries, which is not an easy feat. If those are met, the probability that CEDRE money will have a positive impact on Lebanon’s economy are (sadly) slim. Much ink has been spilled about the country’s unsustainable fiscal path, the apparent coincidence of loan pledges being made during election season, and the need for a framework of accountability and transparency to control corruption before more money is borrowed. Less has been said about the substantive content of Capital Investment Program (CIP) projects. Do CPI projects amount to strategic infrastructure development guided by a long-term vision of providing the basis of an inclusive, effective, and sustainable growth strategy?
 
The short, predictable answer is a resounding no. True, infrastructure development is a prerequisite to economic growth and livelihood improvements for Lebanon’s population. Yet, as this article argues, the documents submitted by the Lebanese government in support of the capital plan betray the absence of an integrated development strategy guiding project selection. CEDRE proposes a laundry list of heavy investment projects, selected individually on the basis of supposed “readiness,” but fails to demonstrate their ability to coalesce into the integrated infrastructure necessary to support basic standards of living, let alone economic growth. Worse, the framework adopted in CEDRE’s preparatory documents appears highly disconnected from Lebanon’s political and economic realities, as well as oblivious to the systematic hollowing-out of Lebanon’s service agencies and to the potential of informal systems of service provision, particularly in the transportation sector. In other words, assuming that the borrowing of money is warranted (and this is at best debatable), and that the accountability and transparency preconditions are secured (and this is frankly impossible), CEDRE’s “technical” proposal in terms of project selection is unsound.
 
Project Contracting Rather than an Integrated Ecosystem
Cities are integrated ecosystems in which infrastructure acts as an interdependent support system vital to public and economic life. Sewers, electricity and telecoms infrastructure, water, roads, as well as marine and air transport all support mobility, commercial exchange, and people’s livelihoods. Consequently, it is impossible to measure the impact of infrastructure investment on livability and economic development without a holistic, multi-sector analysis of the integrated vision these investments are supposed to realize.
 
The CEDRE proposal fails to offer a development vision to guide investment. Instead, the supporting documents seem to confuse infrastructure development with project contracting. They reduce infrastructure to a list of big-ticket items, and conflate the notion of “national development” with the construction of individual highways, dams, sewage treatment plants, power plants, fiber optic networks, and air and sea ports. Infrastructure development cannot simply comprise a laundry list of individual capital intensive projects. Expanding highways does not necessarily result in greater mobility, just like the construction of dams does not always result in greater water provision or increasing electricity production does not always result in greater access to and availably of power. We have as flagrant proof the example of Lebanon’s waste management: Nine of the waste treatment plants built across the country are fully or partially closed, while trash accumulates in illegal dumps, contaminates our ground water, or is incinerated, exacerbating the level of air pollution in the country. The lesson is clear: Waste was not properly managed simply by the building of waste management plants. There is no reason to assume broader water supply results from increasing the number of dams. Instead, one expects an integrative vision for each of these sectors, one that considers the environmental and social impact, and the eventual translation of this holistic vision into the basis for project selection.
 
Assuming that the “vision” comes later, that it will be provided by the $1.4 million study for an economic vision recently submitted by McKinsey & Co. to the government of Lebanon, and that infrastructure projects will naturally support it, is there an internally coherent strategy for their selection?
 
Although it was signed off on by one of the most prominent planning offices in the region, the selection document proposes a highly unconvincing scoring method, which grades a list of projects in the electricity, water, sewage, and transportation sectors according to individual “merit.” The mechanism considers two sets of criteria for each project:
 
project status (measured 1-3) ranks projects according to the completion of tender documents and, consequently, their readiness for execution
project impact (measured 1-3) ranks projects according to “socio-economic impact” and their ability to “mitigate the effects of the Syrian refugee crisis”
 
Each project’s overall prioritization is determined by adding the above two measurements (2-6). Given the gross errors engendered by such a disjointed method, it is clear that project selection was not a serious consideration for the plan’s drafters. This is particularly notable since—as an outraged senior colleague pointed out—the offices who signed off on the reports have the requisite competence to produce good work. One cannot seriously assume that socio-economic impact can be ranked from 1 to 3 based on a “professional hunch,” or that readiness is equal in value to long-term benefits, or that environmental considerations or redistributive impacts can be ignored. Worse, one should not assume that projects can be prioritized and selected without accounting for approved development projects within the same sector.   
 
