World Bank refuses to fund US-brokered energy plan for Lebanon
Aside from lack of funding, the project to transfer Egyptian and Jordanian energy to Lebanon via Syria requires a sanctions waiver guarantee from the US, which is yet to be issued
By News Desk - April 23 2022

Electricity blackout in Beirut (Photo credit: Reuters)

Lebanese Energy Minister Walid Fayyad expressed his shock on 21 April when it was announced that the World Bank had refused to finance the transfer of Egyptian and Jordanian energy sources to Lebanon.

The World Bank stated it needs to review the project’s “political feasibility” before potentially reconsidering the project.

“I don’t know the meaning of the political feasibility they are talking about, which is the excuse behind this delay, and I’m in constant contact with the World Bank administration, US Ambassador Dorothy Shea, and French Ambassador Anne Grillo,” Fayyad stated.

The energy minister declared that the ball is in the court of the US and World Bank when it comes to fulfilling this project.

In addition to lack of funding, the project has another obstacle, which is to obtain clearance from the US. The transfer of Egyptian and Jordanian energy resources involves Syria as the intermediary, which requires sanction waivers that exempt this project from the US Caesar Act.

The Caesar Act, which was passed in 2019 by the US Congress and imposed harsh economic sanctions on Syria, prevents Lebanese cooperation and trade relations with Damascus.

During a visit to Egypt on 14 April, Lebanon’s Energy Minister Walid Fayyad revealed that the US-sponsored plan to import gas from Egypt through Syria is still waiting for guarantees from Washington to exempt both Beirut and Cairo from the sanctions.

In February, Egyptian and Syrian technical teams completed repairs on the gas pipeline that connects Lebanon to Syria, with reports indicating the pipeline was ready for the extraction of Egyptian gas headed for Lebanon.

A month earlier, Lebanese officials claimed they had received assurances from Washington that US sanctions on Syria would not affect Beirut’s plans to import gas and electricity from other countries in the region.

In a speech on 8 March, Hezbollah Secretary General Sayyed Hassan Nasrallah warned of the lack of assurances from the US on this energy-sharing project.

“Have the Lebanese officials obtained [something] from the Americans who are only offering false promises? Until this moment, the US State Department has not given Egypt and Jordan documents exempting them from the Caesar Act,” Nasrallah stated.

On 3 April, a joint statement issued by Hezbollah and the Amal Movement called on the Lebanese government to immediately accept the offer from the Islamic Republic of Iran to build two modern power plants in Lebanon.

Iran has also offered to sell Lebanon the fuel to power these plants, with sales transacted in Lebanese liras.

Currently, Lebanon’s fuel suppliers only accept major foreign currencies, such as dollars and euros. This has created further hardship, given the dwindling foreign currency reserves of the Lebanese Central Bank.

Since 2019, Lebanon has been facing a complete economic meltdown that has caused the shutdown of major power plants, forcing citizens to rely almost entirely on private generators for their energy needs.

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