JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in Lebanon Progress in 2011 and recommendations for action Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Delivering on a new European Neighbourhood Policy
Date: 2012-05-15
Institutions: European Commission, High Representative of the Union
Subjects: European neighbourhood policy, Lebanon, administrative reform, cooperation in the field of education, democratisation, economic reform, environmental cooperation, institutional reform, job creation, judicial cooperation, judicial reform, trade cooperation

EUROPEAN COMMISSION 

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

Brussels, 15.5.2012  
SWD(2012) 117 final 

JOINT STAFF WORKING DOCUMENT 

Implementation of the European Neighbourhood Policy in Lebanon 
Progress in 2011 and recommendations for action 

Accompanying the document 

JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

Delivering on a new European Neighbourhood Policy 

{JOIN(2012) 14 final} 
{SWD(2012) 110 final} 
{SWD(2012) 111 final} 
{SWD(2012) 112 final} 
{SWD(2012) 113 final} 
{SWD(2012) 114 final} 
{SWD(2012) 115 final} 
{SWD(2012) 116 final} 
{SWD(2012) 118 final} 
{SWD(2012) 119 final} 
{SWD(2012) 120 final} 
{SWD(2012) 121 final} 
{SWD(2012) 122 final} 
{SWD(2012) 123 final} 
{SWD(2012) 124 final} 

EN 

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1. 

OVERALL ASSESSMENT AND RECOMMENDATIONS FOR ACTION  

This  document  reports  on  the  overall  progress  made  in  implementing  the  EU-Lebanon 
ENP  Action  Plan  between  1  January  and  31  December  2011,  although  developments 
outside this period are also considered when deemed relevant. It is not a general review 
of  the  political  and  economic  situation  in  Lebanon.  For  information  on  regional  and 
multilateral sector processes in the context of the Partnership for Democracy and Shared 
Prosperity,  readers  should  also  refer  to  the  Partnership  for  Democracy  and  Shared 
Prosperity progress report. 

Following the fall of the national unity government in January 2011, the implementation 
of the ENP Action Plan stalled in the first semester of 2011. The new cabinet of Prime 
Minister  Najib  Mikati,  which  took  office  in  July,  showed  strong  commitment  to 
cooperation  with  the  EU.  High  level  visits,  which  were  carried  out,  gave  the  bilateral 
relations an additional impetus.  The Association Committee held its first meeting since 
2007 and sub-committees resumed their work. Preparations for a new ENP Action Plan 
were launched at the end of the year. 

In  the  context  of  a  volatile  situation  in  the  Arab  world,  and  most  importantly  in  the 
neighbouring  Syria,  Lebanon  successfully  preserved  its  political  stability,  sovereignty 
and  internal  unity  due  to  the  policy  pursued  by  the  government.  Lebanon  remained 
committed to its international obligations and respected its financial commitment towards 
the Special Tribunal for Lebanon (STL), and accepted the renewal of the STL mandate 
for additional 3 years. 

Human rights and fundamental freedoms are generally respected in Lebanon. Freedom of 
expression, association and religion can be exercised in a relatively liberal environment. 
A  crucial  milestone  in  deepening  Lebanon’s  democracy  will  be  the  electoral  reform, 
pending  for  many  years,  on  which  discussion  re-started  in  September  2011.  Remaining 
challenges include increasing the efficiency and independence of the judiciary, improving 
the management of prisons and detention centres, abolishing the death penalty, improving 
the  treatment  of  migrants  and  refugees  and  increasing  the  participation  of  women  in 
political and social life. There was rather limited progress in these areas in 2011. 

Cutting corruption remains a major challenge. A new administrative reform strategy was 
presented at the end of 2011. Plans for decentralisation have not been formulated yet. In 
the  security  sector,  the  code  of  conduct  adopted  by  the  Internal  Security  Forces  in 
January 2012 is expected to further contribute to a more citizen-oriented police service. 
Furthermore, Lebanon needs to improve its border management. 

The political stalemate of the first half of 2011 and the events in Syria have taken their 
toll  on  several  macroeconomic  indicators  throughout  the  year.  However,  Lebanon 
managed  to  maintain  economic  stability.  The  economic  situation  remains  vulnerable, 
especially on the fiscal front, given the high levels of government deficit and public debt. 
The  ENP  Action  Plan  focuses  inter  alia  on  fiscal  consolidation,  public  finance 
management  and  progress  towards  establishing  a  fully  functioning  market  economy. 

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Implementation of these priorities was mixed, with the prudent stance of the central bank 
broadly  supporting  macro-economic  performance  and  stability  but  little  progress  being 
made  on  fiscal  consolidation  and  structural  reforms  including  in  the  energy  and 
telecommunication sector. 

Lebanon’s  lack  of  progress  in  the  accession  to  the  World  Trade  Organisation  (WTO) 
remains  the  main  obstacle  to  further  trade  liberalisation  with  the  EU.  The  Lebanese 
parliament still has to discuss and adopt a number of legislative proposals necessary for 
the accession. Trade exchanges will be further facilitated by improved computer tools for 
customs. According to the new legislation, an independent National Council for Financial 
Markets will be set up to regulate financial markets. 

Lebanon  needs  to  improve  its  infrastructure  to  ensure  basic  services  for  the  population 
and  improve  the  environment  for  businesses.  Decreasing  internet  costs  leading  to 
increased  access  to  the  broadband  internet  was  an  important  step  forward  in  2011. 
Agreement  on  financing  of  the  electricity sector  plan,  reached  in  September  2011,  may 
help address shortcomings in electricity supply. 

