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54–245 PDF 

" ! COMMITTEE PRINT 

111TH CONGRESS

1st Session 

S. PRT. 

2010

111–38 

FOLLOWING THE MONEY 

IN YEMEN AND LEBANON: 

MAXIMIZING THE EFFECTIVENESS 

OF U.S. SECURITY ASSISTANCE 

AND INTERNATIONAL FINANCIAL 

INSTITUTION LENDING 

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

JANUARY 5, 2010 

Printed for the use of the Committee on Foreign Relations 

Available via World Wide Web: 

http://www.access.gpo.gov/congress/senate 


seneagle
COMMITTEE ON FOREIGN RELATIONS

JOHN F. KERRY, Massachusetts, Chairman

CHRISTOPHER J. DODD, Connecticut 

RUSSELL D. FEINGOLD, Wisconsin 

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

BENJAMIN L. CARDIN, Maryland 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

JEANNE SHAHEEN, New Hampshire 

EDWARD E. KAUFMAN, Delaware 

KIRSTEN E. GILLIBRAND, New York 

RICHARD G. LUGAR, Indiana 

BOB CORKER, Tennessee 

JOHNNY ISAKSON, Georgia 

JAMES E. RISCH, Idaho 

JIM DEMINT, South Carolina 

JOHN BARRASSO, Wyoming 

ROGER F. WICKER, Mississippi 

JAMES M. INHOFE, Oklahoma 

DAVID MCKean, Staff Director

KENNETH A. MYERS, JR., Republican Staff Director

(II)

C O N T E N T S 

Page 

Letter of Transmittal ............................................................................................... v 

Executive Summary ................................................................................................. 1 

Introduction .............................................................................................................. 5 

Yemen ....................................................................................................................... 5 

Background ....................................................................................................... 5 

U.S. Security Assistance to Yemen ................................................................. 7 

IFI Lending ....................................................................................................... 15 

Lebanon .................................................................................................................... 18 

Background ....................................................................................................... 18 

Red Flags ........................................................................................................... 19 

U.S. Security Assistance to Lebanon .............................................................. 20 

IFI Lending ....................................................................................................... 26 

APPENDIXES

Appendix I.—Interlocutors in Yemen ..................................................................... 29 

Appendix II.—Interlocutors in Lebanon ................................................................ 30 

Appendix III.—Acronyms ........................................................................................ 31 

(III)

(v) 

1The report can be found on the Government Printing Office’s web-site—http://www.gpo.gov/ 

fdsys/search/home.action insert ′′S. Prt. 109-52′′ in the search line. 

LETTER OF TRANSMITTAL 

UNITED STATES SENATE, COMMITTEE ON FOREIGN RELATIONS, Washington, DC, January 5, 2010. 

DEAR COLLEAGUE: In the Fall of 2009, I directed my Senior Professional Staff Member for the Middle East, Dorothy Shea, to visit 

Yemen and Lebanon to gather information for two forthcoming 

committee reports. The first concerns security assistance, and is in 

follow up to the committee’s 2006 report, ‘‘Embassies as Command 

Posts in the Anti-Terror Campaign.’’ 1 The second report is the last 

in a series my staff have produced on lending by International Financial Institutions (IFIs). Although the circumstances facing 

Yemen and Lebanon differ greatly, I selected these two countries 

because they have both been major recipients of U.S. security assistance, particularly under Section 1206 of the National Defense 

Authorization Act. In addition, while both countries have received 

substantial IFI lending, significant structural reforms are urgently 

needed to tackle long-term development challenges. 

The stakes in both countries are quite high. As this report was 

going to press, we learned about the magnitude of the threat posed 

by al-Qaeda in Yemen: on December 25, 2009, Umar Farouk 

Abdulmutallab, a Nigerian national who is believed to have received training, indoctrination, and explosives in Yemen, attempted 

to blow up a Detroit-bound Northwest Airlines flight. On January 

3, 2010, the U.S. and British Embassies in Sanaa, followed by several other Western embassies, temporarily closed due to credible 

threats of planned suicide attacks by al-Qaeda operatives. Separately, Anwar al-Awlaqi, the Yemeni-American radical cleric, has 

been linked to numerous terrorism suspects, including Nidal Malik 

Hasan, charged with the November 2009 Fort Hood massacre. 

Many analysts assess that al-Qaeda in the Arabian Peninsula has 

taken advantage of the Yemeni government’s preoccupation with 

an insurgency in the north and a secessionist movement in the 

south to exploit the country’s large swaths of ungoverned spaces in 

an effort to consolidate and build capacity to launch terrorist operations. 

In addition to its multiple security challenges, Yemen, already 

the poorest country in the Arab world, faces daunting socio-economic crises, such as the depletion of its oil and water resources. 

The literacy rate is a little over 50 percent and unemployment was 

last estimated at 35 percent. Yemen’s security and socio-economic 

challenges are inter-related, a reality that U.S. assistance proVerDate Nov 24 2008 10:44 Jan 12, 2010 Jkt 000000 PO 00000 Frm 00005 Fmt 6601 Sfmt 6601 H:\DOCS\54245.TXT MikeBB PsN: MIKEB
vi 

grams must address urgently, creatively, and with unity of effort 

within the U.S. government and with like-minded donors. 

Lebanon, meanwhile, is still recovering from the 2006 war between Israel and Hizballah, as well as the 2007 fighting between 

Lebanese Armed Forces (LAF) and Fatah al-Islam at the Nahr alBarid Palestinian refugee camp. The United States has a strong interest in helping to further the professionalization of the Lebanese 

security services and their ability to counter terrorist threats. We 

have made substantial investments toward this end, but the work 

is far from over. We must also work to ensure the sustainability 

of U.S. assistance. In addition, the international donor community 

needs to do a better job of encouraging the kinds of structural reforms that will be necessary to overcome the country’s long-standing economic challenges, such as the massive public debt. 

While the key findings of this report will be incorporated as case 

studies in the broader committee reports, I wanted to share with 

you the entire staff trip report, which I believe provides useful insight into key issues underpinning the myriad challenges these two 

countries face and which U.S. security assistance, as well as IFI 

lending, is designed to help address. As the Congress and the Administration debate the issue of foreign assistance reform in general, and the role of security assistance in particular, as well as 

U.S. strategy to combat al-Qaeda in the Arabian Peninsula, I hope 

that you will find this information helpful. 

I look forward to continuing to work with you on these issues 

and welcome any comments you may have on this report. 

Sincerely, 

RICHARD G. LUGAR, 

Ranking Member. 

(1) 

FOLLOWING THE MONEY IN YEMEN 

AND LEBANON: MAXIMIZING THE 

EFFECTIVENESS OF U.S. SECURITY 

ASSISTANCE AND INTERNATIONAL 

FINANCIAL INSTITUTION LENDING 

EXECUTIVE SUMMARY 

During a September 27–October 2, 2009, Senate Foreign Relations Committee minority staff visit to Yemen and Lebanon, staff 

gathered information to contribute to two forthcoming committee 

reports, one on security assistance, and the other on lending by 

International Financial Institutions (IFIs). Although the circumstances facing Yemen and Lebanon differ greatly, the two countries were chosen because the security threats facing both have 

been serious; hence, they have both been major recipients of U.S. 

security assistance, particularly under Section 1206 of the National 

Defense Authorization Act. In addition, while both countries have 

received substantial IFI lending, significant structural reforms are 

urgently needed to tackle long-term development challenges. 

In both Yemen and Lebanon, although some problems persist in 

the management of the security assistance portfolios, the country 

teams have made a conscious effort to learn from past mistakes, 

and the U.S. Chiefs of Mission were exercising appropriate leadership over U.S. security assistance efforts. In both Yemen and Lebanon, U.S. security assistance has had a qualitative impact on the 

ability of the armed forces of the respective countries to counter 

terrorist threats. At the same time, in both countries, the United 

States and other international donors must guard against inappropriate uses of assistance. In Yemen, for example, the government 

may be tempted to divert U.S.-provided counter-terrorism assistance for use in the Houthi conflict in the North; in Lebanon, foreign aid donors must be mindful that without proper safeguards 

and transparency, local perceptions of favoritism in the apportionment of development assistance could exacerbate sectarian tensions. Finally, both Yemen and Lebanon are believed to receive 

substantial off-budget financial infusions from Saudi Arabia. While 

such cash transfers may help meet short-term needs, over the long 

term the lack of transparency surrounding them is unhealthy. 

Moreover, they may enable the perpetuation of poor governance 

practices, such as patronage. 

Among the key findings and recommendations are the following: 

2 

1For background on the respective roles and responsibilities of the various actors, see the December 4, 2009, Congressional Research Service (CRS) report prepared by Specialist in International Affairs, Nina M. Serafino: ‘‘Security Assistance Reform: Section 1206 Background and 

Yemen 

• Yemen is in turmoil. Recent terrorist plots emanating from 

Yemen against the United States and Western interests have 

underscored that the threats emanating from a resurgent alQaeda in the Arabian Peninsula (AQAP) pose a direct danger 

to U.S. national security. Yemen is simultaneously facing this 

and other security threats, as well as impending natural resource debacles, such as the depletion of its oil and water resources, and the fundamental economic development challenges of a least developed country. While the purpose of this 

staff visit was not to find solutions to these myriad problems, 

two things were clear: 

1) The challenges facing Yemen are inter-related and 

cannot be addressed in isolation. However dangerous and 

immediate the country’s security threats, they need to be 

dealt with in the context of the country’s deteriorating 

socio-economic situation and persistent governance challenges; and 

2) The United States lacks the leverage to resolve all of 

the problems facing Yemen on its own. It must work with 

the international community, including the IFIs, in addition to the Republic of Yemen Government (ROYG) and 

Yemeni civil society groups to urgently address these challenges before they spin out of control. 

• The United States and the ROYG have different priorities with 

respect to the myriad security threats that Yemen confronts. 