Consider transportation and how the projected execution of Beirut’s peripheral boulevard would intersect with the recently approved $295 million World Bank loan for a Greater Beirut Public Transport Project (GBPTP). The two projects are imbued with contradicting visions of urban mobility. While the CEDRE-proposed highway network would maintain Beirut’s reliance on private car mobility, the GBPTP supports a consensus among the country’s foremost transportation experts that would shift urban mobility toward public transportation systems, a more efficient, realistic, and ecologically responsible choice. Furthermore, international experience has demonstrated that urban authorities cannot shift the modal transport distribution from private to shared modes of mobility unless investment is shifted away from easing private car mobility. Consequently, some of the aims of proposed CEDRE projects contradict the very goals set by public agencies for these sectors.
 
Contextual Considerations: Rethinking PPP
In addition to its poor selection process, the CIP upholds a framework of so-called public-private partnerships. Here too, important considerations must be accounted for, particularly the distinction between what is public and what is private.
 
The CIP requires that Lebanon commit to privatization, and we are told donor countries made the involvement of private partners a precondition for the disbursement of funds. But the deep organic client relations that connect the public and private sectors in Lebanon, and the fact that it is impossible to distinguish political interests from private investors, means that a project’s implementation will depend on its ability to generate rapid private profits rather than its ability to foster long-term development. Furthermore, a number of vital infrastructure systems—such as public transportation—require state investment and subsidies in order to function properly. Their value cannot be narrowly quantified by the cost-efficiency of individual investment, but must be considered in terms of the large positive externalities they create, including environmental and social benefits for cities and their inhabitants.
 
Conversely, the CIP seems to ignore the fact that Lebanese infrastructure heavily relies on informal networks of service provision tied to vested interests and supporting countless livelihoods. Experience has shown the value of building on these networks and, where possible, upgrading and integrating them into official forms of service provision. How does the CIP predict its impact on these systems? How will it secure jobs and livelihoods for individuals who will be displaced by new investments—particularly given that people who work in sectors that provide these services are among Lebanon’s most vulnerable social groups?
 
CEDRE is likely to impose the same types of restrictions on public sector employment that have been conditions of previous aid and loan packages. With the World Bank and the IMF more determined than ever to impose fiscal responsibility, the country’s massive public sector payroll is on everyone’s lips. While it is safe to assume that the swell of low-level jobs in the public education system and army is a tribute to the way Lebanon’s political class uses public sector employment to hold the population hostage with low-wage, menial employment, the main service agencies of the countries have been hollowed out. Employment has been frozen for decades, with dismal salaries that cannot attract requisite talent. This is particularly true for high-ranking positions in the water, electricity, and telecoms agencies, leaving them largely deprived of competent managers and employees capable of running them effectively. One needs only look to the World Bank’s own case studies to understand that effective and functional public agencies are a prerequisite to the involvement of private actors in sectors such as electricity, water, telecoms, or transportation.   
 
Lebanon certainly needs investment in its crumbling infrastructure, and it is reasonable to assume that the additional load of hosting a large refugee population necessitates greater intervention and warrants more support from the international community. However, the investments we need should be geared toward reducing systemic losses and boosting environmentally conscious and renewable choices. Additionally, they should be distributed judiciously to projects selected according to an integrated economic and ecological vision. It is not too late to review the plans. If we are going to impose the burden of paying back these loans on our children, let us at least ensure these funds are used to improve their future.