There  was  rather  limited  progress  in  the  field  of  social  policy  with  the  exception  of  a 
wage  hike  for  workers,  which  was  approved  in  early  2012.  Structural  measures  that 
would  improve  social  safety  nets  and  address  poverty  and  social  inequalities  should  be 
devised.   

On the basis of this year’s report and with a view to sustained implementation of the ENP 
Action Plan in 2012, Lebanon is invited to: 

•  Adopt a new electoral law, in good time for the legislative elections in 2013, bringing 

the electoral process further into line with international standards. 

•  Reduce the backlog of draft laws currently before parliament and advance adoption of 

legislative proposals in key economic and social areas. 

•  Take  measures  to  improve  the  effectiveness  and  independence  of  the  judiciary, 
including  increased  use  of  computers  in  courts  and  independence  of  judicial 
appointments. 

•  Pay  special  attention  to  enhancing  the  role  of  women  in  both  public  and  economy 

sectors respectively. 

•  Take  concrete  steps  to  improve  rights  of  the  Palestinian  refugees  to  property, 

employment and social security, while respecting the right of return principle. 

•  Finalise  and  sign  a  comprehensive  Memorandum  of  Understanding  between  the 
Lebanese authorities and UNHCR to improve the protection of refugees and asylum 
seekers. 

• 

Improve  the  management  of  public  finances,  including  the  adoption  of  the  long 
awaited  law  on  public  procurement,  and  adopt  a  balanced  state  budget  (this  is  a 
precondition for EU budget support). 

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•  Advance  accession  to  the  World  Trade  Organisation,  by  adaptation  of  laws  and 
progress in bilateral service negotiations, and sign and ratify the regional Convention 
on pan-Euro-Mediterranean Rules of Origin. 

•  Adopt  structural  measures  in  reforming  the  energy  sector;  implement  the  electricity 

plan and enhance the use of renewables. 

•  Take  steps  to  strengthen  the  independence  of  the  Telecommunications  Regulatory 

Authority with a view to possible liberalisation of the sector. 

•  Re-launch social  dialogue  and adopt  a strategic  framework  for  vocational  education 

and training in support of job creation. 

2. 

POLITICAL DIALOGUE AND REFORM  

Towards Deep and Sustainable Democracy 

The  new  government  formed  in  July  2011  upheld  the  commitment  of  the  previous 
administration  to  prepare  a  new  parliamentary  election  law  ahead  of  the  legislative 
elections  in  2013.  A  new  proposal  presented  by  the  Ministry  of  Interior  and 
Municipalities  stimulated  public  debate  across  the  political  and  religious  spectrum.  The 
proposal addresses several of the recommendations made following the 2009 EU Election 
Observation  Mission,  including  some  form  of  proportional  representation,  improved 
election  campaign  supervision,  pre-printed  ballots,  out-of-country  voting  and  a  gender 
quota on candidate lists. However several other crucial recommendations proposed by the 
EU Election Observation Mission in 2009 were not addressed. The draft does not propose 
the  establishment  of  a  truly  independent  electoral  commission.  It  does  not  propose  to 
lower the voting age, as this requires a constitutional amendment. The discussion on the 
electoral reform started in 2011 and will continue in 2012. Consultation with civil society 
was limited. 

Civil  society  organisations  in  Lebanon  operate  within  a  relatively  liberal  framework 
without  limitations  on  their  freedom  of  association  and  assembly.  A  further  step 
towards  formalising  their  participation  in  the  legislative  process  was  the  government’s 
call  for  reactivation  of  the  Lebanese  Economic  and  Social  Council.  Nominations  for 
members of the Council have not been acted on since 2002. The Council should establish 
a  structural  framework  for  the  dialogue  between  civil  society  and  the  Lebanese 
authorities. 

Lebanon has a very open and diverse media environment. But a few cases of limitations 
on  freedom  of  expression  were  observed  in  2011.  The  activities  of  some  filmmakers 
were restricted. The National Audiovisual Council limited the airing of a small number of 
television  programmes,  films  and  other  artistic  material  that  touched  upon  ‘sensitive’ 
religious and political topics. 

There  was  some  progress  on  the  independence  of  the  judiciary.  The  Government 
decided significantly to increase the remuneration of judges in an effort to reduce the risk 
of corruption. However key judicial appointments, such as the head of the Higher Judicial 

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Council,  continue  to  be  heavily  influenced  by  both  the  legislature  and  the  executive. 
Inefficiency  of  the  courts  and  delays  result  in  denial  of  court  access.  The  excessive 
jurisdiction  of  military  courts  and  the  trying  of  civilians,  who  have  no  connection  with 
the  military,  violate  the  principle  of  a  fair  trial.  The  computerisation  of  the  Ministry  of 
Justice  continued  in  2011.  The  EU  continues  to  provide  financial  support  for  judicial 
reform. A financing decision for a new programme of EUR5 million was taken in 2011.  

The  public  perception  of  corruption  in  Lebanon  remains  poor.  According  to  the 
corruption-perception  index  published  by  Transparency  International,  Lebanon  ranked 
134th  in  2011  compared  to  127th  in  2010.  There  is  no  national  strategy  to  tackle 
corruption.   

In  the  security  sector,  some  progress  took  place  within  the  Internal  Security  Forces 
(ISF). At the end of 2011 the ISF finalised their new code of conduct, which opens the 
door  to  the  development  of  a  more  citizen-oriented  police  service.  The  members  of  the 
ISF  Council  of  Command  were  appointed  after  five  years  of  negotiation.  Furthermore 
there  has  been  greater  cooperation  between  police  services  and  the  judiciary  in  the 
context of criminal investigations. But mainstreaming of best practices and closer inter-
agency cooperation are still needed. 

