JOINT STAFF WORKING PAPER Implementation of the European Neighbourhood Policy in 2010Country report: Lebanon  JOINT STAFF WORKING PAPER Implementation of the European Neighbourhood Policy in 2010Country report: Lebanon
Date: 2011-05-25
Institutions: European Commission, High Representative of the Union
Subjects: European neighbourhood policy, Lebanon, State aid, association agreement, bilateral agreement, democracy, economic reform, human rights, political cooperation, political reform

EUROPEAN COMMISSION 

HIGH REPRESENTATIVE OF THE
EUROPEAN UNION FOR 
FOREIGN AFFAIRS AND 
SECURITY POLICY

Brussels, 25.5.2011 
SEC(2011) 637 final 

JOINT STAFF WORKING PAPER 

Implementation of the European Neighbourhood Policy in 2010 
Country report: Lebanon 

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JOINT STAFF WORKING PAPER 

Implementation of the European Neighbourhood Policy in 2010 
Country report: Lebanon 

1. 

OVERALL ASSESSMENT 

Lebanon  and  the  European  Community  first  established  contractual  relations  in  1977  by 
signing a Cooperation Agreement. An EU-Lebanon Association Agreement entered into force 
in  2006.  It  sets  out  in  more  detail  the  specific  areas  in  which  relations  can  be  developed 
bilaterally.  On  this  basis,  the  EU-Lebanon  ENP  Action  Plan  was  approved  in  January  2007 
for a period of five years.  

This  document  reports  on  progress  made  in  the  implementation  of  the  EU-Lebanon  ENP 
Action Plan between 1 January and 31 December 2010, although developments outside this 
period  are  also  taken  into  consideration  where  relevant.  It  is  not  a  general  review  of  the 
political  and  economic  situation  in  Lebanon.  In  addition,  for  information  on  regional  and 
multilateral sector processes, please refer to the sectoral report. 

The Action Plan was adopted to guide Lebanon-EU dialogue and cooperation with respect to 
political,  economic  and  social  reforms  in  the  country.  Since  the  outset,  however,  its 
implementation  has  taken  place  in  a  context  of  crisis  or  emergency  and  has  suffered  from 
many situational and structural obstacles. 

In  2010,  EU-Lebanon  Association  Council  meetings  were  held,  and  three  out  of  ten  sub-
committees met in the first half of 2010. No Association Committee meeting was held. The 
controversy  over  the  Special  Tribunal  for  Lebanon  tasked  with  investigating  the  killing  of 
former Prime Minister Rafiq Hariri and 22 other people increased. It polarised the Lebanese 
political arena and paralysed the functioning of key institutions including parliament and the 
cabinet.  Due  to  the  political  impasse,  the  Lebanese  parliament  was  not  able  to  adopt  a 
significant  number  of  laws,  which  are  essential  for  the  implementation  of  the  ENP  Action 
Plan.  This  hindered  the  advancement  of  the  reform  agenda  and  prevented  the  planning  of 
further  meetings  (no  sub-committee  meetings  were  held  in  the  second  half  of  2010).  In 
January  2011,  the  Lebanese  Government  collapsed  after  11  Ministers  resigned.  Since  the 
appointment of Prime Minister-designate Najib Mikati on 25 January, negotiations have taken 
place to form a new government. 

The  economy  of  Lebanon  performed  well  in  2010  despite  the  global  financial  crisis.  Also, 
macroeconomic  policies  remained  prudent  during  the  upswing.  While  some  headway  has 
been  made  in  reducing  short-term  risks,  large  underlying  vulnerabilities  remain  and  new 
vulnerabilities  could  emerge  in  the  future.  The  country’s  weaknesses  remain  important,  in 
particular  the  government’s  high  level  of  debt.  Overall  progress  on  structural  reforms  was 
rather  disappointing.  Most  of  the  commitments  made  at  the  Paris  III  donor  conference  in 
2007, some of which are also part of the Action Plan (e.g. restructuring of public utilities and 
privatisations), are still pending.  

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2. 

POLITICAL DIALOGUE AND REFORM 

Democracy and the rule of law 

A  delegation  from  the  European  Parliament  visited  Lebanon  in  November  2010,  thus 
contributing  to  the  political  dialogue  between  the  European  and  Lebanese  parliaments  that 
was  called  for  in  the  Action  Plan.  The  EU  also  launched  a  capacity-building  programme  to 
help the Lebanese Parliament exercise its legislative and oversight role effectively. 

Local  elections  ran  smoothly  in  May  2010.  The  Ministry  of  Interior  and  Municipalities  has 
worked on a draft electoral law, which was expected to address the recommendations of the 
2009  EU  Electoral  Observation  Mission  by  May  2011.  A  number  of  actions  were  taken  to 
make the process of reforming the electoral system inclusive. This included four workshops 
held by Lebanese authorities on the reform process, a workshop held by the EU delegation on 
the  independent  electoral  monitoring  body  and  a  study,  co-funded  by  the  EU  and  the 
International  Foundation  for  Electoral  Systems,  on  setting  up  the  Independent  Electoral 
Commission. The feasibility study on the out-of-country vote, planned in collaboration with 
the  United  Nations  Development  Programme  (UNDP)  is  well  behind  the  Government’s 
schedule.  