While the USG is focused on preventing al-Qaeda from making 

use of the country’s ungoverned spaces to recruit terrorists and 

launch terrorist operations, President Saleh’s top priority has 

been to defeat the Houthi insurgency in the north. December 

2009 saw a potential turning point, with Yemeni forces, supported by the United States, escalating their operations 

against al-Qaeda. Military airstrikes on December 17 and 24, 

2009 are said to have killed scores of al-Qaeda operatives, including, reportedly, some suicide bombers who were planning 

attacks against Western interests in Sanaa. Prior to this campaign, the ROYG was likely diverting U.S. counter-terrorism 

assistance for use in the war against the Houthis, and that 

temptation will persist. Sustaining ROYG commitment to the 

fight against al-Qaeda will be critical. 

• This potential misuse of security assistance underscores the 

importance of enhancing the current end-use monitoring regime for U.S.-provided equipment. Indeed, the existing end-use 

monitoring protocols in place have revealed discrepancies between U.S. records of security assistance and those that are in 

the possession of Yemeni defense forces. The Defense Security 

Cooperation Agency (DSCA), the Department of State, and Embassy’s Office of Military Cooperation (OMC) should work to 

reconcile these differences.1 In addition, they should conduct a 

3 

Issues for Congress,’’ which explains that major foreign military assistance programs have traditionally been carried out under State Department authority, oversight and guidance, while the 

Defense Security Cooperation Agency (DSCA) has been responsible for implementation. 

thorough review of physical security and accountability procedures at the Yemeni Special Operations Forces (YSOF) compound. 

• Civilian-military coordination at Embassy Sanaa is now excellent, with the Ambassador exercising Chief of Mission authority, as appropriate, over military local engagement efforts. Past 

problems resulting from a lack of coordination underscore the 

importance of unity of effort among all U.S. agencies. Making 

the most of a situation in which the military has been given 

a bigger role than is the norm in carrying out development 

work—under the banner of countering extremism—the USAID 

Mission in Yemen deserves credit for integrating military counterparts into its efforts, investing heavily in training and mentoring them, as appropriate. 

• The Mission made the case that it would be well-served if some 

of the reservists deployed to Yemen for short (usually 6 

months) tours could be re-deployed there for follow-on deployments. Considering the substantial investment the Mission 

makes in training these reservists, and the limited tours of 

duty for which they typically serve, this proposal is worthy of 

consideration. 

Lebanon 

• Lebanon is still recovering from the 2006 war between Israel 

and Hizballah, which inflicted great damage around Beirut, 

much of southern Lebanon, and other parts of the country. The 

2007 fighting between Lebanese Armed Forces and Fatah alIslam at the Nahr al-Barid Palestinian refugee camp led to further casualties and damage. These circumstances necessitated 

a marked increase in U.S. assistance to Lebanon, particularly 

in the realm of security assistance, totaling several hundreds 

of millions of dollars. 

• Because of these massive infusions of aid, U.S. security assistance programs in Lebanon have already come under substantial oversight. Previous oversight reports have recognized the 

concrete and measurable benefits that this quick-impact assistance had on the ground. They also identified some problems, 

many of them logistical in nature, particularly from the early 

days of implementation of assistance under Section 1206 of the 

National Defense Authorization Act. While not all of the problems have been eradicated, staff found that U.S. officials had 

taken steps to learn from past mistakes and avoid their duplication. 

• Having received large sums of Section 1206 assistance over the 

past several years, the U.S. security assistance program for 

Lebanon is now relying on Foreign Military Financing (FMF) 

for the longer-term sustainment needs, with no 1206 assistance 

requested for FY 2010. This is in keeping with the Congressional intent that the 1206 program be limited to helping partVerDate Nov 24 2008 10:44 Jan 12, 2010 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 H:\DOCS\54245.TXT MikeBB PsN: MIKEB
4 

ner nations confront urgent and emerging counter-terrorism 

threats. 

• The problem of official corruption was a recurring theme during this visit, with several interlocutors pointing to an overall 

lack of transparency, fueled by a lack of accountability in the 

Government of Lebanon’s budget process, including off-budget 

revenues and expenditures. In addition, many observers perceived an unhealthy influence of the country’s confessional political system on the apportionment of state resources. The 

U.S. Government, the IFIs and major Western donors all have 

procedures in place to guard against the misuse of foreign assistance. However, in the face of real or perceived confessional 

biases in the allocation of foreign assistance, donors should encourage still greater transparency. 

• One interlocutor argued that, in the face of a succession of crises, the Government of Lebanon has become a master at manipulating international donors, relying on hand-outs rather 

than taking on much-needed structural reforms. Without minimizing the seriousness of the crises that Lebanon has confronted in recent years, international donors should guard 

against the pitfalls associated with a crisis-driven approach. 

Rather, against the backdrop of Lebanon’s recent political and 

economic difficulties, international donors should press for 

structural reforms to address imbalances, including, importantly, Lebanon’s crippling official debt. 

5 

2 Ibid. This report provides a thorough review of the evolution of Section 1206 authority. Because Lebanon and Yemen are the second and third largest recipients of Section 1206 funding 

to date, totaling $105.5 million and $97.3 million, respectively, the report goes into a fair 

amount of detail about the composition of the respective assistance packages. 

INTRODUCTION 

On September 27–October 2, 2009, Senate Foreign Relations 

Committee minority staff visited Yemen and Lebanon to gather information to contribute to two committee reports. The first concerns security assistance, and is in follow up to the 2006 report, 

‘‘Embassies as Command Posts in the Anti-terror Campaign.’’ The 

second is the last in a series on lending by international financial 

institutions (IFIs). Although the circumstances facing Yemen and 

Lebanon differ greatly, the two countries were chosen for this visit 

because they have both been confronted with serious security 

threats requiring substantial amounts of U.S. security assistance, 

particularly under Section 1206 of the National Defense Authorization Act.2 In addition, both countries will likely remain flashpoints 

in the foreseeable future, necessitating a long-term, sustainable, security assistance strategy. In addition, both countries have received 

substantial IFI lending, but significant structural reforms are urgently needed to tackle long-term development challenges. 

With respect to Yemen, the purpose of the visit was not to find 

solutions to the myriad and urgent challenges facing that country, 

or the particular threat posed by al-Qaeda there, which has 

claimed responsibility for the December 25, 2009 attempted bombing of a Detroit-bound airplane. Background on these issues is offered below, however, to provide context for the observations and 

recommendations for U.S. engagement. Lebanon, meanwhile, is 

still recovering from the 2006 war between Hizballah and Israel, 

and has since been subject to prolonged periods of political gridlock. 

Indeed, the visit took place against the backdrop of lengthy negotiations to form a government of national unity following that country’s June 7 elections. Therefore, the report offers background on 

the Lebanese political climate, including the sectarian politics behind these national unity talks, to provide context for staff observations on security assistance and IFI lending. In addition to key 

findings on those subjects, the report has sections on ‘‘red flags’’ 

that warrant further attention. Recommendations are in italics. 

YEMEN 

BACKGROUND

Yemen is in turmoil; many analysts have characterized it as a 

‘‘failing’’ or failed state. Its weak central government is led by 

President Ali Abdullah Saleh, who has been in power since the 

1990 merger between North Yemen and South Yemen (and who 

was President of North Yemen from 1978 to 1990). There is no 

clear successor. Outside of the capital, the central government enjoys little legitimacy, resulting in large swaths of ungoverned 

spaces. The President relies on patronage to perpetuate his influence. 

Socio-economic Challenges: The poorest country in the Arab 

world, Yemen faces daunting economic development challenges, 

6 

3 According to State Department, only 3% of Yemen’s land is arable. The country has long 

been a food importer. In 2009 the World Food Programme provided $55 million in assistance 

to 1.6 million beneficiaries in Yemen. 4Statistics in this paragraph are widely cited in such reports as the State Department’s Background Notes (http://www.state.gov/r/pa/ei/bgn/35836.htm); the CIA World Factbook (https:// 

www.cia.gov/library/ publications/the-world-factbook/geos/ym.html); and the reports of numerous 

non-governmental organizations. 

coupled with serious security threats. On the economic front, 

Yemen is quickly depleting its oil, which has generated over 75 

percent of its income. Water resources are also running out, largely 

as a result of poor resource management and a growing popular addiction to the mild narcotic qat, a water-intensive crop, the cultivation of which absorbs approximately one-third of the country’s 

water. In addition, as a result of government subsidies, cultivation 

of qat has displaced that of other agricultural products, increasing 

the country’s food insecurity.3 Demographic trends are only intensifying these problems: population growth exceeds 3.4 percent per 

year, and more than two-thirds of the population is under the age 

of 24. The unemployment rate was last officially estimated (in 

2003) at 35 percent, and is probably higher. Literacy rates are 

about 50 percent.4

Security Threats: The security situation is extremely worrying. 

The Republic of Yemen Government (ROYG) is engaged in several 

ongoing conflicts: 

• Al-Qaeda has long been active in Yemen, as evidenced by the 

numerous attacks against Western targets for which it has 

claimed responsibility, going back to the October 2000 attack 

on the USS Cole. As this report was going to press, al-Qaeda 

claimed responsibility for the December 25, 2009 attempted 

bombing of Northwest Airlines flight 253 by the Nigerian-born, 

Yemeni-trained Umar Farouk Abdulmutallab; and on January 

3, 2010, the U.S., British, and several other Western Embassies in Sanaa temporarily closed, due to credible threats of 

planned suicide attacks by al-Qaeda operatives. Al-Qaeda twice 

launched attacks on the U.S. Embassy in September 2008; the 

second of which resulted 16 dead, including the 6 attackers. In 

January 2009, al-Qaeda affiliates in Yemen and Saudi Arabia 

merged to form al-Qaeda in the Arabian Peninsula (AQAP). 