A  new  project  Developing  National  Capability  for  Security  and  Stabilisation,  signed 
between Lebanon and the EU in December 2011 worth EUR12 million, aims at further 
enhancing ISF organisational competences. 

As  for  democratic  control  over  the  armed  forces,  the  efforts  to  resume  the  national 
dialogue and draw up a national defence strategy that would ensure sovereign control by 
the Government did not bring results in 2011. The UN, supported by the EU, continued to 
call  on  Lebanon  to  advance  in  implementing  UN  Resolution  1701  in  particular  with 
regard to the disarmament of all armed groups and ensuring that there are no weapons on 
Lebanese  territory  without  the  consent  of  the  Government  of  Lebanon.  The  Lebanese 
Armed Forces remained committed to cooperation with the UN Interim Force in Lebanon 
(UNIFIL).  At  the  end  of  2011,  a  strategic  review  was  launched  with  a  view  to  a 
progressive handover of UNIFIL functions to the Lebanese state.   

Other Human rights and governance-related issues 

Human  rights  and  fundamental  freedoms  in  Lebanon  are  relatively  well  respected  and 
enshrined  in  the  legal  framework.  Nevertheless  limited  violations  occur  in  some  areas. 
During 2011, three cases of judicial harassment of human-rights defenders were reported. 
The  Human  Rights  Action  Plan  is  under  final  discussion  in  the  Parliament’s  Human 
Rights Committee. The Action Plan should lay the groundwork for the establishment of a 
National Human Rights Institution. 

There are indications that torture is not widespread but still occurs in Lebanon, mainly in 
detention  centres,  prison  facilities  and  police  custody.  Lebanon  has  ratified  the  UN 
Convention  against  Torture  as  well  as  the  Optional  Protocol  to  the  Convention. 

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Nevertheless  it  still  has  to  establish  a  National  Preventive  Mechanism  and  submit  the 
required reports. 

The situation of detainees in prisons and detention centres continues to be of concern. 
Prison conditions are not in line with international standards. Overcrowding, sub-standard 
conditions  and  mistreatment  were  among  the  causes  of  prison  riots  in  2011.  A  high 
percentage of imprisoned persons are in pre-trial detention, and a limited number serving 
beyond their sentence. The transfer of authority over prisons from the Ministry of Interior 
to the Ministry of Justice continued at a slow pace in 2011. 

There is no agreement among political actors on abolishing capital punishment. In the 
reporting  period,  the  courts  handed  down  further  death  sentences  in  cases  of  Lebanese 
individuals convicted of spying on behalf of Israel. Although no death sentence has been 
carried out since 2004, the moratorium on executions has never been formalised through 
a legal act. 

There was limited progress in the area of women rights. A draft law on the Protection of 
Women  from  Domestic  Violence  was  adopted  by  the  council  of  minister  in  2010  but 
continues  to  be  opposed  by  religious  leaders.  Lebanese  legislation  continues  to  prevent 
Lebanese  women  from  passing  on  their  nationality  to  their  children.  A  new  legislative 
proposal that facilitates the acquisition of citizenship by emigrants of Lebanese descent, 
excludes from this possibility emigrants of ‘matrilineal’ Lebanese descent. Lebanon did 
not  lift  its  reservations  on  the  Convention  on  the  Elimination  of  All  Forms  of 
Discrimination against Women (CEDAW). Female participation in political life remains 
low. No woman was appointed to a ministerial post in the new government and there are 
only  four  female  members  of  the  Lebanese  parliament.  However,  as  encouraging  step 
towards addressing gender related issues, notably gender-based violence, the parliament 
repealed the penal code provision mitigating so called crimes of honour. No significant 
progress was noted in improving the rights of children. 

Lebanon’s administrative and legal framework governing refugees and asylum seekers 
remains  deficient  (see  chapter  5).  No  improvement  is  evident  in  the  situation  of 
Palestinian  refugees.  Discrimination  persists  and  covers  employment,  ownership  of 
property, social safety and political inclusion in general. The amendments to the Labour 
law  adopted  last  year  did  not  lead  to  a  tangible  improvement  in  the  situation  of 
Palestinian refugees in the labour market as many of the critical implementation decrees 
have not been issued.  

The unified standard contract for migrant workers issued by government decree in 2009 
is  being  more  widely  used.  However,  there  are  still  significant  shortcomings  in  its 
application, in the sponsorship system for domestic workers in general as well as in the 
fact that the Lebanese labour laws are not applicable to domestic work. 

The Office of the Minister of State for Administrative Reform has drawn up a proposal 
for  an  administrative  reform  strategy  that  focuses  on  the  core  functions  of  a  modern 
state. It aims to foster a transparent, accountable and effective public administration. The 
proposal has been presented to the Council of Ministers for adoption. The EU is ready to 

6

 
 
support the implementation of the strategy with EUR9 million through projects for which 
the financing agreement was signed at the end of 2011. 

Continued  work  on  decentralisation  is  among  the  priorities  of  the  new  government. 
However,  no  noticeable  development  took  place  in  2011.  An  EU  financial  support 
package of EUR 20 million to assist the municipal finance reform was signed at the end 
of 2011.  