The  EU  is  actively  financing  the  modernisation  of  the  judiciary  and  the  improvement  of 
prison  conditions.  A  decree  nominating  the  unit  in  charge  of  the  computerisation  of  the 
Ministry of Justice and of the courts was approved. This will allow the implementation of an 
Information  Technology Master Plan  to be funded by the EU. A new  project to support the 
independence of justice and building on previous and ongoing initiatives in the sector is under 
preparation for 2011. The Ministry of Justice announced in May 2010 that it is working on a 
decree  to  set  up  two  General  Directorates,  one  for  the  Promotion  of  Human  Rights  and 
Fundamental  Freedoms  and  another  for  Prison  Administration.  The  transfer  of  the  prison 
management from the Ministry of Interior to the Ministry of Justice, which started in 2008, is 
continuing and should be completed by 2013. The EU is supporting the Ministry of Interior in 
designing  a  new  detention  centre  for  illegal  migrants  to  be  built  in  compliance  with 
international  standards.  Regarding  prison  conditions,  the  Ministry  of  Interior  launched  an 
assessment  to  be  completed  in  the  first  quarter  of  2011.  Reports  from  civil  society 
organisations  in  2010  indicate  that  prison  conditions  and  administration  are  not  in  line  with 
international standards and advocated a comprehensive reform of the prison system. The law 
on reducing sentences is being applied and, since 2009, around 100 prisoners have benefited 
from it.  

In  the  field  of  security  sector  reform,  efforts  to  improve  the  individual  capability  of  the 
different security agencies continued but no progress can be reported in terms of promoting 
reform,  transparency  and  accountability  in  the  security  sector  as  a  whole.  Decisions  on 
institutional changes within the Internal Security Forces and on the revision of their Code of 
Conduct  are  not  advancing  due  to  a  deadlock  in  the  Council  of  Command.  An  EU  funded 
support  programme  "Developing  national  capability  for  Security  and  Stabilisation"  aims  at 
developing  the  national  long-term  capability  of  the  Lebanese  security  system  thus  ensuring 
greater security for citizens. 

No  legislative  amendments  were  adopted  in  the  fields  of  good  governance  and 
accountability, including the fight against corruption and bribery.  

Human Rights and Fundamental Freedoms 

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Lebanon worked to strengthen the institutional framework in the human rights area, in line 
with the provisions of the Action Plan. The Lebanese Parliament’s Human Rights Committee 
continued  work  on  a  draft  national  Action  Plan  on  Human  Rights,  in  cooperation  with  the 
UN’s Office of the High Commissioner for Human Rights (OHCHR) and the United Nations 
Development  Programme  (UNDP).  The  Plan  was  presented  to  Parliament  on  20  December 
2010, although four key studies related to it had not yet been completed (Palestinians’ rights, 
non-Palestinian refugees’ rights, prisons and the right to secrecy and communications). 

A  Human  Rights  Office  has  been  created  in  the  Ministry  of  Interior  but  the  budget  and 
staffing of the existing Human Right Unit of the Internal Security Forces are insufficient. A 
bill  to  set  up  a  National  Human  Rights  Institution  is  being  considered  by  the  Ministry  of 
Justice. The appointment of an Ombudsman,  an office created in 2008, is still pending, and 
the decrees to set up the institution and make it operational were not adopted. 

Lebanon  underwent  a  Universal  Periodic  Review  (UPR)  by  the  United  Nations  Human 
Rights  Council.  It  agreed  to  several  important  UPR  recommendation  such  as  setting  up  a 
National  Commission  on  Human  Rights,  criminalising  all  forms  of  torture  and  ill-treatment 
and  ratifying  the  Convention  on  the  Rights  of  Persons  with  Disabilities  (now  before 
parliament).  Nevertheless,  Lebanon  rejected  other  key  recommendations  including  those  in 
relation  to  the  rights  of  women,  migrants  and  discrimination  based  on  sexual  orientation. 
Moreover, the ratification of a number of other international human rights conventions is still 
blocked.  Lebanon  has  eight  overdue  reports  to  UN  treaty  bodies  and  has  not  extended  a 
standing invitation to all thematic special rapporteurs. Lebanon has reiterated its intention to 
withdraw its reservation to the Convention on the Elimination of All Forms of Discrimination 
against Women (CEDAW), but has not yet done so. 

Lebanon rejected the UPR recommendations that it accede to the second optional protocol of 
the  International  Convention  on  Civil  and  Political  Rights,  aimed  at  abolishing  the  death 
penalty, and that it formalise, through a legal act, the moratorium on executions in place since 
2006. The 2008 decree for the abolition of the death penalty has not yet been discussed by the 
cabinet and a number of people were sentenced to death in 2010. On July 1, the President said 
that he would sign death penalties against Lebanese convicted of spying for Israel. Lebanon 
abstained  on  the  Resolution  on  the  moratorium  on  the  use  of  the  death  penalty  at  the  UN 
General Assembly. 

Lebanon enjoys one of the most open and diverse media environments in the Middle East and 
relatively liberal legislation on civil society organisations. No significant developments were 
recorded  in  the  area  of  freedom  of  expression  and  association  in  2010.  There  remain  a 
number  of  shortcomings  due  to  the  fact  that  media  outlets  largely  represent  the  views  of 
political interests.  

Ill-treatment, abuses and torture are reported in Lebanon and impunity for such violations is 
widespread.  Some  improvement  can  be  expected  from  a  code  of  conduct  for  the  Internal 
Security Forces, now in the final stages of approval, and from the proposal in May to set up a 
National  Preventive  Mechanism  to  monitor  detention  centres  and  prisons  under  the 
Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment 
(OPCAT). The National Preventive Mechanism has not been set up yet, although a draft law 
has been sent to parliament. Lebanese institutions facilitated a visit by the UN subcommittee 
on the prevention of torture in May 2010 and granted them access to prisons. 

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In the field of promotion and protection of the rights of women and children, no substantive 
progress can be reported, although several important draft laws are currently being discussed. 
The  draft  of  Child  Protection  Policy  has  not  been  finalised  yet.  Women’s  participation  in 
political  life  remains  low,  but  the  May  municipal  elections  saw  the  highest  share  of  female 
candidates ever, at 8.2%. There was no progress towards adopting the draft law on protection 
of women from domestic violence in Lebanon, which was approved by the cabinet in April 
2009. 