AQAP was likely responsible for the June 2009 kidnapping and 

murder/mutilation of nine foreign aid workers, as well as the 

botched suicide bombing that targeted Saudi Assistant Interior 

Minister Prince Mohammed bin Nayef in August 2009. Yemen 

is the ancestral home of Osama bin Laden, and a disproportionate number of foreign fighters in Iraq and Afghanistan are 

said to have been of Yemeni origin. Hundreds of these veterans 

may now be returning to Yemen, as al-Qaeda seeks to exploit 

the country’s ungoverned spaces to plan and launch attacks. 

• Since 2004, there have been several rounds of civil war between al-Houthi guerrillas of the Shi’a Zaidi sect in the North 

and ROYG forces. Fighting erupted again in August, 2009 and 

has resulted in thousands of casualties, and 150,000 displaced 

persons. The ROYG’s use of aerial bombardment and artillery 

has contributed to the high toll of civilian casualties. 

7 

5 Christopher Boucek, Yemen: Avoiding a Downward Spiral, Carnegie Papers, Carnegie Endowment for International Peace Middle East Program Number 102: September 2009, p. 16. 

• Simmering resentment over perceived, and real, disenfranchisement by residents of the South has perpetuated unrest 

and irredentism. The latter half of 2009 has seen an uptick in 

clashes between southerners and the now exclusively northern 

soldiers deployed in the South. Recent calls for secession by 

former Saleh ally Sheikh Tariq al-Fadhli raise the specter of 

civil war. 

• Finally, Yemen faces the increasing phenomenon of piracy off 

the Somali coast. According to a report published by the Carnegie Endowment for International Peace, 130 piracy incidents 

occurred in the Gulf of Aden in the first half of 2009, compared 

to 111 in all of 2008.5

What is the United States Government doing to help the ROYG 

confront these challenges, and how do we prioritize among them to 

best target our assistance? No doubt, the threat posed by AQAP is 

the most critical to U.S. national security interests, and the USG 

must do everything in its power to neutralize that threat. As Christopher Boucek argues in the above-mentioned Carnegie report, 

however, it would be a mistake to focus foreign aid—and the attention of policymakers—inordinately on seeking a military solution to 

Yemen’s manifold problems. There is a clear linkage between Yemen’s economic and social development challenges and its security 

threats. Indeed, the perceived—and real—lack of prospects for the 

future may be contributing to the appeal of Islamic extremism. As 

one Yemeni interlocutor put it: ‘‘Either we give our young people 

hope, or someone else will give them an illusion.’’ 

The United States lacks the leverage to resolve the problems facing Yemen on its own. It must work urgently with ROYG and with 

partner civil society organizations in Yemen, and with like-minded 

partners in the international community, including the IFIs, and 

those with the most influence in Yemen, such as Saudi Arabia, urgently to address these challenges before they spin out of control. 

U.S. SECURITY ASSISTANCE TO YEMEN

Trends in U.S. Assistance to Yemen 

U.S. security assistance to the ROYG has increased dramatically 

in the past decade, as illustrated in the below table. Since the 2006 

creation of Section 1206 authority in the National Defense Authorization Act, U.S. security assistance has been more heavily weighted to military- rather than civilian-funded programs: In FY 2006, 

Yemen received $4.3 million in Section 1206; in FY 2007, it received $26 million. In FY 2009, that figure jumped to $66.8 million. 

Levels of Foreign Military Financing (FMF), administered by the 

State Department, have been more volatile. After zero funding in 

this category in FY 2001, Yemen benefited from a $20 million spike 

in FY 2002, with significant variations in following years. 

Economic development assistance, meanwhile, has seen a steady 

upward trajectory. USAID-funded development assistance has 

grown from zero in fiscal years 2001-2003 to $4.9 million in FY 

2008; $11.2 million in FY 2009. USAID has also funded Global 

8 

6 Boucek, p. 22. 

7 Although the ROYG often seeks to portray the war in the north as ‘‘counterterrorist’’ in nature and alleges that Iran is supporting and supplying weapons to the Houthis, these allegations 

have not been substantiated. 8 It is not possible to establish whether these night-time raids were enabled by U.S.-provided 

NVGs. The Yemeni armed Forces have also purchased night vision equipment from Russia and 

other sources. 

Health programs in Yemen since FY 2008 at about $3 million/year. 

Economic Support Funds (ESF) have also steadily increased, from 

zero in FY 2001 to $15.2 million in FY 2007. After a temporary decrease in FY 2008 to $1.5 million, ESF shot back up to almost $20 

million in FY 2009. 

In FY 2009, Yemen received just over $117 million in U.S. assistance, of which roughly $73 million (or 62 percent) was in the security domain. The balance went to ESF, Development Assistance 

(DA), Section 1207 Stabilization Programs, and Global Health. 

Some analysts have criticized this relative proportion of security 

assistance as indicative of a ‘‘misallocation of priorities’’ in Yemen.6

The reality is more complex. In fact, the U.S. military is also supporting economic development and good governance. For example, 

the Special Operations Command/Central Command (SOCCENT) 

has been engaged in rural development programs in Yemen’s tribal 

areas. 

Red Flags 

Different Priorities: The United States and the ROYG have different priorities vis-a`-vis Yemen’s security threats. While the USG 

is focused on preventing al-Qaeda from launching further terrorist 

attacks from Yemen, and has provided counter-terrorism assistance 

to the ROYG for this purpose, President Saleh’s top priority has 

been defeating the Houthi rebellion in the north. As a result of this 

difference in focus, there are serious concerns that U.S. counter-terrorism assistance, provided to assist the ROYG in combating alQaeda, has been diverted for use in the war against the Houthis.7

December 2009 may mark a potential turning point in the convergence of priorities, when Yemeni forces, supported by the United 

States, escalated their operations against al-Qaeda. Military airstrikes on December 17 and 24, 2009 are said to have killed scores 

of al-Qaeda operatives, including, reportedly, some suicide bombers 

who were planning attacks against Western interests in Sanaa. 

Even so, the temptation to divert U.S. counter-terrorism assistance 

for use in the war against the Houthis will persist. Sustaining 

ROYG commitment to the fight against al-Qaeda will be critical. 

• The reported use of night-time raids in Saada raises questions 

about whether the 1206-funded night-vision equipment has 

been used in these raids.8

• Likewise, concerned about the possibility of the Yemeni Air 

Force using propellant activated devices in aerial campaign in 

the North, the Embassy has put a hold on the provision of this 

equipment to the Yemeni Armed Forces. 

9 

U.S. Assistance to Yemen (In Millions of Historic Dollars) 9

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Request 

Development Assistance ........................... 0 0 0 2.0 0 0 1.5 4.9 11.2 35 Food Aid .................................................... 38.5 0.6 29.6 38.4 0 11.5 0 2.2 0 0 Economic Support Funds .......................... 0 2.0 8.0 16.7 7.8 20.8 15.2 1.5 19.8 0 Foreign Military Financing ........................ 0 20 1.9 14.9 10.4 8.4 9.7 4.0 2.8 10.0 International Military Education Training 0.2 0.5 0.6 0.9 1.0 0.9 1.0 0.9 1.0 1.1 Nonproliferation, Antiterrorism, Demining 

and Related Programs ......................... 1.2 0.8 0.8 0.5 1.9 0.2 2.3 2.5 2.5 3.6 

International Narcotics Control and Law 

Enforcement ......................................... 0 0 0 0 0 0 0 0.5 0 1.0 

NDAA Section 1206 ................................... 0 0 0 0 0 4.3 26.0 0 67 0 NDAA Section 1207 ................................... 0 0 0 0 0 10 0 10 10 0 

9 To best reflect how much money was spent (not just planned for), where possible data reflects obligations, per fiscal year. Because of different 

U.S. Government accounting practices, however, this is not always possible. Therefore, data for Sections 1206 and 1207 reflects allocations, with data provided by the State Department’s Office of the Coordinator for Foreign Assistance and the Congressional Research Service (CRS). All other data reflects obligations per fiscal year, with data through 2007 per the U.S. Agency for International Development’s Greenbook (http:// gbk.eads.usaidallnet.gov/). Data since that time comes from CRS. 

10 

10 Ambassador Seche told staff on October 20, 2009 that he had already directed OMC to develop a much more rigorous system. On November 11, 2009, State Department officials confirmed that such a system is being developed. 

• During the visit, the Embassy’s FMF Officer expressed uncertainty about whether there was a clear U.S. policy prohibiting 

the use of U.S. security assistance in the Houthi conflict, and, 

if so, how this policy was being communicated to the ROYG. 

When staff mentioned this officer’s apparent need for guidance 

to Ambassador Seche, he said the policy was clear, and that 

the OMC Chief was aware of it, as was the Yemeni government. But, he undertook to clarify to all OMC staff that U.S. 

assistance should not be used against the Houthis. The Ambassador also reviewed several instances in which U.S. policy 

against using U.S.-provided security assistance in the Houthi 

conflict had been conveyed to top Yemeni leaders. 

Need for Improved End-Use Monitoring: OMC engages in end-use 

monitoring, with an inspection of night-vision equipment provided 

to the Counter-terrorism Unit and the Yemeni Special Operations 

Forces (YSOF) conducted as recently as June, and July, 2009, respectively. Several USG interlocutors expressed the view that the 

existing system of biannual monitoring is insufficient to determine 

with precision how U.S. assistance is being used, however. Moreover, in the most recent round of inspections, the FMF officer found 

that much equipment was unaccounted for. There were also significant discrepancies between DSCA’s data on the quantity that had 

been provided and that which was in the Yemeni forces’ inventories. 

Recommendation: 

In light of the above concerns about the Yemeni Armed 

Forces’ use of U.S. security assistance against the Houthis, 

the USG should develop a more robust end-use monitoring 

regime for Yemen, and for any other country where there is 

ongoing armed conflict in which U.S.-provided CT resources could be diverted.10

In addition, in accordance with OMC’s recommendations, 

DSCA, the Department of State, and OMC should conduct 

a thorough review of physical security and accountability 

procedures at the YSOF compound, making improvements 

a condition for further U.S. military assistance. A DSCAappointed and -funded team should be sent to Yemen TDY 

to assist in this review. 