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

The ministerial declaration of the new government explicitly listed cooperation with the 
European Union among its objectives. Dialogue with the EU resumed very intensively as 
soon as the government was established, with several high level visits and ENP meetings 
held in the second half of 2011. 

The Lebanese government expressed continued commitment to the UN Security Council 
Resolutions,  mainly  UNSCR  1701  and  UNSCR  1757  establishing  the  Special  Tribunal 
for Lebanon (STL). Lebanon honoured its obligations towards the STL and in November 
2011  transferred  its  49%  share  of  funding  to  the  STL.  On  30  June  2011  the  Tribunal 
handed  over  to  the  Lebanese  authorities  the  indictments  for  four  persons  accused  in 
relation  to  the  assassination  of  Prime  Minister  Rafiq  Hariri  in  2005.  The  Lebanese 
authorities did not succeed in apprehending the accused persons in the reporting period. 
The  Lebanese  Prosecutor  General  provided  regular  reports  to  the  STL  on  efforts 
undertaken  in  this  regard.  The  STL  mandate  was  extended  for  an  additional  3  years  in 
early 2012. 

Lebanon has shown commitment to continued work with UNIFIL on the implementation 
of the UNSCR 1701 and remains committed to the joint strategy between the Lebanese 
Armed Forces and UNIFIL. In the reporting period the European UNIFIL peacekeepers 
became  subject  of  three  separate  attacks,  strongly  condemned  by  the  Lebanese 
government but investigations into these attacks have not shown any significant results. 
The  EU  condemned  these  incidents  and  called  on  Lebanese  government  to  increase 
security measures and enable a safe environment for their work.  

During  2011  Lebanon  held  the  post  of  a  non-permanent  member  of  the  UN  Security 
Council,  handling  particular  contentious  issues  during  its  presidency  in  September,  
namely  the  UN  resolution  on  Libya,  the  bid  for  Palestinian  statehood  and  proposed 
resolutions  on  Syria.  Lebanon  has  sought  to  take  a  neutral  approach,  abstaining  or 
declining to vote, on issues relating to Syria.  

In September 2011, Lebanon successfully hosted the Second Meeting of State Parties to 
the  Convention  on  Cluster  Munitions  attended  by  representatives  of  more  than  120 
countries. The Ottawa Convention on Anti-Personnel Mines and the Rome Statute of the 
International Criminal Court have still not been ratified by Lebanon. 

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In 2011, Lebanon sought a peaceful approach to resolving differences in the delineation 
of  its  southern  maritime  border,  where  the  coordinates  delimiting  Lebanon’s  Exclusive 
Economic Zone differ from those used by Israel. 

3. 

ECONOMIC AND SOCIAL REFORM 

Macroeconomic framework and functioning market economy 

Lebanon  has  been  severely  hit  by  the  regional  turmoil.  The  slowdown  in  exports  and 
inward investment led to a GDP growth rate of only 1.5% for 2011 (from 7% in 2010). 
Consumer Price Index inflation accelerated to 5.4% in 2011 from 4.5% in 2010, mainly 
due to sustained commodity prices. 

On  the  fiscal  front,  Lebanon’s  central  government  deficit  widened  to  8.3%  of  GDP  in 
2011  (from  7.5%  in  2010)  following  a  rise  in  the  wage  bill  and  increased  transfers  to 
Electricité du Liban. Lebanon’s public debt remains high at 134% of GDP, although its 
ratio has considerably declined in recent years partly thanks to rapid GDP growth.  

Oil price increases and the rebound of imports during 2011, combined with the impact of 
the  regional  turmoil  on  tourism  (a  key  sector  of  the  Lebanese  economy)  and  exports 
affected the current account deficit which widened further to 14.1% of GDP in 2011 from 
nearly  10.6%  of  GDP  in  2010.  Official  foreign  exchange  reserves  dropped  to  $28.3 
billion in the first half of 2011 (from $29.6 billion at the end of 2010) but they recovered 
subsequently at the end of August and remain at comfortable levels, amounting to nearly 
$31 billion at the end of 2011. 

The banking sector is dominant in the economy (with deposits representing around 300% 
of  GDP)  and  politically  influential.  A  significant  portion  of  its  assets  are  devoted  to 
holding the high government debt. Financial stability risks have been mitigated in recent 
years due to the strong official foreign exchange reserve cushion of the economy, which 
has  contributed  to  the  credibility  of  the  currency  peg  to  the  US  dollar  (introduced  in 
1999). 

Improving  public  financial  management  and  reforming  the  water,  energy  and 
telecommunications sectors remain key elements of Lebanon’s reform agenda. In the area 
of  public-debt  management,  Lebanon,  with  assistance  from  the  World  Bank,  has 
established  a  new  Debt  Management  Office  within  the  Finance  Ministry  (MoF)  and  a 
Committee on Debt Management where the Central Bank of Lebanon and the MoF are 
represented. 

Employment and social policy 

While there are no official figures available and authorities do not issue regular statistics, 
estimates indicate that Lebanon’s unemployment rate was approximately 11% in 2011.  
Youth  unemployment  remained  a  particular  concern,  with  unemployment  for  the  age 
category below 25 estimated at 21% in 2011. The Lebanese economy continued to suffer 
from  a  lack  of  capacity  to  absorb  young  people  entering  the  labour  market,  an  issue 

8

 
 
which is particularly acute for young graduates of the secondary and university levels and 
leads many to emigrate.    