In the area of asylum and protection of refugees, progress can be reported on the situation of 
Palestinian  refugees  in  Lebanon.  On  17 August  the  Lebanese  Parliament  amended  the 
Labour Law to lift some of the restrictions imposed on employing Palestinian refugees. The 
implementing decrees for the amended law were signed in February 2011, after the reporting 
period. Registered Palestinian refugees have the right to work in any field open to foreigners 
(a  definition  that  excludes  the  liberal  professions).  A  work  permit  remains  obligatory  but  it 
will  be  free  of  charge.  They  now  have  the  same  rights  as  Lebanese  citizens  in  terms  of 
resolution of employment conflicts before the relevant arbitration council. With the new law, 
Palestinian  refugees  who  have  contributed  to  the  National  Social  Security  Fund  are  now 
entitled  to  claim  their  end-of-service  benefits.  However,  despite  paying  contributions,  they 
remain ineligible for health and maternity benefits, work-related accident and injury benefits, 
and  family  indemnity.  They  also  continue  to  be  banned  from  regulated  professions. 
Procedures  to  obtain  work  permits  still  need  to  be  simplified.  There  has  been  no  progress 
either  on  Palestinian  refugees’  right  to  own  property.    As  to  the  issue  of  ‘non-identified 
Palestinians’ – refugees who are not registered either by the United Nations relief and Works 
Agency (UNRWA) or the Lebanese Authority, it has also remained broadly unchanged. 

As Lebanon has not ratified the 1951 Geneva Convention and the 1967 Protocol related to the 
status  of  refugees,  nor  implemented  a  refugee  law,  the  situation  of  refugees  and  asylum 
seekers  remains  dire.  Refugees  and  other  non-citizens  who  enter  the  country  without  prior 
authorisation  are  considered  to  be  in  the  country  illegally  and  are  often  subject  to  arbitrary 
detention in very poor conditions. Many refugees are treated as illegal immigrants and some 
have  been  subject  to  arrest  and  indefinite  detention.  No  progress  is  reported  regarding  EU 
calls on Lebanon to give legal recognition to the certificates issued by the United Nation High 
Commissioner for Refugees (UNHCR), especially to Iraqi refugees, and to provide renewable 
residence permits to persons registered with UNHCR.  

In  the  area  of  social  integration  and  protection  of  migrant  domestic  workers,  a  decree  to 
improve the regulation of employment agencies and a unified contract for migrant domestic 
workers was adopted in 2009. It is now crucial that the new rules be properly implemented. 
As far as fundamental conventions and core labour standards are concerned, no progress 
can be reported on the ratification of the International Labour Organisation Convention 87 on 
Freedom of Association and Protection of the Right to Organise. 

Cooperation  on  foreign  and  security  policy,  regional  and  international  issues,  conflict 
prevention and crisis management 

Lebanon  is  one  of  the  European  Union’s  key  partners  in  the  Middle  East.  Dialogue  on 
foreign and security policy has mainly focused on implementation of UN Security Council 
Resolutions relevant to and relating to Lebanon, such as resolutions 1559, 1680 and 1701 —
and resolution 1757, which established the Special Tribunal for Lebanon. EU member states 
are  strongly  involved  in  the  United  Nations  Interim  Force  in  Lebanon  (UNIFIL)  as  troop-
contributing countries. 

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Lebanon faced increased political tensions during the second half of 2010, further aggravated 
by the question of the Special Tribunal for Lebanon. Regional mediation efforts intensified to 
prevent escalation, involving Syria, Saudi Arabia, Turkey and Qatar.  

With regard to bilateral relations between Lebanon and Syria, no progress can be reported on 
issues such as demarcating borders and investigating the cases of missing Lebanese in Syrian 
prisons.  

Lebanon  ratified  the  Oslo  Convention  on  Cluster  Munitions.  The  Ottawa  Convention  on 
Anti-Personnel  Mines  and  the  statute  of  the  International  Criminal  Court  have,  however, 
not been ratified yet.  

In  the  field  of  combating  and  preventing  terrorism,  Lebanon  has  ratified  11  of  the  13 
relevant  conventions  and  submitted  regular  reports  to  the  UN.  The  remaining  ones  are:  the 
International  Convention  for  the  Suppression  of  the  Financing  of  Terrorism  and  the 
International  Convention  for  the  Suppression  of  Acts  of  Nuclear  Terrorism.  Lebanon  is  not 
equipped with a strong counter terrorism apparatus but efforts to improve  working methods 
are  currently  ongoing  and  supported  by  the  EU.  The  2006  national  dialogue  decision  to 
disarm Palestinian factions outside the camps has not been effectively enforced. Moreover, in 
specific areas, access by the Lebanese Security Forces is not fully guaranteed.  

3. 

ECONOMIC AND SOCIAL REFORM  

Macroeconomic framework and functioning market economy  

Lebanon’s  economic  and  financial  performance  in  2010  —  GDP  growth  of  8 %  (following 
growth of 9 % in 2009) — has been remarkable in the face of the global recession. Buoyant 
revenues,  supported  by  economic  growth  and  the  reintroduction  of  excise  duty  on  gasoline, 
helped to reduce the government deficit from 8,6% of GDP in 2009 to an estimated 7.4 % of 
GDP  in  2010.  However,  the  fiscal  deficit  remains  large,  reflecting  the  high  debt  burden, 
which absorbs 45 % of total state revenues and drastically limits economic growth potential. 
At the end of 2010, Lebanon’s sovereign gross debt amounted to USD 59 billion (EUR 44.5 
billion), representing 139 % of annual GDP (148 % at the end of 2009). This makes Lebanon 
one  of  the  most  indebted  countries  in  the  world.  About  half  of  the  national  debt  is 
denominated in foreign currency. The commercial banks are the government’s main creditors, 
holding 40 % of the public debt. The Lebanese Government proposed measures to tackle the 
country’s macro-financial vulnerability such as increasing an interest income tax, introducing 
an asset revaluation tax and raising registration fees in order to generate additional revenue in 
the 2010 budget. These measures could allow the government to continue to reduce the debt-
to-GDP ratio, but they have not yet been adopted by the parliament as they were part of the 
2010 budget package. 2010 was the fifth consecutive year in which the budget was not passed 
by a vote in parliament.  

