August 31, 2006

Donors pledge $940 million for Lebanon

By Patrick Lannin

STOCKHOLM (Reuters) - International donors pledged more
than $940 million on Thursday for war-torn Lebanon's immediate
relief efforts, nearly double the target amount.

The funds raised at the Stockholm meeting will go to
short-term needs, from shelter for those who lost their homes
in Israel's war with Hizbollah to removing unexploded bombs.

Lebanon hopes to hold a bigger conference later this year
to raise money for longer-term reconstruction.

"We believe that this is a very important accomplishment
... This will pave the way for further efforts," Lebanese Prime
Minister Fouad Siniora told a news conference.

He told the delegates from 60 countries and aid groups the
pledges "show that the Lebanese people are not alone."

A statement released after the conference said donors had
promised more than $940 million. A Swedish Foreign Ministry
official said this included $175 million of U.S. funds, part of
an aid package unveiled by President George W. Bush last week.

Sizeable donations also came from the European Commission,
France and Italy. Conference host Sweden promised $20 million.

With earlier commitments, more than $1.2 billion are
available for recovery and reconstruction, the statement said.

A preliminary estimate of infrastructure damage was $3.5
billion, an International Monetary Fund official said, warning
that Lebanon -- which already has one of the highest debt
ratios in the world -- faces a debt spiral if "considerable"
foreign aid on highly favorable terms is not forthcoming.

The closing statement also urged Israel to heed a call from
United Nations Secretary-General Kofi Annan to lift its
six-week-old sea and air blockade of Lebanon and for U.N.
Resolution 1701 to be fulfilled.

Lebanese revenues all but dried up as a result of the war
and blockade. This year's forecast of 5 percent growth will
likely turn out to be an economic contraction. The economy
would likely suffer well beyond 2006, the IMF said.

The Swedish government had set a goal of $500 million in
donor promises for Lebanon, which says a 34-day war between
Israel and Hizbollah guerrillas inflicted billions of dollars
in damage to its infrastructure and economy.

"Lebanon, which only seven weeks ago was full of hope and
promise, has been torn to shreds by destruction, displacement,
dispossession, desolation and death," Siniora said earlier.

Stockholm will play host to a smaller gathering on Friday
to discuss humanitarian needs in the Palestinian territories.


The Lebanon conference took place amid growing Western
concern that cash handouts from Hizbollah to those whose homes
were destroyed or damaged would entrench their popularity.

Israel began bombarding Lebanon after Hizbollah guerrillas
captured two Israeli soldiers and killed eight in a
cross-border raid. Nearly 1,200 people in Lebanon, mainly
civilians, and 157 Israelis, mostly soldiers, were killed
during the war.

Siniora said Hizbollah would have no access to funds raised
in Stockholm. "This idea that it will be siphoned one way or
another to Hizbollah is a fallacy."

Lebanese officials said a top priority was the building of
10,000 prefabricated homes for some of the 1 million people
displaced by the destruction. Another was the removal of
unexploded ordnance, including thousands of cluster bombs.

"What is particularly discouraging ... is to see how many
cluster bombs were used in the last 72 hours of the war," U.N.
relief coordinator Jan Egeland told Reuters Television.

Lebanon also plans to earmark $52 million for further work
on clearing an oil slick that has spread along its coast since
the bombing of the Jiyyeh power station last month.

According to U.N. and Lebanese estimates, Israeli strikes
on the plant's fuel storage tanks spilled 10,000 to 15,000 tons
of heavy fuel oil into the Mediterranean Sea.

(Additional reporting by Gilbert Le Gras in Washington)