DSCA-OMC Process Problems: OMC reported numerous breakdowns in communications with DSCA. As OMC representatives put 

it, ‘‘DSCA needs to be revamped. It needs to be more accountable 

to Embassies.’’ This observation tracks with findings in a recent report issued jointly by the Inspectors-General of the Departments of 

State and Defense on Section 1206 assistance, which pointed to numerous instances of problems in information flow between DSCA 

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11See the Interagency Evaluation of the 1206 Global Train and Equip Program, Inspectors 

General of the U.S. Department of Defense (Report No. ID-2009-007) and U.S. Department of 

State (Report No. ISP-I-09-69), August 31, 2009, in particular Appendix H: Lebanon Case Study, 

pp. 64–66. 

bassies. Such problems concerned the status of assistance actually 

delivered, and even the quantity of materiel agreed in contracts.11

Pros and Cons of Increasing the Military Involvement in 

Foreign Assistance 

Asked for his views about the foreign policy implications of the 

growing military role in foreign assistance, Ambassador Seche expressed concerns about potential pitfalls if Chief of Mission authority in coordinating and overseeing such programs is circumvented. 

For example, the above-mentioned SOCCENT rural development 

program reportedly got off to a rocky start due to misperceptions 

on the part of tribal leaders about what the USG’s intentions were. 

Fortunately, an embarrassing international incident was avoided. 

As a result of this incident, the Ambassador has more firmly asserted his primacy as Chief of Mission in approving such operations. In addition, the SOCCENT team learned some important 

lessons about the need to fully integrate its efforts with the Embassy’s broader vision, and to take advantage of the regional expertise 

and cultural knowledge of their State Department and USAID colleagues. 

Asked about the pros and cons of using military resources to conduct the kinds of economic development activity that traditionally 

has been the purview of civilian agencies, Embassy staff indicated 

that while USAID has the comparative advantage with respect to 

conceptualizing, implementing, and overseeing development assistance, in Yemen at least, the Mission has had to learn to live with 

a bigger military role in this field. Many Embassy officers have 

chosen to embrace this reality, pointing out the advantages of being 

able to draw on the U.S. Military’s vast personnel and financial resources. In addition, because these military officers operate under 

the authority of their respective commands, as opposed to under 

Chief of Mission authority, they are allowed to travel to some areas 

of the country that are off-limits to civilian personnel. Due to Embassy travel restrictions for civilian employees, USAID officers 

have not been out to visit some USAID-funded projects in many 

years. 

Civ-Mil Coordination Within the Embassy 

The need for better civilian-military coordination within the Embassy was identified in the 2006 ‘‘Embassies as Command Posts’’ 

report. Ambassador Seche clearly takes seriously the exercise of 

Chief of Mission authority in these matters. He chairs bi-weekly 

meetings of the Embassy’s inter-agency Counter-terrorism Working 

Group. Indeed, the military assistance program in Yemen has improved, thanks to this coordination between the military and civilian sides of the Embassy. Asked to characterize internal Embassy 

coordination, one military officer said it was ‘‘phenomenal.’’ The 

USAID Mission Director agreed, praising the ‘‘unity of purpose’’ 

pursued by the different actors on the country team. 

12 

As evidence of the military’s full integration, the USAID Mission 

Director pointed to the fact that military representatives had been 

invited to, and participated constructively in, USAID’s strategic 

planning conference in Cairo, at which the Mission’s new threeyear strategy was developed. The SOCCENT Forward Lt. Col. in 

country said his team ‘‘wouldn’t think of doing anything that had 

not been fully coordinated with the country team.’’ Staff found this 

commitment to coordination and unity of purpose exemplary. No 

doubt, the personalities of the Embassy’s leaders have contributed 

to this seamlessness, but staff found that the structures are in 

place to sustain it. 

Regional Expertise and Continuity of Effort 

Another of the areas of potential pitfall identified in the ‘‘Embassies as Command Posts’’ report was the deployment of military personnel with limited regional or linguistic expertise for short (usually six-month) tours. This phenomenon continues to be a problem 

in Yemen. The USAID Mission Director said he and his team make 

a substantial investment in training new military arrivals with 

whom they must work closely in carrying out joint programs. He 

emphasized that USAID is prepared to make this investment. He 

would like to see the Mission get more return on this investment, 

however. He suggested that reservists who are activated for sixmonth tours in Yemen as Civilian Affairs Officers or with the Military Information Support Team (MIST) return to their country of 

assignment for a follow-on deployment. 

Recommendation: 

In Yemen, where USAID has invested heavily in training 

these reservists in development policy management and 

local culture, it is understandable that the Mission would 

want to improve returns on this investment. Such follow-on 

re-deployments also merit consideration more broadly. 

USAID/Sanaa is actively seeking the redeployment of two such 

MIST team members, whose work has been quite well received. 

SOCCENT has also learned that in a country/region where local 

culture is built on relationships, episodic engagements will not succeed in delivering results. It has therefore embedded teams of 

trainers with the host government counterpart groups. 

FMF vs. 1206 

Of the host government officials with whom staff spoke, there 

was little to no understanding of the differences between FMF and 

Section 1206-funded assistance. They did not distinguish at all between military-administered or civilian-administered programs. 

Their focus, understandably, was on the end result, i.e., what kind 

of materiel and training assistance could be provided, and how 

quickly. 

When asked about the relative advantages of 1206, as opposed 

to FMF, representatives from the Office of Military Cooperation 

(OMC) expressed understanding for the relative slowness of the 

FMF process, from the Letter of Approval phase to actual delivery 

of materiel. Because FMF is meant for long-term sustainment, they 

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12 In fact, in the FY 2009 Defense Authorization Act, the Congress provided authority for Section 1206 funds to be used in consecutive fiscal years, i.e., funds for a program that begins in 

one fiscal year may be used for that program in the next fiscal year. It is not likely that 1206 

authorities would be expanded further for multi-year funding. Although the idea may warrant 

consideration from the perspective of logistical effectiveness, the notion of multi-year programming may run counter to Congressional intent in creating the 1206 mechanism to help partner 

nations combat urgent and emerging terrorist threats. See the above-referenced CRS report on 

‘‘Security Assistance Reform: Section 1206 Background and Issues for Congress’’ for a review 

of the legislative history and evolution of Section 1206 legislation. 

ning) can be built into the planning process. Section 1206 funds, 

while meant to have a quicker impact to deal with urgent needs, 

also suffer from delays, however, since a ‘‘pseudo-FMF’’ process is 

followed once the funds have been approved. 

To help speed up the 1206 process, Embassy Sanaa’s OMC team 

offered the suggestion that some of the steps in the approval process should be allowed to be pursued simultaneously, rather than 

sequentially. In addition, to mitigate the sometimes long lead times 

in procurement, one OMC officer suggested that the Section 1206 

authority be amended to allow for disbursement for approved 

projects over a two-year period.12 Finally, to avoid situations in 

which Posts invest significant resources in developing proposals 

that end up not being approved, the Combatant Commands, with 

input from the State Department, should provide Embassies with 

a sense of the likelihood that their Section 1206 proposals would 

receive funding before the Embassies spend too much time in proposal development phase. 

Recommendation: 

These suggestions have the potential to improve effectiveness of the 1206 program and warrant further study. 

Constructive Criticism from Host Government End Users 

The Chairman of the Yemeni Coast Guard (YCG) expressed gratitude for the significant materiel support and training that the 

USG has provided the Yemeni Coast Guard. Specifically, the initial 

tranche of 44-foot motorized lifeboats allowed the YCG to start operating. Asked for constructive criticism about the program, the 

YCG requested additional assistance, more timely delivery, and in 

one case, easier-to-maintain motors: 

• A second tranche of Section 1206-funded boats, some 7-meters 

and some 13-meters, boosted the YCG’s ability in the realm of 

protection, search and rescue, and training. These boats have 

limited endurance in the sea, however. The YCG now seeks to 

acquire medium-sized boats to conduct anti-piracy, anti-smuggling, and anti-terror missions. Without these boats, the YCG 

is unable to respond to Coalition Forces’ warnings about Somali pirates in international shipping lanes. (The USG will 

provide two 87-foot boats funded under Section 1206, but delivery is not expected in 2011.) 

• The Mercury outboard motors provided in some of the boats 

were deemed ‘‘too sophisticated’’ (with their advanced electronic systems) for the YCG to maintain. The YCG expressed 

preference for Yamaha equivalents, which is better understood 

by local mechanics and for which spare parts are more easily 

14 

13Of course, the United States actively opposes the Arab League boycott of Israel. While some 

Arab states do not observe the boycott, Yemen does. 

accessible. (U.S. Marines were able to repair two out of four of 

these motors on a recent training exercise.) 

• Approximately two years ago, the Army Corps of Engineers 

agreed to build a pier at the Gulf of Aden. This FMF-funded 

contract was opened for bidding, but no U.S. companies bid, either because of the security situation in Yemen or the relatively small size of the project. The YCG fulfilled its part of 

the agreement by preparing the infrastructure. The Coast 

Guard was concerned about the length of time that had lapsed 

without U.S. fulfillment of its commitment. 

Specific areas for improvement cited by the Yemeni Air Force 

Colonel in charge of international cooperation include: 

• Provision of English language labs: Through a mix-up at the 

port of entry, equipment and materials to create English language instruction labs, which had been designated to go to the 

Air Force, ended up being redirected to the YCG. 

• Difficulties in Parts Repair Process: The Air Force has run into 

repeated problems when it sends parts back to the United 

States for repair. Many contractors erroneously believe that 

Yemen is not eligible to receive military assistance, so they disallow third-party transfers. 

• A couple years ago, Yemen requested Excess Aerospace Ground 

Equipment (AGE). The equipment was based in Europe. Unfortunately, a contract was never let for the refurbishment of this 

equipment, since it was unclear which of the services would be 

responsible for funding it. According to OMC, DSCA recently 

instructed the Air Force to take responsibility for this project. 