The  current  account  deficit  is  estimated  to  have  increased  to  11.3 %  of  GDP  in  2010,  from 
9.7 % of GDP in 2009, due to a larger trade deficit resulting from higher energy import prices 
and rising domestic demand. This situation is prolonging the high deficit and a high degree of 
vulnerability to a sharp fall in capital flows.  

In  the  context  of  domestic  stability,  commercial  bank  deposits  held  by  non-residents 
(essentially the Lebanese diaspora) grew at an average rate of 11 % in 2009 and 2010, despite 

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interest rate cuts during the second part of 2010. In the meantime, the foreign reserves of the 
Bank  of  Lebanon  (BoL),  backed  by  strong  export  performance  and  by  strong  and  rising 
capital inflows, increased to a record level of over USD 29 billion (EUR 21.8  billion) by the 
end of 2010.  

The main challenge for the Lebanese authorities is to manage rapid economic expansion by 
preventing overheating (and inflation), and, simultaneously, carrying out structural reforms to 
promote sustained medium-term growth and macro-financial stability. Despite the success of 
policies to reduce government debt in recent years, the current debt ratio remains Lebanon’s 
main  weakness  and  key  reforms  must  be  implemented  to  restore  medium-term  debt 
sustainability. As things stand, financial stability depends essentially on continued inflows of 
short-term  deposits  from  non-residents;  in  this  context,  confidence  is  crucial  and  political 
stability, combined with the absence of regional tensions, is a prerequisite. 

Employment and social policy 

As regards the socio-economic situation in Lebanon, many social reforms which were part of 
the  agenda  agreed  at  the  Paris  III  donor  conference  continued  to  be  delayed  because  of  the 
political situation.  

The  Ministry  of  Social  Affairs  continued  to  develop  tools  for  social  inclusion  and  the  fight 
against poverty, in particular a poverty-targeting mechanism and a national strategy on social 
development.  However,  there  was  limited  inter-ministerial  coordination  or  involvement  of 
other stakeholders. No changes have been reported in the unemployment situation. The last 
survey on household living conditions was conducted by the Central Statistical Authority in 
2007.  

No progress is reported in the fields of pension reforms and reform of the social security 
system. 

The Economic and Social Council did not meet in the period under review and the structures 
nor  did  the  practices  for  social  dialogue  change  in  2010.  There  is  no  progress  regarding 
labour rights and the new Labour law remains to be adopted.  

Sustainable development 

During  the  reporting  period,  efforts  were  made  to  develop  sector  strategies,  notably  on 
energy, water and environment, which illustrates greater interest in sustainable development. 
Lebanon  started  implementing  the  strategic  framework  for  agriculture  and  fisheries  for 
2010–2014,  as  reported  in  last  year’s  report.  The  Ministry  of  Agriculture  set  up  about  20 
national  committees  covering  major  agricultural  sectors.  Projects  on  ‘Strengthening 
Production  and  Marketing  of  Lebanese  Agricultural  Products’,  on  the  ‘Lebanese  National 
Observatory for Agricultural Development’ and on ‘Capacity building for a pro-poor review 
and making operational the agricultural development strategy’ are ongoing. 

4. 

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM 

During the reporting period, the EU remained Lebanon’s top trading partner. Bilateral trade 
in goods with the EU grown every year since 2005; in 2010 EU exports to Lebanon rose by 
12.2 % and Lebanese exports to the EU by 28.9 %. The trade balance remains favourable to 
the EU. Tariff dismantlement took place in line with the Association Agreement. 

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The  EU  and  Lebanon  signed  the  Protocol  for  the  Settlement  of  Bilateral  Trade  Disputes  in 
Brussels in November 2010. Exploratory talks on possible future negotiations on liberalising 
trade in agricultural, processed agricultural and fish and fisheries products took place in May 
2010 in the margins of the first Sub-committee meeting on Agriculture and Fisheries. Since 
last  year’s  report,  no  meetings  of  the  World  Trade  Organisation  (WTO)  accession  working 
party have taken place. In March 2010, Lebanon presented its revised offer on services to the 
EU as part of bilateral negotiations in the context of its accession to the WTO, but the offer 
fell short of expectations in certain key service sectors. Discussions are ongoing as to how to 
proceed with the negotiations. 

Lebanon continued to upgrade the IT capacity of its customs administration, in particular by 
modernising  its  customs  systems,  including  training,  scanning  operations  and  related 
applications at the airport and at the port of Beirut. Lebanon participated in the ‘SIROCCO’ 
operation carried out in June 2010. SIROCCO is a joint customs operation coordinated by the 
European  Commission  Anti-Fraud  Office  (OLAF)  and  carried  out  by  the  customs 
administrations  of  the  EU  and  11  partner  countries  from  the  southern  rim  of  the 
Mediterranean1. 

On  free  movement  of  goods  and  on  technical  regulations,  Lebanon  slowly  continued  its 
preparations for negotiations on an Agreement on Conformity Assessment and Acceptance of 
Industrial Products (ACAA). Lebanon has identified three priority sectors within the ACAA 
framework (electrical products, pressure equipment and construction materials). The requisite 
Action  Plan,  drafted  by  the  Lebanese  ACAA  Committee,  has  not  yet  been  approved  by  the 
Council of Ministers. The Metrology law was approved by the Council of Ministers in July 
2010.  In  October  2010,  the  Council  of  Ministers  also  approved  the  draft  law  on  ‘Technical 
Regulations and Conformity Assessment Procedures’ presented by the Ministry of Economy 
and Trade. 