An  Economic  and  Social  Action  Plan  was  prepared  in  2011  by  the  Prime  Minister’s 
Office, is currently under discussion in the Council of Ministers. The Strategy is based on 
six pillars, including the creation of a conducive business environment, rehabilitation of 
infrastructure  in  basic  social  services  such  as  energy,  transport,  water  supply  and 
sanitation, human development including social protection, and regional development.   

The authorities also launched a specific programme for the most vulnerable families, so 
as  to  tackle  poverty  and  high  regional  disparities  (the  most  recent  data  from  2004 
indicated that 28% of the population were living on less than $4 per day); the programme 
covers  about  52  000  families  and  includes  assistance  with  electricity,  drugs  for  chronic 
illnesses and fostering access to education. A targeted ‘first job seeker’ pilot programme, 
supported  by  a  grant  from  the  World  Bank,  was  set  up  at  the  end  of  2011  in  order  to 
promote the entry into the labour market of graduates aged between 16 and 30 years. 

On  social  protection,  the  new  government  announced  in  its  Ministerial  Statement  its 
intention  to  improve  social  welfare  and  enhance  universal  coverage,  notably  of  health 
insurance through the National Social Security Fund. Draft legislation along these lines 
was  submitted  to  the  Council  of  Ministers  in  September  20011.  Efforts  continued  to 
reform the pension scheme, so as to move away from a system of end-of-career lump sum 
payments in the private sector.     

Threats of a general strike by the General Union of Labour Workers in October 2011 led 
the authorities to engage in contacts and dialogue with social partners. After a series of 
controversies, pay increases of 20-30% for the lowest earners were eventually agreed in 
January 2012, once agreement between the Government and the State Council was found 
and transportation and education allowances removed from the overall financial package. 
The authorities also committed to reviving the Social and Economic Council. 

On  labour  standards,  Lebanon  launched  procedures  in  January  2012  to  ratify 
International Labour Organisation (ILO)  Convention  87  on  the  Freedom  of  Association 
and Protection of the Right to Organise. The authorities also indicated their intention to 
revise the labour law to eliminate discrimination and  extend the coverage of the  labour 
law  to  migrant  and  notably  domestic  workers,  as  well  as  to  transpose  into  national 
legislation core ILO standards such as those on working times. First steps were taken in 
September 2011, with a decision to open the labour market to non-Lebanese citizens who 
are  children  or  spouses  of  women  of  Lebanese  nationality.  In  February  2012,  a 
Memorandum  of  Understanding  was  signed  between  Lebanon  and  the  Philippines, 
enhancing  the  treatment  of  migrant  domestic  workers;  the  authorities  indicated  that  the 
same treatment would be applied to workers of other nationalities.   

In  the  area  of  agriculture,  the  Government  issued  decrees  on  fertilisers,  seedlings, 
pesticides  (pesticide  prescription)  and  decisions  on  post-harvest  requirements.  The 
Ministry of Agriculture (MOA) regulated private nurseries and established a register for 
nurseries and revised test requirements for imported agricultural products. The ministry 

9

 
 
also  launched  pest-surveillance  activities  and  initiated  the  National  Biotech  Committee. 
July 2011, the MOA launched the Agriculture and Rural Development Programme (EU 
contribution  EUR14  million)  which  aims  to  increase  the  overall  performance  of  the 
agriculture  sector  in  order  to  achieve  sustainable  food  security  and  to  improve  the 
livelihood of rural and farming communities. It is expected that 40000 people will benefit 
directly from the Programme. 

4. 

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM 

In  2011  EU  was  the  largest  trading  partner  for  Lebanon,  covering  29%  of  Lebanese 
trade.  Bilateral  trade  volume  has  been  steadily  growing  since  2007  with  an  average 
annual  growth  of  11.8%  and  amounted  to  EUR  5.6  billion  in  2011.  EU  imports  from 
Lebanon  consisted  mainly  of  semi-manufactured  goods  (26.4%),  agricultural  products 
(20.5%), fuel and mining products (16.2%), chemicals (12.9%), machinery and transport 
equipment  (9%).  EU  exports  to  Lebanon  consist  mainly  of  machinery  and  transport 
equipment  (22.4%),  energy  products  (26.3%),  agricultural  products  (14.8%)  and 
chemicals (13.3%).  

Lebanon has yet to notify the EU of the completion of internal procedures for the entry 
into  force  of  the  Protocol  on  the  Dispute  Settlement  Mechanism,  signed  in  November 
2010.  

No progress was made by Lebanon in 2011 in its accession process to the World Trade 
Organisation (WTO). Lebanon has yet to adopt a number of laws and to make progress in 
bilateral  services  negotiations  in  the  WTO  accession  context.  The  EU  continued  to 
provide assistance for Lebanon's accession to WTO; a precondition for further deepening 
of bilateral trade relations with the EU. 

Computerisation  of  customs  systems  included  upgrades  to  existing  systems  and  the 
rolling  out  of  the  customs  clearance  automated  information  system  and  the  electronic 
declaration system systems to the whole customs territory.  

In respect of the free movement of goods and technical regulations, very little progress 
was  made  in  the  preparations  for  negotiations  on  an  Agreement  on  Conformity 
Assessment and Acceptance of Industrial Products (ACAA). Lebanon has identified three 
priority  sectors:  electrical  products,  pressure  equipment  and  construction  materials. 
Lebanon has not yet approved the draft ACAA Action Plan. The Government approved 
the Metrology law in July 2010 but it has not yet been submitted to the Commission for 
assessment.  The  2010  law  on  ‘Technical  Regulations  and  Conformity  Assessment 
Procedures’ is not yet in line with the acquis. In October 2011, LIBNOR, the Lebanese 
organisation for standardisation, became an affiliate member of the European Committee 
for Standardisation (CEN). 