An Avoidable Problem in Provision of Excess Defense Articles (EDA) 

Yemen benefited from Excess Defense Articles amounting, on 

paper at least, to $36.3 million in FY 2007. According to OMC representatives, this number is artificially inflated, as Yemen is eligible to purchase EDA at drastically discounted prices. The EDA provided consisted of medical supplies, uniforms, and personal equipment. Unfortunately, the Ministry of Defense subsequently rejected 

some of the medical equipment provided, probably because some of 

it was Israeli-origin.13 Because most products in the EDA catalogue 

are not accompanied by descriptive photographs (which in this case 

would have shown Hebrew writing), the origin of the equipment 

was not known at the time of order. 

1206: Consultations with Host Government vs. Managing Expectations 

Noting the recommendation in the August 31, 2009 joint report 

by the Inspectors General of State and Defense, OMC officials said 

it would not be helpful to engage in consultations with Yemeni 

military authorities in the 1206 proposal development phase. They 

expressed the opinion that the partnership is not mature enough 

to allow consultations prior to approval. To do so would risk raising 

15 

expectations on the part of their Yemeni counterparts. OMC representatives explained that they make judgments based on their 

knowledge of the Yemeni military’s needs. 

IFI LENDING

Overview of Development Issues and International Donor 

Assistance 

Yemen is beset by extreme poverty, economic stagnation, explosive population growth, deficient health and education systems, 

and rapidly depleting natural resources, all made worse by weak 

governance and endemic corruption. The country ranks 153rd on 

the Human Development Index. Yemen was already falling behind 

in its efforts to reach most Millennium Development Goals; the 

global economic crisis has compounded its economic woes, both 

from falling oil revenues and decreased remittances from Yemenis 

working abroad. The UN Development Program considers Yemen a 

least developed country (LDC), and the country’s socio-economic indicators bear this out. The $16 in per capita donor assistance it receives is well below international averages for LDCs, however. (By 

comparison, Benin receives $36, and Mozambique $51, respectively, 

in per capita assistance.) 

Since its recent pledge of $83 million per year in development assistance for the next five years, the United Kingdom has become 

Yemen’s largest bilateral donor. At a November 2006 donors conference in Paris, international donors pledged $5 billion for the period 2007-2010. Donors included: Saudi Arabia, the Arab Fund for 

Socio-Economic Development, Qatar, the United Arab Emirates, 

the World Bank Group, the Arab monetary Fund, the Islamic Development Bank, Kuwait, Netherlands, Germany, the European 

Union, and the United States. For a number of reasons, many of 

the funds pledged at Paris have not yet materialized however. 

First, Yemen has not met some of the reform conditions some donors tie to their aid. In addition, implementation of projects is often 

constrained by Yemen’s absorptive and capacity issues. That said, 

it should also be taken into consideration that Yemen is believed 

to receive substantial and regular off-budget financial infusions 

from Saudi Arabia. Many commentators view such cash transfers 

as deleterious, contributing to a lack of transparency and enabling 

the perpetuation of poor governance practices, such as patronage. 

The World Bank’s Program 

Yemen has experienced periods of steep decline in international 

donor assistance, following the 1991 Gulf War, when Yemen supported Saddam Hussein; and following its own civil war in 1994. 

Since this latter period, Yemen has been gradually rebuilding its 

relationships with development partners, and in recent years a 

number of donors have increased their involvement in Yemen, including beyond formerly project-based assistance. 

According to the World Bank Resident Representative, the Bank 

has about $1 billion in existing projects in Yemen, some of which 

have been ongoing for 4-5 years. The Bank’s annual lending is between $120-130 million. For the past two years, Yemen has benefited from International Development Association (IDA) grants; 

16 

previously World Bank assistance took the form of credits. The 

Bank’s assistance pledged at the 2006 Consultative Group (CG) 

meeting on Yemen account for about 8 percent of total pledges 

(compared to about 50 percent prior to the CG). The International 

Monetary Fund (IMF) does not have a permanent presence in 

Yemen but provides advisory services via the Article IV process. 

The last Article IV consultations took place from October 21 to November 3, 2008 in Sanaa. 

The Bank’s objective in Yemen is to facilitate Yemen’s further 

progress toward the Millennium Development Goals. These goals, 

in turn, are in sync with the ROYG’s stated goals, as articulated 

in the National Reform Agenda, the focus of which is on human development, including education and health; water resource management; and good governance. The Bank measures the effectiveness 

of its programs in accordance with institutional standards, i.e., it 

produces Project Completion Reports when a project closes. The 

Bank brings out a new team not involved in the planning or implementation of the project to assess the World Bank’s role and the 

government’s role and solicits government comments. Before the report is made public, it is subject to review by the Independent 

Evaluation Department at the World Bank in Washington. 

Need for Private Sector Investment 

Increased foreign direct investment (FDI), as well as domestic investment, will be critical if Yemen is to create needed jobs—and 

hope for the future—among its increasing population of young job 

seekers. According to the 2009 report of the UN Conference on 

Trade and Development, Yemen is experiencing a downward trend 

in FDI inflows. Gross domestic investment as a percentage of GDP 

has also declined for the past two years. In the face of falling oil 

revenues and its rapidly depleting oil sector, the ROYG had been 

putting its hopes in the development of the liquefied natural gas 

(LNG) sector. As the Country Director for the International Finance Corporation put it, however, the slump in the international 

market for LNG renders this strategy no longer viable. He made 

the case that, ‘‘If Yemen’s economic development prospects are to 

have any success, it will be as the result of very time-consuming, 

hard-slogging micro-financing.’’ There are no quick fixes. Right 

now, he said, there is no coordination among donors on private sector development—a reality he intended to change. Nor were there 

any micro-finance banks based in Yemen, although one—al-Amal— 

has announced plans to open there. 

Recommendation: 

To the extent that micro-finance banks need to be induced to enter the Yemeni market, international donors 

should provide incentives. Similarly, the international 

donor community in Yemen and the ROYG itself should 

focus more attention—and resources—on private sector development. The IFC has thus far provided business education training to 26,000 graduates, many of whom will become trainers themselves. Such activities should be expanded and built upon. 

17 

14The Inspection Panel: Report No. 48995-YE Report and Recommendation: Yemen: Institutional Reform Development Policy Grant (Grant No. H336-YEM), June 18, 2009. 

World Bank Investigative Panel: Oversight Run Amuck 

On June 18, 2009, the World Bank issued a 167-page World 

Bank Inspection Panel Report on an Institutional Reform Development Policy Grant, in which a poorly documented complaint on the 

part of a Yemen-based non-governmental organization was scrutinized in minute detail.14 Asked about how many staff hours had 

been spent on reviewing and explaining the Bank’s actions in response to the group’s ill-conceived accusations, the Bank’s Resident 

Director admitted that an inordinate amount of staff time and effort, including at the executive level, had gone into this process. He 

explained that there had been political pressure in Washington to 

look into this case, since it was the first complaint ever received 

from the Middle East/North African region. 

Recommendation: 

This case was not worthy of the substantial staff time 

and resources that the Bank expended in responding to it. 

The U.S. Executive Director to the World Bank should 

weigh in with Bank leadership to ensure that some threshold of credibility is established prior to commitment of 

Bank resources in investigative panels. 

Parliamentary Oversight 

While the Yemeni Parliament does not challenge the Executive 

Branch in exercising its oversight prerogatives, it has been more 

vigorous with respect to reviewing World Bank lending. In some 

cases, this has led to delays in project implementation, in one recent case, a 24-month delay. Nonetheless, the World Bank Resident 

Representative welcomed the Parliamentary role as ‘‘healthy.’’ 

Empowering Reform From Within 

Unhappy with the slow pace and uneven results of Yemen’s reform efforts, a small group of largely Western-educated and wellconnected intellectuals and technocrats, under the auspices of the 

President’s son, developed a targeted action plan to focus the government’s short- to medium-term reform efforts. This group took 

into consideration the Government’s Third Five-Year Plan for Poverty Reduction, as well as other existing plans and strategies, but 

determined that these various plans sought to take on too many 

challenges at once. They therefore developed 10 priorities on which 

the ROYG should focus for the next year. Indeed, when staff asked 

the Vice Minister of Planning and International Cooperation to describe the ROYG’s development strategy, he said that this 10-point 

plan was now the operating document. The 10 points are not perfect; they do not address head on the need to eliminate government 

subsidies for diesel, for example, relying instead on a strategy of 

seeking lower prices on the international market to reduce costs. 

That said, because this plan is ‘‘locally owned,’’ in the words of one 

of its drafters, it stands a greater chance of success than reforms 

mandated by foreign donors. 

18 

15For a general discussion on the need for fiscal transparency in Lebanon, see the 2009 report 

on Lebanon by the e-Standards Forum of the Financial Standards Foundation: http:// 

estandardsforum.org/lebanon/standards/code-of-good-practices-on-transparency-in-fiscal-policy. 

Recommendation: 

The international donor community should work to empower and support such locally owned reform processes. 

LEBANON 

BACKGROUND

Lebanon and the United States have traditionally enjoyed close 

relations, reflecting the countries’ cultural and political ties, as well 

as the bonds cultivated by a large Lebanese-American community. 

Lebanon is a democracy, but the country’s democratic processes 

and institutions reflect entrenched confessional political affiliations. By agreement since independence in 1943, and affirmed in 

the 1989 Ta’if Agreement, the country’s top three constitutional positions are reserved for citizens from specific religious groups: the 

President is Maronite Christian; the Prime Minister is Sunni Muslim; and the Speaker of Parliament is Shi’a Muslim. Confessional 

politics can be messy, as was seen in the lengthy period of negotiations to form a national unity government following the June 7th 

elections. The result was five months of inertia, as the caretaker 

government was not empowered to make significant decisions, including on security assistance and international financial institution lending. 