In  the  area  of  sanitary  and  phyto-sanitary  (SPS)  issues,  the  draft  food  safety  law,  which 
includes the launch of a food safety agency, and the draft animal quarantine law were not yet 
adopted. 

Lebanon’s  business  climate  continued  to  suffer  from  the  inefficiency  of  the  judiciary  in 
settling commercial disputes, the high cost of logistics and the general lack of transparency in 
public decision making. Lebanon has fallen four places in the World Bank’s ‘Doing Business’ 
overall ranking 2011. No new developments were registered in the area of company law and 
the right of establishment in 2010. 

In the field of financial services, the Lebanese banks weathered the global crisis well, thanks 
to  prudent  banking  regulation  and  supervision  and  banks’  conservative  funding  and  asset 
structures.  The  banking  system  remains  globally  profitable,  highly  liquid,  with  adequate 
provisions  and  a  relatively  small  share  of  non-performing  loans.  Banks  are  responding  to 
falling  interest  rates  by  expanding  their  operations  outside  Lebanon  and  by  increasing  their 
domestic lending activity to the private sector. 

Lebanon  continued  to  implement  the  recommendations  of  the  IMF  Financial  Services 
Assessment Programme, and the Central Bank followed the roadmap towards the adoption of 

1 

SIROCCO focused on deep sea containers loaded in China or the United Arab Emirates and arriving in 
member countries of the Union for the Mediterranean. Around 40 million cigarettes, 1243 kg of hand-
rolled tobacco, 7038 litres of alcohol and 8 million other counterfeit goods were seized as part of the 
operation. 

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International  Financial  Reporting  Standards  (IFRS)  for  accounting.  In  bank  regulation  and 
supervision, a focus on preventing excessive risk-taking continues to be warranted. 

 No progress can be reported in the area of auditing. 

Other key areas 

An amending protocol to the Convention on avoidance of double taxation with Malta entered 
into force in March 2010. Negotiations are ongoing with several other EU Member States. No 
further progress is reported on the implementation of Action Plan commitments on taxation.  

In the field of competition, a draft law has been before parliament since 2007.  

No  new  developments  took  place  in  2010  regarding  the  protection  of  intellectual  property 
rights. A report by an independent organisation put Lebanon’s software piracy rate at 72 %. 
Lebanon has taken measures to punish the distribution of counterfeit medicines. 

Draft  legislation  to  modernise  public  procurement  is  still  waiting  for  parliamentary 
approval.  A  SIGMA  mission  reviewed  the  texts  to  increase  their  compliance  with 
international standards and to prepare for future targeted EU assistance in this area.  

The Council of Ministers has not yet adopted the National Master Plan for Statistics, drafted 
in  2008.  It  raises  the  issue  of  the  degree  of  independence  of  the  Central  Administration  for 
Statistics (CAS), which is currently under the direct control of the prime minister. In 2010, the 
CAS  defined  some  priority  areas  for  development,  including  national  accounts  and  trade 
statistics. An EU-funded twinning programme was launched in December. The CAS further 
benefits from EU assistance through the recently launched MEDSTAT III programme. 

The situation of public finance reform and internal financial control remains of concern. 
The  Ministry  of  Finance  benefited  from  a  TAIEX  workshop  for  relevant  control  bodies 
(Inspection, Supreme Audit) on PIFC methodology and approaches. On external audit, the 
Court of Accounts remains under the direct control of the prime minister. In addition, a lack 
of qualified staff and internal resources undermines its capacity to carry out its functions and 
fulfil its reform agenda. 

On enterprise policy, Lebanon continued to implement the Euro-Mediterranean Charter for 
Enterprise.  

5. 

COOPERATION ON JUSTICE, FREEDOM AND SECURITY 

Work  continued  on  the  development  of  an  Integrated  Border  Management  Strategy 
following the appointment of a national border coordinator in March 2010 and the submission 
of a concept note to the cabinet in April 2010. Work focused on reconciling socio-economic 
development  with  improved  border  control  measures.  Training  on  integrated  border 
management advanced incrementally with donor support while cooperation with FRONTEX 
advanced through the deployment of a technical scoping mission in October. 750 new border 
inspectors  were  recruited,  of  whom  250  were  women.  There  is  an  operational  need  for 
coordinated  and  structured  training  to  fully  professionalise  border  management  staff. 
Intelligence sharing across all relevant agencies remains a priority.   

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The  EU  funded  programme  "Developing  national  capability  for  Security  and  Stabilisation" 
foresees  to  increase  Lebanon’s  capability  to  practice  Integrated  Border  Management  of 
international standards. 

Concerning the fight against organised crime, work continued on the adaptation of national 
legislation to comply with relevant UN instruments. Two draft laws were finalised in 2010, 
one on cybercrime and another on electronic signature regulation, in line with the Budapest 
Convention, but neither law was formally adopted. 

On the fight against trafficking in human beings, the lack of official statistics still prevents a 
full assessment of the situation.  

As in 2009, Lebanon pursued national and regional cooperation measures in the fight against 
drug  trafficking  with  attention  to  improving  law  enforcement  and  developing  drug 
prevention programmes. The National Council on Drugs is responsible for implementing the 
national  anti-drugs  strategy  provided  for  in  the  1998  Law.  The  Ministry  of  Agriculture 
launched  an  alternative  development  project  in  the  Beka’a  valley  with  donor  support  as  a 
follow-up  to  crop  eradication  measures  taken  in  2009.  The  Internal  Security  Forces 
implemented  drug  demand  reduction  programmes  in  cooperation  with  civil  society  and 
educational organisations to combat a rise in drug consumption particularly amongst students 
and  young  people.  Lebanon  participated  actively  in  the  regional  Euro-Med  Police  II 
programme  on  drugs  cooperation  and  pursued  similar  cooperation  within  the  framework  of 
the Arab League.  