Regarding sanitary and phytosanitary issues, the draft food safety law (which includes 
the  establishment  of  a  food  safety  authority)  and  the  draft  animal  quarantine  law 
remained  pending.  A  phytosanitary  strategy  is  in  development.  Lebanon  upgraded 
quarantine facilities. 

10

 
 
Lebanon’s  business  climate  further  deteriorated  through  the  perceived  political 
instability  due  to  the  Arab  Spring  and,  in  particular,  the  situation  in  Syria.  Lebanon’s 
ranking in the World Bank’s ’Doing Business 2012’ annual report fell from 103 to 104 in 
comparison with the previous year. The high cost of logistics, labour and land in urban 
areas,  poor  supply  of  energy  and  the  unpredictability  of  administrative  and  juridical 
decisions  continued  to  burden  investors,  while  the  lower  prices  and  faster  speed  of 
internet connections present a welcome improvement. 

The 2009 plan to facilitate the establishment of a business without recourse to a lawyer 
was  scrapped  due  to  resistance  from  the  Bar  Associations:  the  minimum  legal  fees  for 
starting  a  business  remain  at  6  million  Lebanese  pounds  (or  around  EUR  3000).  The 
major  obstacle  to  the  establishment  of  a  business  is  the  difficulty  of  obtaining 
construction permits. The World Bank estimates that it requires 19 separate procedures, 
taking  a  total  of  219  days,  with  a  cost  that  is  around  235%  of  GNI  per  capita.  No 
significant  reforms  have  been  introduced  in  2011  and  it  is  estimated  that  the  cost  of 
establishment rose during the year. Likewise there was no reform in the area of company 
law in 2011. 

Lebanon  participated  in  implementing  the  2011-2012  industrial  cooperation  work 
programme  that  Euro-Mediterranean  Industry  Ministers  adopted  on  11-12  May  2011  in 
Malta. 

The Parliament reinforced the regulation of financial services in August 2011 through a 
new law establishing an independent body, The National Council for Financial Markets 
in Lebanon, to regulate and supervise capital markets. 

Other key areas 

The  agreement  on  double  taxation  between  Lebanon  and  Italy  was  approved  in  May 
2011  by  the  Italian  Senate,  bringing  the  number  of  such  agreements  with  EU  member 
states to eight. 

Lebanon  announced  in  August  2011  that,  following  a  recommendation  of  an  EU 
Twinning Project, the Directorate of VAT and of Revenue would be merged to achieve 
better  integration  of  databases  and  shared,  standardised  procedures.  Lebanon  adopted  a 
change  in  tax  recovery  approaches  from  catching  the  citizen  to  running  a  risk-based 
system promoting voluntary compliance. 

The  Ministry  of  Finance  continued  providing  the  EU  with  the  annual  figures  for  state 
aid. The  Parliament did not  deal in 2011 with the 2007 draft competition law,  and  the 
Government is revising the draft. 

The  International  Intellectual  Property  Alliance  reported  in  2011  that  piracy  abuses 
continue  to  be  a  problem  for  legitimate  business  in  Lebanon.  Enforcement  of  property 
rights is sporadic despite improvements. 

11

 
 
Draft  legislation  to  modernise  public  procurement  is  still  waiting  for  parliamentary 
approval.  The  EU  provided,  through  SIGMA,  assistance  in  developing  public 
procurement legislation and a strategy. 

The Central Administration for Statistics (CAS) worked to improve the availability and 
quality  of  national  accounts,  trade  data  and  social  statistics.  It  also  studied  with  the 
support  of  an  EU-funded  twinning  programme,  the  feasibility  of  setting  up  a  business 
register. This work has suffered from a chronic lack of resources allocated to CAS.  

In  cooperation  with  the  World  Bank,  CAS  launched  the  National  Household  Budget 
Survey for 2011, for the first time since 2004. The results will help assess poverty levels, 
provide  weights  for  the  consumer  price  index,  the  main  indicator  of  inflation,  and  give 
more accurate and timely labour and unemployment figures. 

A  Public  Expenditure  Financial  Accountability  (PEFA)  exercise  funded  by  the  EU  was 
finalised in August 2011. In October 2011, the Ministry of Finance accepted the PEFA 
report  as  an  unofficial  working  document.  This  document  constitutes  a  baseline  for 
measuring Public Finance Management reform in the future and for preparing a reform 
strategy with the support of a EUR 13.7 million project. 

Hearings took place during the last months of 2011 at the Parliament to discuss the lack 
of closure of accounts since 2004. The head of the parliamentary commission on Budget 
and  Finance  suggested  that,  given  the  role  of  the  Court  of  Account  as  external 
auditor/controller of the Government’s work, it should be placed under the control of the 
presidency of the Republic and not, as today, under the control of the Prime Minister. 

5. 

COOPERATION ON JUSTICE, FREEDOM AND SECURITY 

During the year 2011 the controversy over demarcation of the maritime border with Israel 
continued.  In  August  2011  the  Lebanese  Parliament  approved  the  delineation  of  the 
borders  of  its  Exclusive  Economic  Zone  in  line  with  the  maps  submitted  to  the  UN  in 
2010. In September Lebanon lodged an official complaint with the UN Secretary General 
contesting the depositions made by Israel in July 2011. 