Further complicating matters, the Parliament has not passed a 

budget for the past five years. Official guidance allows Ministries 

to spend 1/12 of the previous year’s expenditures each month, but 

a widening deficit suggests that more is being spent. Moreover, the 

substantial off-budget aid that the GOL is believed to receive from 

Saudi Arabia is not accounted for, contributing to a general lack of 

fiscal accountability.15

It must also be taken into consideration that Lebanon is still recovering from the 2006 war between Israel and Hizballah, which 

left much of southern Lebanon and other parts of the country in 

ruins. The 2007 fighting between Lebanese Armed Forces and 

Fatah al-Islam at the Nahr al-Barid Palestinian refugee camp led 

to further casualties and damage. According to the State Department, over $3.7 billion in civilian infrastructure was destroyed in 

both conflicts and thousands were displaced. Postwar donors’ conferences in Stockholm in August 2006 and Paris in 2007 resulted 

in about $8 billion in pledges of mostly in-kind assistance, much of 

which was conditioned on economic reforms. U.S. assistance to Lebanon increased markedly after the 2006 war and even more so in 

the aftermath of the Nahr al-Barid conflict. 

Finally, no study of the impact of U.S. programs or assistance in 

Lebanon would be complete without taking into consideration the 

constraints imposed by the security situation there. Specifically, all 

U.S. Direct Hire employees must live on the Embassy compound. 

The Embassy’s current facility is operating at full capacity with 

only very limited options for expansion. Employees’ movements 

outside the compound must take place in armored vehicles with 

19 

bodyguard protection, for which there are finite resources. In the 

words of the Deputy Chief of Mission, this reality ‘‘effects everything we do—it limits everything we do.’’ For example, the USAID 

Mission is comprised of two US Direct Hires, but programs comparable in magnitude to the $100 million it will soon be managing 

would be staffed by many more in other countries. All too often, requests for official visits to Lebanon end up being denied, simply because there is not sufficient space to house the visitors. The Embassy is currently engaged in negotiations to purchase a property 

on which to build a new Embassy compound (NEC) that would be 

able to meet anticipated security and infrastructure needs, and the 

State Department has identified funding for this construction starting in 2011. 

Recommendation: 

Given the importance of U.S. interests in Lebanon and 

the constraints placed on pursuing those interests by the 

current infrastructure limitations, the Department should, 

within existing budgetary resources, make the acquisition of 

land and building of a NEC a high priority, applying diplomatic pressure on those in a position to influence this outcome, as appropriate. 

RED FLAGS

• The problem of official corruption was a recurring theme during this visit, with several interlocutors pointing to an overall 

lack of transparency, fueled by a lack of accountability in the 

official budget process, as well as off-budget revenues and expenditures. Many observers also perceive an unhealthy influence of the country’s confessional political system on the apportionment of state resources. Speaking to the specific problems 

of corruption in the management of international donor assistance, one official charged that, ‘‘The entire system is corrupt 

and inefficient.’’ He cited as examples cases in which waste 

water treatment plants were built with no connection to 

houses; roads were built before plumbing had been installed, 

requiring the newly constructed roads to be torn up and re-constructed. He attributed some of these problems to a ‘‘shopping 

list approach’’ to foreign aid, and the absence of national priorities or a commitment to exploiting synergies. 

• Manipulation of Crises: One interlocutor argued that, in the 

face of a succession of crises, the GOL has become a master at 

manipulating international donors, relying on hand-outs rather 

than taking on much-needed structural reforms. ‘‘The whole 

international community has been blackmailed for ages. We 

don’t need more money. We need to change the rules of the 

game. We need to change the structure. We need to break our 

dependence on foreign aid.’’ 

Recommendation: 

Without minimizing the seriousness of the crises that 

Lebanon has confronted in recent years, the United States 

Government and other international donors should guard 

20 

19 In addition to the committee’s own Embassies as Command Posts in the Anti-Terror Campaign: A Report to Members of the Committee on Foreign Relations, United States Senate, of 

December 15, 2006, see Interagency Evaluation of the 1206 Global Train and Equip Program, 

Inspectors General of the U.S. Department of Defense and U.S. Department of State, August 

31, 2009; as well as Assessments of the Impact of 1206-Funded Projects in Selected Countries: 

Lebanon, Pakistan, Yemen, Sao Tome and Principe, by Eric Thompson and Patricio AsfuraHeim for CNA Analysis and Solutions, July 2008. The Government Accountability Office is also 

currently undertaking a review of Section 1206, at the conclusion of which it will publish its 

findings. 

against this phenomenon. Moreover, it should be kept in 

mind that, while crises can be used an excuse for inaction, 

they can also be catalysts for addressing difficult issues. 

U.S. SECURITY ASSISTANCE TO LEBANON

Trends in U.S. Assistance 

As documented in the chart below, U.S. assistance to Lebanon 

has mushroomed in recent years. As recently as FY 2004, the 

United States provided Lebanon with little security assistance. 

There was no Foreign Military Financing (FMF) program, and 

funds for International Military Education and Training (IMET) 

were limited to $800,000. The events of 2006 changed that. 

Hizballah acted as an independent militia in provoking and conducting war with Israel in the summer; it later sought to topple 

Lebanon’s elected government. Thus, the United States vastly increased its security assistance to Lebanon to help enhance the effectiveness of its armed forces and their ability to rein in 

Hizballah. This assistance has taken the form of FMF, which has 

increased dramatically; and IMET, which has increased only moderately; in addition to significant infusions of assistance under Sections 1206, of which Lebanon has been one of the biggest beneficiaries; and 1207 of the Defense Authorization Act. In addition, in 

recent years Lebanon has benefited from over $60 million in International Narcotics Control and Law Enforcement Assistance 

(INCLE) and about $19 million in Nonproliferation, Anti-terrorism, 

Demining, and related programs (NADR). 

Economic Support Funds (ESF) have also increased appreciably. From a baseline of $33.2 million in ESF in FY 2004, the figure 

jumped to $61.9 million in FY 2006 and $137.4 million in FY 2007. 

ESF in FY 2008 and 2009 was also substantial, but less than the 

2007 peak figure. Most USAID funding in Lebanon has been provided through the Office of Transition Initiatives, which went from 

zero in FY 2005 for $39.7 million in FY 2006, and $25.7 million in 

FY 2007. Food aid also spiked during FY 2006. 

Continuing Oversight Leads to Improved Operations 

Because Lebanon has been a major recipient of security assistance, it has already come under substantial oversight.19 These efforts have recognized the timeliness and effectiveness of U.S. security assistance, pointing to tactical data, such as the number of M113 tanks that were made mission-capable as a result of Section 

1206 assistance, and the number of bombing raids and medical 

evacuation flights flown with UH-1’s in the Nahr al-Barid conflict. 

In addition, the Lebanese Armed Forces (LAF) earned high marks 

for following up on the 1206 program with FMF and FMS investment to make 1206-funded capabilities sustainable over the long 

21 

term. Not surprisingly, the reports also identified problems, particularly from the early days of Section 1206 implementation. The 

purpose of this report is not to re-hash previously published findings. However, staff did ask interlocutors in Lebanon about the extent to which they have made progress in resolving the more serious problems identified in these reports. For example: 

• The DOD and State Inspectors General (IGs) identified a ‘‘lack 

of cost management’’ in one case in which the USG paid 

$779,000 in fees to deliver spare parts for UH-IH helicopters 

valued at $598,000. In addition, the IGs determined that over 

$4 million in Section 1206 assistance had not been obligated 

prior to the end of the fiscal year—‘‘a lost opportunity to provide the vetted and approved assistance.’’ According to representatives of Embassy Beirut’s Office of Defense Cooperation 

(ODC), in both cases, problems stemmed from the difficulties 

associated with obligating the one-year monies of Section 1206. 

Although such difficulties persist, they reported that the Embassy has been successful in streamlining the 1206 process. 

• The ODC is working with the LAF to overcome one of the 

other deficiencies cited in the IGs’ report, i.e., a crippling lack 

of spare parts and tack shoes for the LAF’s M-113 armored 

personnel carriers. They have opened a new case to refurbish 

the M-113s, since the spare parts that had been envisioned in 

an earlier 1206 case ended up being obsolete. 

• The IGs identified multiple discrepancies between information 

available to DSCA and ODC about the status of 1206 cases. In 

several cases, DSCA reported that assistance that had been delivered to the Lebanese Armed Forces, while ODC reported 

that such assistance had not been delivered. The fact that the 

IGs were not able to reconcile these differences was telling. 

DSCA and ODC/Beirut have been working to address this 

problem through weekly conference calls. 

Recommendation: 

The Administration should develop a centralized information management system, with appropriate checks and 

balances for accuracy, to accurately track the status of all 

Section 1206 assistance. 

22 

U.S. Assistance to Lebanon (In Millions of Historic Dollars) 16

2004 2005 2006 2007 2008 2009 2010 Request 

Development Assistance ................................................................ 0.5 3.8 3.5 6.4 0 0 0 Food Aid ......................................................................................... 0 0.1 13.1 0.4 0 0 0 Economic Support Funds ............................................................... 33.2 18.7 61.9 137.4 44.6 67.5 109.0 Foreign Military Financing ............................................................. 0 0 29.7 4.8+ 17 220 6.9 159.7+ 74 100 

International Military Education Training ..................................... 0.7 0.8 0.8 0.9 1.5 2.1 2.5 Nonproliferation, Antiterrorism, Demining and Related Programs 0.1 0.1 1.9 9.8 4.7 4.6 6.8 International Narcotics Control and Law Enforcement ................. 0 0 0 0.2+ 18 60 0.5 6.0 20.0 

NDAA Section 1206 ........................................................................ 0 0 10.5 30.6 15.1 49.3 0 NDAA Section 1207 ........................................................................ 0 0 10.0 0 10.0 10.0 0 

16 To best reflect how much money was spent (not just planned for), where possible data reflects obligations, per fiscal year. Because of different U.S. Government accounting practices, however, this is not always possible. Therefore, data for Sections 1206 and 1207, as well as the monies appropriated in the 2007 and 

2009 supplemental spending bills, reflects allocations, with data provided by the State Department’s Office of the Coordinator for Foreign Assistance and CRS. All other data reflects obligations per fiscal year, with data through 2007 per the U.S. Agency for International Development’s Greenbook (http:// gbk.eads.usaidallnet.gov). Data since that time comes from the Congressional Research Service (CRS). 