In the fight against money laundering, a draft revised law on money laundering was finalised 
in June 2010. It proposes freezing assets and confiscating the proceeds of money laundering 
in  line  with  Lebanon’s  specific  obligations  under  the  United  Nations  Convention  against 
Corruption.  It  also  amends  the  rules  on  banking  secrecy  to  include  suspect  transactions 
involving  the  financing  of  terrorism.  Major  improvements  to  reporting  and  supervision 
systems,  including  those  for  cash  transfers,  are  required:  the  training  of  law  enforcement 
agents and the staff of financial bodies remains critical.  

There is no progress to report in the area of data protection. 

In the area of police and judicial cooperation, Lebanon confirmed its interest in acceding to 
the European Convention on Cybercrime, the 1965 Hague Convention on the Service Abroad 
of  Judicial  and  Extrajudicial  Documents,  and  the  1970  Convention  on  Taking  Evidence 
Abroad  in  Civil  and  Commercial  Matters.  No  progress  could  be  registered  regarding  the 
accession  of  Lebanon  to  certain  international  conventions  regarding  family  law,  such  as  the 
the1980  Hague  Convention  on  the  Civil  Aspects  of  International  Child  Abduction,  and  the 
1996 Convention on Parental Responsibility and the Protection of Children. The dialogue on 
international child protection and family law issues in the context of Lebanon’s participation 
in the Judicial Conference on Cross-Frontier Family Issues, took place in the context of the 
‘Malta  Process’.  As  in  2009,  Lebanon  took  part  in  the  regional  Euro-Med  programmes  on 
justice and police cooperation. 

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6. 

TRANSPORT, ENERGY, ENVIRONMENT, THE INFORMATION SOCIETY, RESEARCH AND 
DEVELOPMENT 

Implementation  of  a  comprehensive  transport  policy  continued  to  be  stalled  because 
regulatory authorities in the land, aviation and maritime sectors were not set up as foreseen.  

This is particularly critical for land transport, where progress has been limited. Stakeholders’ 
consultations are ongoing on a road safety action plan for public transport. A new traffic law 
is  under  discussion  in  the  relevant  parliamentary  committee.  A  feasibility  study  for  the 
Chekka–Tripoli railway connection is under way.  

Negotiations  between  the  European  Commission  and  Lebanon  on  a  comprehensive  Euro-
Mediterranean aviation agreement, launched in December 2009, are stalled.  

In the maritime sector, there was no progress on the Vessel Traffic and Monitoring System. 
The Lebanese flag remains on the black list of the Paris Memorandum of Understanding on 
Port State Control.  

In  June  2010,  the  Government  adopted  a  Policy  Paper  for  the  electricity  sector.  The  Paper 
covers three strategic areas (infrastructure, supply and demand, legal framework) to address in 
a  prioritised  manner  the  deficient  energy  sector  in  Lebanon.    The  comprehensive  policy 
identifies  ten  specific  initiatives  and  42  action  steps  to  improve  and  increase  electricity 
generation  to  meet  the  country’s  growing  energy  needs  and  a  return  to  profit  of  the  main 
electricity company Electricité du Liban by 2015; subsidies from the state budget amounted to 
EUR  900 million in 2010. During the year, Lebanon suffered from frequent power cuts. The 
policy  also  aims  at  further  development  of  the  country’s  electricity  and  gas  networks.  It 
includes plans to boost energy efficiency and the development of renewable energy sources, 
which  can  supports,  inter  alia,  the  development  of  the  Mediterranean  Solar  Plan.  In  August 
2010, Lebanon adopted a law on off-shore oil and gas exploration. A tender is ongoing for the 
construction of a coastal gas pipeline. With EU support, Lebanon strengthened the capacity of 
the  Lebanese  Centre  for  Energy  Conservation  to  implement  the  National  Energy  Efficiency 
Action Plan (NEEEAP). 

With  regard  to  climate  change,  Lebanon  continued  to  prepare  its  Second  National 
Communication  to  the  UN  Framework  Convention  on  Climate  Change,  including  a 
greenhouse gas inventory and an assessment of climate impacts. Some preparatory steps were 
taken to set up a national committee on climate change and desertification 

Steps were taken to prepare Clean Development Mechanism (CDM) projects, but no project 
has  yet  been  recorded  by  the  UN.  Lebanon  is  encouraged  to  fully  implement  the  Cancun 
agreement  and  in  particular  devise  a  low  carbon  development  strategy  including  update 
information on target or actions that it will implement 

Regarding the environment, Lebanon prepared a National Water Strategy. Monitoring of air 
quality  in  Beirut  started  and  two  nature  reserves  were  established.  Steps  were  taken  to 
improve waste management. Continued attention is required to implement existing strategies 
and  plans  and  to  further  enhance  monitoring  and  enforcement  and  coordination  between 
public authorities. The Ministry of Environment recruited additional staff, but administrative 
capacity needs to increase further at all levels. The legislative framework continues to require 
further development, in particular with regard to environmental impact assessment, access to 

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environmental information and public participation. Lebanon took some steps to consider the 
environment in other policy sectors such as energy. 

Lebanon  took  some  preparatory  steps  to  update  the  State  of  the  Environment  Report  and 
carried out some activities to inform and involve the public, but access to information requires 
further  improvement.  Implementing  legislation  on  environmental  impact  assessments  is  still 
pending and public consultation in the context of environmental assessments continues not to 
be widely ensured. A dedicated EU-funded programme to support environmental governance 
in Lebanon was identified during the reporting period and it will contribute to reinforce the 
management capacities of the ministry and to strengthen the legislative framework. 