Lebanon  still  lacks  a  comprehensive,  integrated  border  management  strategy.  The 
border  between  Lebanon  and  Syria,  in  particular,  is  not  adequately  delineated  or 
controlled and incursions into Lebanon by Syrian armed forces took place during 2011. 
EU  support  in  securing  and  controlling  the  border  in  accordance  with  international 
standards will be provided to Lebanon in the framework of the Security and Stabilisation 
Programme,  which  was  signed  in  December  2011.  The  Lebanese  authorities  actively 
participated in the Mediterranean Transit Migration Dialogue. 

No progress was registered in the area of asylum law, where Lebanon is still not a party 
to  the  1951  Geneva  Convention  on  the  Status  of  Refugees.  In  this  context  a  revised 
Memorandum  of  Understanding  with  UNHCR  is  needed  to  fill  the  protection  gap. 
Nevertheless,  at  the  end  of  2011  Lebanese  northern  regions  of  Lebanon  were  giving 
hospitality to approximately 5000 Syrians who in 2011 fled violence and persecution in 

12

 
 
their  country.  In  the  course  of  2011,  UNHCR,  in  partnership  with  the  Lebanese  High 
Relief Council, assisted more than 10000 people displaced from Syria; this also included 
the enrolment of children at Lebanese schools and psycho-social support.   

In August 2011, parliament adopted an anti-trafficking law amending the Lebanese penal 
code to address the crime of trafficking in human beings. The law provides for a clear 
definition of trafficking and sets out penalties for traffickers.  Further consideration needs 
to  be  given  to  the  prevention  of  trafficking  and  the  situation  of  children,  who  are  not 
addressed in the law.   

In  the  fight  against  drugs,  the  Drug  Enforcement  Unit  of  the  Internal  Security  Forces 
continued further eradication of hashish plantations in the Bekaa region. 

A law on money laundering, including provisions for the creation of an inter-ministerial 
committee to improve the fight  against  organised crime and its financial aspects, was 
approved  in  late  2011.  No  progress  took  place  in  other  areas  on  the  fight  against 
organised  crime,  including  in  relation  to  the  draft  law  on  cybercrime,  which  had  been 
prepared in 2010.   

No progress was evident in the field of judicial and law-enforcement cooperation and a 
number of international conventions regarding family law, and notably children, remain 
unsigned.  As  part  of  the  ‘Developing  National  Capacity  for  Security  and  Stabilisation’ 
project, EU support will also be given to strengthen the capacity of the Internal Security 
Forces to gather evidence and reinforce judicial cooperation. 

6. 

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

A land-transport strategy, that includes the creation of a Land Transport Authority, was 
presented  to  the  Council  of  Ministers  in  September  2011.  The  Ministerial  Statement 
mentioned  the  organisation  of  the  Public  Licence  system  for  vehicle,  drivers  and 
companies; it is now theoretically being implemented but is unclear how it is enforced.  
Restoration and upgrading of the railway network (integrated into a multimodal service) 
remains stalled. After the signature of a horizontal agreement in 2004, in December 2009 
the  European  Commission 
launched  negotiations  on  a  comprehensive  Euro-
Mediterranean  Aviation  Agreement  with  Lebanon,  aimed  at  regulatory  alignment  with 
EU  standards  and  mutual  market  opening.  Those  negotiations  should  be  concluded  in 
2012.  The  Lebanese  flag  remains  on  the  black  list  of  the  Paris  Memorandum  of 
Understanding on Port State Control. 

Regarding  energy,  the  parliament  agreed,  in  September  2011,  upon  the  financing  of  a 
mid-term  part  of  the  energy  strategy  agreed  in  2010,  tendering  for  this  is  expected  to 
begin  in  May  2012.  The  short-term  part  of  the  strategy has been agreed after  extensive 
debate  in  April  2012,  the  long-term  sections  remain  unfunded  with  indications  that  the 
government will try to mobilise private investments. This strategy provides for additional 
power plants and electricity networks with the aim of ensuring electricity supply ‘round 
the clock’ from 2014. It is vital for implementing the electricity-sector plan, which aims, 

13

 
 
inter alia, to restructure the heavily loss-making electricity company Electricité du Liban 
and to reduce state subsidies. Parliament set up a committee to prepare the establishment 
of an independent regulator, already foreseen in the Electricity Law. In January 2012, the 
Government  adopted  implementing  decrees  related  to  the  Petroleum  Law,  aiming  to 
facilitate  international  investments.  In  November  2011,  Lebanon  launched  a  National 
Energy Efficiency Action Plan (NEEAP), which calls for the development of renewable 
energy  sources  (solar,  wind,  hydro),  the  implementation  of  energy-efficiency  measures 
and  the  development  of  a  financing  mechanism.  The  aim  is  to  have  12%  of  energy 
consumption produced, by 2020, from renewable energy sources. The NEEAP would be 
instrumental in developing the Mediterranean Solar Plan. 

Lebanon  submitted  its  Second  National  Communication  to  the  UN  Framework 
Convention  on  Climate  Change.  No  Clean  Development  Mechanism  project  has  yet 
been recorded by the UN. Lebanon is being encouraged to build capacity and to engage 
in the new carbon market mechanism to be developed following the 17th Conference of 
Parties to the United Nations Framework Convention on Climate Change. It is also being 
encouraged  to  fully  implement  the  Cancun  and  Durban  agreement  and  in  particular  to 
devise  a  low  carbon  development  strategy  including  updating  information  on  targets  or 
actions that it will implement. 