17 In supplemental funding bills for FYs 2007 and 2009, Lebanon benefited from additional allocations for FMF in the amounts of $220 million and $74 million, 

respectively. 

18 Similarly, supplemental funding for FY 2007 allowed for allocation of an additional $60 million in INCLE funding. 

23 

Internal and External Coordination 

The Embassy demonstrated excellent internal coordination on 

foreign assistance, with the Ambassador and DCM actively overseeing policy and coordination on the full range of issues associated 

with multiple security, reconstruction, and development assistance 

programs. On security issues, either the Ambassador or DCM 

chairs an interagency core group that meets weekly. In addition, 

the Embassy convened a group of international donors of security 

assistance to coordinate plans and action in that realm. Staff had 

the opportunity to meet with this group, which gathers every sixeight weeks, and which has sub-groups on border security, rule of 

law assistance, and assistance to the LAF. The U.S. Embassy 

maintains a matrix to track all international security assistance 

that it shares with that group. 

As a result of this coordination, there was widespread agreement 

among donors that the Lebanese Government, and the LAF in particular, needs to develop a national security strategy. In the words 

of a British defense official, thus far, the LAF’s approach has been 

tactical -- built around the kinds of materiel and other assistance 

it has been able to receive from donors. His Spanish counterpart 

agreed, concluding that the contrary views sometimes expressed by 

the Defense Minister and the LAF Commander were reflective of 

the absence of a grand strategy. Donors recognized that confessional loyalties are a key factor. 

FMF vs. 1206 

U.S. security assistance to Lebanon has made a qualitative difference in the LAF’s counter-terrorism abilities. In the words of an 

ODC representative, ‘‘We’ve improved their mobility, their ability 

to communicate, and their ability to counter terrorist operations. 

We have helped prepare them for whatever the next round may 

hold.’’ This self-assessment is backed up by well-documented examples cited in the above-cited oversight reports. Asked for a more recent example of a tangible impact U.S. assistance had had on the 

ground, Embassy officers pointed to a recent incident in which LAF 

troops were able to use night vision goggles provided under this 

program to find and capture seven terrorists affiliated with Fatah 

al-Islam who had escaped from Roumieh prison. 

The question is: what is the best vehicle for providing security 

assistance? The Head of Planning for the LAF, who was well aware 

of the differences between the various pots of money, expressed a 

preference for 1206, which he perceived as ‘‘more efficient; more 

timely.’’ He indicated that the LAF looks to FMF for sustainment 

of 1206-funded equipment. Ideally, he said, the Government of Lebanon should fund such sustainment expenses out of its own budget. 

The current situation in Lebanon precludes that, however; he explained that the $30 million he has been promised for 2009 will 

meet only a fraction of the LAF’s equipment and sustainment 

needs. 

Asked about the comparative advantages offered by FMF and 

1206, representatives from the Office of Defense Cooperation indicated that, all things being equal, they preferred FMF as a vehicle 

for delivering security assistance. Even though FMF processes are 

slower than 1206, they welcomed the predictability of FMF, which 

24 

20See footnote 12. The referenced CRS report on ‘‘Security Assistance Reform: Section 1206 

Background and Issues for Congress,’’ which explains that in the FY 2009 Defense Authorization 

Act, the Congress provided authority for Section 1206 funds to be used in consecutive fiscal 

years, i.e., funds for a program that begins in one fiscal year may be used for that program 

in the next fiscal year. 

is budgeted for each year, as opposed to 1206 which are awarded 

through a competitive process. Although 1206-funded assistance 

can be delivered more quickly, they said that the lack of certainty 

about whether individual 1206 program proposals will be approved 

detracted from the program’s overall effectiveness. 

ODC representatives indicated that multi-year funding for 1206 

would help make the program more effective.20 In the past, the 

lengthy lead time associated with preparing 1206 proposals and 

getting them approved resulted in Embassy Beirut’s 1206-funded 

programs not being notified to Congress until May, allowing as little as three months for contracting. This kind of timeline is unrealistic, they said. In FY 2009, the Embassy resubmitted proposals 

that had not been approved the previous year. 

Recommendation: 

While this re-submission resulted in a speeding up of the 

1206 process at Embassy Beirut this year, the tactic of resubmitting 1206 proposals that were not funded from a 

previous year raises questions about immediacy and the extent of the emerging nature of the threats that those proposals were designed to help the host country confront. 

As an example of the interconnectedness that is sometimes seen 

between security assistance provided under Section 1206 and more 

traditional forms of security assistance, the ODC Chief noted that 

he had inquired whether 1206 funds could be used to cover Joint 

Combined Exercises and Training (JCET) programs in the area of 

counterterrorism. When ODC checked with counterparts with the 

Joint Chief of Staff, it was determined that JCETs, which are funded under Title X, Section 2011 funding, cannot be funded with Section 1206 monies. 

Recommendation: 

Staff believes that this was the proper call, since JCETs, 

even if for the purpose of improving host countries’ counterterrorism capabilities, represent a long-term training investment; whereas Section 1206 was designed to meet shortterm, immediate counter-terrorism needs. 

One example of a successful and innovative 1206-funded assistance program is the provision to the LAF of the ‘‘Lebanese Armed 

Caravan,’’ of up to four Cessna aircraft modified to provide close air 

support in counter-terrorism operations. Staff had the opportunity 

to make a site visit to the airfield to view the first such aircraft 

provided and receive a briefing on its applications. The assistance 

package included a significant training component. This assistance 

resulted in a qualitative boost in the LAF’s capabilities and has 

been extremely well-received. 

Asked if there had been cases in which 1206-or FMF-funded programs had not been well conceived, ODC representatives pointed to 

a 1206 case involving D9 armored bulldozers. Because the armaVerDate Nov 24 2008 10:44 Jan 12, 2010 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 H:\DOCS\54245.TXT MikeBB PsN: MIKEB
25 

ment had been carried out in Israel, the bulldozers would have 

been undesirable in Lebanon. As noted above, the United States 

opposes the Arab League boycott of Israel, which Lebanon observes. 

Fortunately, the Country Team caught the problem before the case 

moved forward. 

Assistance to the Internal Security Forces 

The United States has understandably focused the bulk of its security assistance on the LAF, which is responsible for border security, counterterrorism, and national defense. In addition, however, 

since FY 2007, the USG has also supported Lebanon’s police, or Internal Security Forces (ISF), which is responsible for maintaining 

public order. This assistance, funded under the International Narcotics Control and Law Enforcement (INCLE) and Section 1207, is 

designed to help professionalize what has been a chronically underfunded institution lacking in credibility on the Lebanese street. 

Staff had the opportunity to visit the INCLE-funded police training 

center, including newly refurbished buildings and some currently 

under construction. Staff observed an ongoing train-the-trainer 

course in community policing, and heard positive testimonials from 

the trainees. 

According to the head of the ISF academy, the ISF started out 

with 7 instructors; as a result of this assistance they now have 29. 

The USG-provided courses include a basic training class for new recruits; a course for supervisors; a tactical training course; and a 

community policing program, a new concept in Lebanon that was 

thought to be appropriate for high-tension communities, including, 

ultimately, Palestinian refugee camps such as Nahr al-Barid. Police 

commanders expressed appreciation for this U.S. assistance, which 

they credited with having a positive effect, as evidenced by increased mobility for police units, which was inferred as signifying 

greater acceptance of the ISF on the part of local residents. 

Reining in Contractor Expenses 

The security and infrastructure realities described above require 

that the Embassy rely on contractors to implement many aspects 

of U.S. security assistance programs. Because contractors are not 

U.S. direct hire employees, they do not fall under Chief of Mission 

authority and thus are not required to stay on the Embassy compound. The downside, according to ODC representatives, is that an 

inordinate proportion of U.S. assistance is devoted to contractors’ 

expenses. ‘‘We’ve let the defense contractors go wild’’ in the words 

of one employee. A new Embassy compound that will be able to accommodate more official visitors will help mitigate this phenomenon. 

Constructive Criticism from Host Government End Users 

The LAF’s Head of Planning expressed gratitude for U.S. security assistance, tinged by some frustration over the long lead time 

required in some cases. For example, the above-mentioned need to 

refurbish over 1200 armored personnel carriers had taken much 

longer than had been anticipated. The provision of spare tires for 

light trucks had also been delayed. Some of the radios that had 

been promised in 2007 were reported to still not be in use, because 

26 

21 According to the IMF’s 2009 Article IV Consultation Mission in Lebanon’s Concluding Statement of March 5, 2009 (http://www.imf.org/external/np/ms/2009/030509.htm), Lebanon’s gross reserves for 2009 were projected at over $20 billion, 47% of which were represented as foreign 

currency deposits in the banking system. 22 Ibid. IMF officials echoed this sentiment in private meetings with staff. They pointed out 

that, although the ratio has fallen to 160% from a high of 180% in 2006, it remained the highest 

in the world and is not sustainable over the long term. In a November 2009 briefing of SFRC 

staff, State Department officials indicated that the GOL’s debt-GDP ratio had fallen further to 

about 150%, in part as a result of exchange rate fluctuations. 23Of the approximate $7 billion pledged at Paris III, grants comprised about $1.5 billion. 

they are subject to a worldwide contract that has not yet been 

awarded. Uniforms that had been provided to the LAF Rangers 

were of the desert pattern, rather than the preferred urban design, 

which is more appropriate for the kind of fighting in which LAF 

troops are likely to engage. 