 While Lebanon has not yet ratified the CITES convention, it requires CITES permits for the 
import  and  export  of  species  that  are  included  in  Appendix  1  and  Appendix  2  of  the 
Convention. There were no significant developments in the ratification of remaining Protocols 
of the Convention for the Protection of the Marine Environment and the Coastal Region of the 
implementation  of  already  ratified  agreements  requires 
Mediterranean.  Furthermore, 
particular attention. Lebanon continued to participate in the Horizon 2020 Initiative and in the 
EU Water Initiative. There was cooperation and information exchange between the European 
Commission  and  Lebanon  on  water,  depollution  and  management  of  environmental 
information, among other topics. 

In  the  field  of  civil  protection,  Lebanon  has  been  actively  involved  in  the  Euro- 
Mediterranean  Programme  for  Prevention,  Preparedness  and  Response  to  natural  and  man-
made Disasters, which has reached mid-term implementation. 

In the area of the information society, there were no significant developments. The high tax 
revenue generated by the high level of taxation of telecom operators is an obstacle to market 
liberalisation. The two state-owned operators continue to operate on the basis of equal tariffs 
set  by  the  Ministry.  Fixed  telephony  and  infrastructure  remained  a  de  facto  monopoly.  In 
2010, the Telecommunications Regulatory Authority (TRA) sent draft regulations to the State 
Council on, for example, consumer affairs, service provider licensing, the national numbering 
plan and the national frequency allocation table. The TRA approved the Code of Practice for 
Value Added Services. In the audiovisual sector, the Conseil National de l’Audiovisuel has a 
purely consultative role and decisions on licences for electronic/audiovisual media are taken 
by  the  Council  of  Ministers.  There  is  also  a  need  to  ensure  independent  issuance  of  press 
cards.  

In  the  area  of  research,  Lebanon’s  participation  in  the  7th  Framework  Programme  (FP7) 
remained limited. There is a need for better coordination among the national contact points to 
increase  the  participation  of  Lebanese  researchers  and  research  bodies  in  the  FP7.  Lebanon 
increased its level of participation slightly, with 17 research groups being successful in their 
applications, as of March 2011, and receiving some EUR 1.7 million of EU funding, mainly in 
the FP7 Theme "Food, Agriculture and Fisheries, and Biotechnologies". 

7. 

PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH 

In April 2010, the cabinet approved a National Education Strategy and Development Plan for 
2010–15. The main priorities identified in the strategy were: increasing access, accreditation, 
quality  assurance,  improving  teaching  quality  and  development  of  a  national  policy  on 
diploma recognition. The strategy did not cover technical education and vocational training, 

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which awaits finalisation of a strategic policy framework. The Council of Higher Education 
applied some quality assurance procedures for the licensing of higher education institutions, 
but  an  agreed  national  accreditation  mechanism  is  still  lacking.  As  in  2009,  significant 
challenges remain with regard to education governance, resource management and measures 
to  address  student  de-skilling  and  drop-out  rates.  There  was  no  change  in  the  situation 
regarding  the  reorganisation  of  private  higher  education  or  the  University  of  Lebanon, 
though  dialogue  did  continue  with  the  support  of  the  Higher  Education  Reform  Experts 
(HERE) funded by the EU.  

In the area of vocational training, in March the Minister designated a national coordinating 
committee for developing the national qualifications framework (NQF), leading to the start of 
work  on  a  qualifications  grid  in  November.  As  a  direct  result  of  the  earlier  MEDA-ETE 
regional  programme,  agreement  was  reached  in  November  on  an  ETF/Italian  co-funded 
project on entrepreneurship in education as part of lifelong learning, in close cooperation with 
ILO  and  UNESCO.  The  Ministry  cooperated  with  business  and  other  stakeholders  in  the 
analytical review of vocational education and training under the Torino Process and the linked 
Education and Business study by appointing a national coordinator and convening a national 
dissemination seminar in September. 

Lebanon participated actively in Tempus, receiving funding for seven projects under the third 
call for proposals for Tempus IV for the academic year 2010–11. In addition, two Lebanese 
students were awarded Erasmus Mundus Master’s scholarships while student and academic 
mobility was further enhanced with the expected award of 38 grants under Erasmus Mundus 
Action  2  for  the  academic  year  2010–11.  Lebanese  universities  are  urged  to  continue  to 
submit high-quality applications under the Jean Monnet programme. 

Lebanese  young  people  and  youth  organisations  continued  to  benefit  from  the  mobility 
opportunities  offered  by  the  Youth  in  Action  Programme  for  youth  exchanges,  voluntary 
service  and  cooperation  in  the  field  of  youth  and  non-formal  education.  The  Ministry  of 
Youth  and  Sport  confirmed  Lebanese  participation  in  Euro-Med  Youth  IV  and  continued 
work on a national policy and strategy for sports, youth and scouts.  

In the area of culture, Lebanon participated actively at regional level in the new Euro-Med 
Heritage  IV  programme.  As  Lebanon  did  not  ratify  the  2005  UNESCO  Convention  on  the 
Protection  and  Promotion  of  the  Diversity  of  Cultural  Expressions,  Lebanese  cultural 
organisations were not eligible to respond to the Call for Proposals issued for the 2010 ENP 
Special Action under the Culture Programme.  

As  reported  in  2009,  while  communication  channels  between  the  Ministry  of  Interior  and 
Municipalities and NGOs did improve, registration of civil society organisations is subject to 
lengthy  procedures.  Implementing  the  2007  law  on  consumer  protection,  in  September  the 
Ministry of Economy and Trade reactivated the Consumer Protection Council, which includes 
representatives of the private sector and consumer associations. 