The Ministry of the Environment revised its work programme for 2011-2013, focusing 
on  three  pillars:  activation  and consolidation  of  the  role  of  the  ministry,  conserving  the 
country’s natural wealth and managing environmental risks. Legislation was promulgated 
for the quarrying and hunting sectors. A national strategy for natural marine reserves was 
finalised.  Several  waste-management  projects  were  launched  and  a  master  plan  for  the 
closure and rehabilitation of open and uncontrolled waste dumps was finalised. 

In  the  field  of  civil  protection,  Lebanon  intensified  the  cooperation  with  the  countries 
from  the  region  and  the  exchange  of  best  practices  with  the  EU  in  the  field  of  disaster 
prevention, preparedness and response through its participation in the EU Programme for 
Prevention of, Preparedness for, and Response to natural and man-made. 

it,  making 

corporatising 

The information society sector remains highly politicised as it is one of the few sectors 
which consistently generate substantial revenues for the Lebanese government. The State 
still  fully  owns  the  mobile  and  fixed  line  networks  and  has  not  made  any  progress 
towards 
liberalisation  unlikely.  The  Ministry  of 
Telecommunications seeks to hold on to its role as a licensing authority (particularly in 
the context of the new 3G networks active since October  2011) instead of enabling  the 
Telecommunications  Regulatory  Authority  (TRA) 
telecommunications 
contracts.  There  is  a  need  to  reinforce  the  capacities  of  the  TRA  and  to  ensure  its 
independence and to increase the sector’s attractiveness for private investment. In August 
2011 the government adopted a  new  pricing plan for the internet. While this has led to 
substantially lowered tariffs and increased speeds for users, the Ministry’s development 
plan for broadband internet remains limited to the most affluent areas of the country and 
most notably central Beirut. There is still no national numbering plan in Lebanon, no plan 
for infrastructure sharing and no universal service provider. 

licence 

to 

14

 
 
In  the  area  of  research,  a  system  of  Innovation  Vouchers  is  being  prepared  by  the 
Industrial  Research  Institute.  Although  Lebanon  recently  launched  a  New  Science 
Technology  and  Innovation  Policy  under  the  auspices  of  the  Conseil  National  pour  la 
Recherche Scientifique, coordination at the national level remains a challenge. Lebanon’s 
participation  in  the  7th  Framework  Programme  for  Research  and  Technological 
Development remained limited.  Up  to mid-October 2011, Lebanon had 14 signed grant 
agreements, involving 16 participants from Lebanon and benefiting from an EC financial 
contribution of EUR1.8 million. The number of applications was 15 of which 3 have been 
shortlisted. This is in comparison to respectively 25 and 5 in 2010. 

7. 

PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH 

The  political  uncertainties  of  the  first  half  of  2011  slowed  down  the  education  and 
training  reform  agenda.  In  2011,  Lebanon  prepared  a  draft  higher-education  law.    In 
October  2011,  the  Government  announced  the  establishment  of  a  National  Agency  of 
Quality  Control  in  education  and  highlighted  the  need  for  further  development  of 
vocational and technical education based on labour market needs. 

In  the  area  of  general  education,  Lebanon  identified  the  actions  to  be  implemented  to 
introduce citizen education and to avoid children dropping out of school, these measures 
being part of the Education Sector Development Plan, which is supported by EU. 

Higher  education  cooperation  between  the  EU  and  Lebanon  continued  under  the 
Erasmus Mundus programme. Three partnerships involving Lebanese universities were 
selected  and  the  mobility  of  more  than  200  students  will  be  organised  (of  these,  134 
additional  mobility  schemes  were  financed  from  the  additional  EU  funding  allocated 
under  the  ENP  review).  Two  additional  Tempus  IV  university  cooperation  projects 
involving Lebanese universities were also selected. Under the Marie Curie programme, 
aimed  at  fostering  international  research  collaboration,  thirteen  Lebanese  fellows 
underwent training within the ‘Initial training networks’ projects in Europe.   

Following  the  approval  in  2010  of  the  national  education  strategy  framework  and  the 
education  sector  development  plan  2010-2015,  the  expected  publication  of  a  strategic 
framework  for  vocational  education  and  training  did  not  take  place.  The  European 
Training  Foundation  continued  its  support  to  the  Ministry  of  Education  in  the 
establishment  of  the  Lebanese  National  Qualification  Framework,  including  through  a 
national consultation conference in October 2011.   

In the area of culture, Lebanon has not yet ratified the 2005 UNESCO Convention on the 
Protection and Promotion of the Diversity of Cultural Expressions.  Lebanon participated 
in  three  Euromed  Heritage  IV  projects.  Work  was  undertaken  to  transpose  the  2003 
UNESCO Convention on the Protection of Intangible Heritage into Lebanese legislation.   

A draft law on youth policy has reached its final stages of preparation. Lebanese youth 
and youth workers continued benefitting from the Youth in Action programme, but to a 
lesser  extent  than  previous  years.  The  20  projects  selected  in  2011  involved  about  58 

15

 
 
participants.  Lebanon  did  not  benefit  from  the  Euromed  Youth  IV  programme  due  to 
internal difficulties. 

Lebanon  took  some  health  sector  reform  steps.  Parliament  adopted,  in  August  2011,  a 
tobacco  control  law,  which  prohibits  smoking  in  public  places,  bans  tobacco 
advertisements  and  requires  larger  graphic  warnings  on  cigarette  packs.  Lebanon 
participated  in  the  EU-supported  ‘Episouth  Plus’  project  aimed  at  increasing  health 
security  in  the  Mediterranean  region  and  South  East  Europe.  The  EU  provided  health 
assistance to Palestinian refugees. 

16