IFI LENDING

Economic Situation 

The political stalemate and sporadic sectarian violence that Lebanon has seen in the past several years have greatly hampered economic activity. That said, Lebanon’s free market economy is often 

credited for its resilience in the face of adversity, and indeed many 

international economists have assessed that the economy has performed reasonably well in the face of the international financial crisis. Many commentators site official Government statistics, which 

project the 2009 GDP growth rate at 8.5 percent. Similarly, Lebanon has been able to attract substantial domestic and international investment, in spite of the international financial crisis.21

Some GOL officials and economic analysts have cast doubt on the 

credibility of the official growth rate, however, and they point out 

that the increase in investment is reliant on the country’s high interest rates. Moreover, the IMF has pointed out both publicly and 

privately that Lebanon’s high public debt to GDP ratio remains a 

key vulnerability.22

Overview of International Donor Assistance 

The seeds of Lebanon’s enduring public debt problem were sown 

in the 1990s during the massive rebuilding effort that was 

launched after the civil war. Although the Government committed 

to a variety of economic reforms as part of the November 2002 

Paris II donors conference, at which $4.4 billion in assistance was 

pledged, little progress was made in addressing mounting public 

debt, which reached a high of about 180 percent of GDP in 2006. 

The 2006 war between Israel and Hizballah, followed by the 2007 

fighting at the Nahr al-Barid Palestinian refugee camp led to further destruction and economic pressures. GOL development priorities are outlined in a five-year action plan approved by the Cabinet. Focus areas include: water supply, waste water management, 

electricity, irrigation, and public infrastructure. 

Donors’ conferences in Stockholm in 2006 and Paris in 2007 

(‘‘Paris III’’) resulted in about $8 billion in pledges, mostly 

concessional in nature.23 The lack of budget transparency in Lebanon makes the percentage of national budget funded by foreign 

assistance difficult to determine. Estimates vary between 25 and 

35 percent. Much of the assistance pledged at Paris III was continVerDate Nov 24 2008 10:44 Jan 12, 2010 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 H:\DOCS\54245.TXT MikeBB PsN: MIKEB
27 

24 According to the Paris III progress report issued in December 2008, By the end of 2008, 

71% ($5.384 billion) of the Paris III pledges had been signed into agreements. 

gent on the Government meeting agreed economic reform benchmarks, including the elimination of government subsidies for electricity and privatizations of state-owned industries, such as telecommunications. Few of those benchmarks have been met, however; in particular, Paris III reforms that required legislative action 

went unfulfilled as the Parliament became embroiled in a prolonged political stalemate. As a result, many pledges have not been 

realized.24 With respect to the low rate of compliance with Paris III 

conditionality, one representative of an international financial institution questioned whether the international donor community 

should have been less ambitious. 

The World Bank 

According to the World Bank Country Director, the Bank’s current program in Lebanon is valued at $400 million. The program 

is focused on infrastructure and basic services, including the provision of electricity and water outside of Beirut; social sector support, 

including education and health; and overall financial management, 

starting with Public Financial Management (PFM) reforms. The 

2007-2009 Interim Strategy Note (ISN) was comprised mostly of 

budget support, driven by the Paris III agenda, but as Bank officials told staff, the two years of the ISN program did not allow sufficient time to bring about the kinds of structural reforms that are 

needed in the Lebanese economy. They reported that there is some 

internal debate about the right ratio between budget support for 

structural reforms that are not likely to materialize in the near future, versus investment lending. Bank officials reported that they 

were working on a new Country Partnership Strategy (CPS), but 

that no figure had yet been attached to it. Negotiations could not 

take place until a new government had been formed. 

Asked about the Bank’s greatest successes, Bank officials told 

staff that, in the absence of an environment where structural reforms could be taken on, they were pleased with the progress they 

have been able to make through their technical assistance programs, especially the Public Financial Management (PFM) project, 

the aim of which is to bring a greater degree of transparency to the 

budget process. They explained that Lebanon’s dual budget process 

has inherent disconnects between the planning and execution 

phases and is characterized by an overall lack of accountability. 

Through the PFM capacity-building project, the Bank has funded 

the provision of advisors to work directly in the Prime Minister’s 

office, as well as the Ministries of Finance and Social Affairs. Bank 

staff credited this technical assistance with helping to build a culture of transparency in the capital spending process, and with 

spurring debate at the societal level about energy sector reform. 

Asked to comment on the obstacles to progress, one bank official 

pointed to the constraints of the domestic political situation: ‘‘One 

lesson we learn over and over again is how difficult it is to judge 

what will be politically feasible.’’ For example, he said, the second 

tranche of the last ISN was never disbursed, because the GOL did 

not meet expectations with respect to energy sector reforms in the 

28 

first tranche. In addition, they pointed out that all international assistance is funneled through the Council for Development and Reconstruction, which falls under the Prime Minister’s office. Some 

interlocutors faulted the CDR for managing international assistance for the political benefit of the Prime Minister. Indeed, in a 

separate meeting, one GOL official asserted that the CDR-Prime 

Ministry relationship effectively circumvents the prerogatives of 

services-providing ministries, and is inconsistent with the intent of 

the constitution. 

The IMF in Lebanon 

The IMF opened a regional office in Beirut in January 2008, a 

move that, in the words of one official, was designed to signal improved relations. According to the IMF Resident Representative, 

the Fund’s principal objective in Lebanon has been to help the GOL 

reduce its debt over time, according to the framework of Paris III. 

The Fund began an Emergency Post-conflict Assistance (EPCA) 

program in 2007, which has since come to an end. The IMF Resident Director explained that, in the absence of a government of national unity with whom to partner on implementing the Paris III 

agenda, there was no ongoing program. According to the IMF Resident Representative, the IMF would like to negotiate a stand-by arrangement, when possible. In the meantime, cognizant that the 

lack of a government could become an excuse for inaction, the Fund 

has proposed a staff monitored program. 

Oversight 

As stated above, the Council for Development and Reconstruction 

has a mandate to execute all projects that have been agreed by the 

Cabinet; negotiate loans to finance the Cabinet-approved development goals; and develop overall plans and programs for sustainable 

development. Asked about opportunities for oversight of the foreign 

assistance process, GOL officials cited two mechanisms. The Lebanese Parliament must approve loans over a certain threshold. Indeed, according to a CDR official, about $1 billion in loans was 

awaiting Parliamentary approval at the time of this visit. After assistance is disbursed, the Lebanese Cour de Comptes (the equivalent of a Government Accountability Office) conducts audits. 

Recommendation: 

As one interlocutor pointed out, the GOL would benefit 

from some kind of pre-disbursement audit, rather than rely 

on the ex post facto audits of the Cour de Comptes. 

(29) 

APPENDIXES 

APPENDIX I: INTERLOCUTORS IN YEMEN

Ambassador Stephen Seche and DCM Angie Bryan 

Acting Political Section Chief Faith Meyers and Economic Officer 

Roland McCay 

Special Operations, Central Command Forward Lt. Col. Rick 

Prins 

Office of Military Cooperation Deputy Lt. Col. Brit Smeal and 

FMF Officer Maj. Greg Mitchell 

Representatives of Yemeni non-governmental organizations 

working on conflict resolution issues 

Representatives of international organizations working on humanitarian assistance and refugee affairs 

USAID Mission Director Dr. Jeff Ashley and Deputy Director 

Sean Jones 

Deputy Finance Minister Jallal Yaqoub 

World Bank Resident Director Benson Ateng 

International Finance Corporation Country Director Raymond 

Conway 

Vice Minister of Planning and International Cooperation Hisham 

Sharaf 

Chairman, Yemeni Coast Guard Brigadier-General Ali Rassea 

Yemeni Air Force Col. Sheing 

Members of the Embassy Sanaa Military Information Support 

Team (MIST) 

30 

APPENDIX II: INTERLOCUTORS IN LEBANON

Ambassador Michele Sisson and DCM Tom Daughton 

Office of Defense Cooperation officials, led by Chief Lt. Col. Jeffrey Pannaman 

Meeting with international donors of security assistance 

USAID Mission Director Denise Herbol 

Internal Security Forces General Munir Chaaban 

Visit to the INL-funded Police Academy with U.S. contractor 

training 

Visit to the Lebanese Armed Forces’ ‘‘Rangers’’ base. 

Regional Security Officer Paul Bauer 

Management Officer Christian Charette 

Political/Military Affairs Officer Mike Brennan 

IMF Resident Representative Eric Mottu 

World Bank Economist Sebnem Akkaya and Donor Coordination 

Chief Stefano Mocci 

Dr. Wafaa Charafeddine, Council for Development and Reconstruction 

Central Bank Director of Financial Operations Youssef El-Khalil 

Ministry of Finance Director General Alain Bifani 

Public Affairs Officer Ryan Gliha 

31 

APPENDIX III: ACRONYMS

AQAP: Al-Qaeda in the Arabian Peninsula 

CG: Consultative Group 

CDR: Council for Development and Reconstruction 

CPS: Country Partnership Strategy 

DSCA: Defense Security Cooperation Agency 

DCM: Deputy Chief of Mission 

EDA: Excess Defense Articles 

EPCA: Emergency Post-conflict Assistance 

ESF: Economic Support Funds 

FDI: Foreign Direct Investment 

FMF: Foreign Military Financing 

GDP: Gross Domestic Product 

GOL: Government of Lebanon 

IFI: International Financial Institution 

IDA: International Development Association 

INCLE: International 

INL: State Department Bureau of International Narcotics and 

Law Enforcement Affairs 

IMF: International Monetary Fund 

ISN: Interim Strategy Note 

LAF: Lebanese Armed Forces 

LDC: Least Developed Country 

LNG: Liquified Natural Gas 

MIST: Military Information Support Team 

NADR: Nonproliferation, Antiterrorism, Demining and Related 

Programs 

NEC: New Embassy Compound 

ODC or OMC: An Embassy’s Office of Defense Cooperation, 

sometimes called Office of Military Cooperation 

PMF: Public Financial Management 

ROYG: Republic of Yemen Government 

SOCCENT: Special Operations Component of the U.S. Central 

Command 

YSOF: Yemeni Special Operations Forces 

USAID: U.S. Agency for International Development 

USG: U.S. Government 

Æ