Lebanon pursued health sector reform focusing, inter alia, on enhancing primary health care 
and  reforming  the  pharmaceuticals  sector.  In  the  light  of  last  year’s  influenza  A  (H1N1) 
epidemic, the European Commission proposed, in January 2010, to establish communication 
channels  with  Lebanon  for  exchanging  epidemiological  information  in  public  health 
emergency  of  international  concern.  Lebanon  continued  to  participate  in  the  ‘Episouth’ 
network on communicable diseases for the EU, Mediterranean and Balkan countries. 

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8. 

FINANCIAL COOPERATION — 2010 KEY FACTS AND FIGURES 

Cooperation framework 

The  Mid-Term  Review  of  the  programming  document  confirmed  that  the  Country  Strategy 
Paper  adopted  in  2007  remains  a  valid  framework  for  cooperation  with  Lebanon.  The  new 
National Indicative Programme (NIP) (2011–13) for Lebanon was adopted in May 2010 and 
has  a  budget  of  EUR  150  million.  The  programme  is  geared  to  supporting  the  key  policy 
objectives  outlined  in  the  EU-Lebanon  Action  Plan,  with  three  priorities:  (1)  support  for 
political  reform  (targeting  the  reform  agenda  of  the  Lebanese  government),  (2)  support  for 
social and economic reforms (helping to develop the private sector and to improve the living 
conditions of the population through various actions covering e.g. energy, education and the 
environment),  and  (3)  support  for  reconstruction  and  recovery  (focusing  on  economic 
recovery of all regions and improvement of the living conditions of the most vulnerable parts 
of the population, including Palestinian refugees).  

Implementation 

Implementation of the measures covered by the Annual Action Programmes (AAP) for 2007, 
2008  and  2009  is  under  way.  Projects  implemented  in  South  Lebanon  to  support 
municipalities  affected  by  the  2006  conflict  brought  concrete  results:  several  infrastructure 
projects  have  been  completed  and  demining  is  progressing  further,  which  allows  local 
communities to use the land for agriculture or economic purposes.  

In 2010, the EU continued to support the national reform efforts in Lebanon and committed 
assistance  totalling  EUR  44  million  under  the  bilateral  envelope  of  the  European 
Neighbourhood  and  Partnership  Instrument  (ENPI).  The  AAP  focused  on  administrative 
reform  (EUR  9  million),  security  sector  reform  (EUR  12  million),  agriculture  (EUR  14 
million) and support for the infrastructure sectors strategic framework (EUR 9 million). The 
2010 AAP did not include a sector budget support operation; however, in order to prepare the 
ground  for  a  potential  budget  support  programme,  a  PEFA  assessment  is  being  conducted. 
Under the 2009 AAP, the Support for Education Reform and PFM project aims to prepare the 
ground  for  a  future  sector  budget  support  operation  in  education.  Additionally,  in  2010  two 
twinning contracts were concluded for an amount of EUR 2 million and under the AAP 2010 
twinning projects on administrative reform have been pre-identified.  

In  addition  to  the  bilateral  allocation,  Lebanon  also  benefited  from  cooperation  activities 
financed  under  the  ENPI  cross-border,  inter-regional  and  regional  programmes.  Lebanon 
participated  in  the  ENPI  Cross-Border  Cooperation  (CBC)  Mediterranean  Sea  Basin 
Programme (EUR 173.6 million for the whole programme in the period 2007–13). The main 
priorities of the Programme are four-fold (i) promotion of socio-economic development and 
enhancement of territories, (ii) promotion of environmental sustainability at basin level, (iii) 
promotion of better conditions and modalities for ensuring the mobility of persons, goods and 
capital and (iv) promotion of cultural dialogue and local governance.  

The Facility for Euro-Mediterranean Investment and Partnership (FEMIP) provided Technical 
assistance in support of the South Lebanon Water & Wastewater Project (EUR  850 000) and 
extended  the  duration  of  its  technical  assistance  to  Lebanese  Highways,  at  a  cost  of  EUR  
256 000.  An  EIB  loan  of  EUR 100  million  for  the  SME  Reconstruction  Facility,  signed  in 
2007, was cancelled during 2010. 

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Other  EU  instruments  supplement  the  ENPI  assistance  package.  Lebanon  benefited  from 
cooperation activities financed under horizontal instruments such as the European Instrument 
for  Democracy  and  Human  Rights  (EIDHR)  and  the  Development  Cooperation  Instrument 
(DCI) thematic programmes Non-State Actors and Local Authorities in Development (NSA-
LA);  Investing  in  people;  Migration  and  asylum;  and  Environment  and  sustainable 
management of natural resources including energy.  

The Instrument for Stability has been mobilised in Lebanon to respond to crises and support 
early recovery, the re-establishment of security and the rule of law, and political stabilisation, 
for  a  total  amount  of  EUR   20 million  over  the  past  three  years.  Under  the  Instrument  for 
Stability, Lebanon is also engaged in regional cooperation to create Centres of Excellence in 
CBRN risk mitigation (chemical, biological, radiological and nuclear incidents). To date, this 
large project is estimated to receive overall support in the range of EUR 7 million. 

The second tranche of the EU Macro-Financial Assistance (MFA) loan decided in December 
2007 was not disbursed despite the Commission’s offer to extend the validity of the Decision 
by one year (to December 2010). The authorities had failed to implement many of the agreed 
structural policy measures that had to be introduced prior to the release of the second tranche 
of the assistance. In these conditions, the EU MFA expired and the second instalment was not 
disbursed.  

Donor coordination 

In  2010,  the  EU  Delegation  in  Lebanon  ensured  the  coordination  of  assistance  activities. 
Several  working  groups  are  led  by  the  EU  and  its  member  states  (i.e.  on  water,  local 
governance,  rule  of  law).  They  aim  to  ensure  complementarity  and  develop  a  common 
strategic approach in specific sectors. In addition, the EU and Italy began a joint identification 
process in the field of municipal finance reform.  

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