Source: EURLEX
Language: en
Format: md

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# 52014SC0092

**JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in Lebanon Progress in 2013 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 Neighbourhood at the Crossroads: Implementation of the European Neighbourhood Policy in 2013 /\* SWD/2014/092 final \*/**

  

1. OVERALL
ASSESMENT AND RECOMMENDATIONS

This document
reports on overall progress made in the implementation of the EU-Lebanon European Neighbourhood Policy (ENP) Action Plan between 1 January and 31 December 2013,
although developments outside this period are also considered where relevant.
It is not a general review of the political and economic situation in Lebanon. For information on regional and multilateral sector processes, readers should also
refer to the Partnership for Democracy and Shared Prosperity progress report.

In the face of
the political, security and refugee crisis affecting Lebanon, the country
remained committed throughout 2013 to strong engagement with the EU. High-level
dialogue between the EU and Lebanon took place on a frequent basis. The High Representative for Foreign Affairs and Security Policy/Vice
President of the Commission Catherine Ashton visited Beirut in June.
Commissioners Štefan Füle, Kristalina Georgieva
and Michel Barnier paid visits to Lebanon in March, May and November,
respectively. ENP dialogue with Lebanon continued with two meetings of the
Association Committee and five sub-committee meetings, including the EU-Lebanon
economic dialogue. Lebanon and the EU agreed to start implementing the second
ENP Action Plan as from the beginning of 2013 while awaiting the completion of
legal procedures. The extent and intensity of EU support to Lebanon increased substantially, especially in addressing the consequences of the Syrian
crisis as regards security, social services, and refugees and their host
communities.

Throughout 2013 Lebanon faced spill-over effects of the conflict in Syria. It had to deal with a massive influx of
refugees, violent confrontation, several terrorist attacks, a political
assassination, over-involvement of Lebanese actors in the Syrian fighting, as
well as repercussions of the conflict on the economy. Lebanon’s policy of dissociation from the Syrian conflict was called into question, as were
the key principles agreed by Lebanese leaders in the 2012 Baabda Declaration,
issued by the National Dialogue Committee.

The pace of
implementation of most of the objectives set out in the ENP Action Plan was
slow while only a few areas saw more significant progress. To a large extent
this was due to the political crisis. The government of Prime Minister Najib
Mikati resigned in March and no new government was formed until 15 February
2014 when a new 'government of national interest' was announced, headed by PM
Tammam Salam. Political forces in Lebanon did not succeed in agreeing on a
reform of the electoral framework, which led to the postponement of legislative
elections, scheduled for June, until November 2014. The parliament did not
convene after its self-extension in June. Lebanon thus had neither an effective
government nor an operational parliament during most of this highly challenging
year, which impeded progress on the reform front in various fields.

Lebanon’s security agencies, including the Lebanese Armed Forces (LAF),
while overstretched, continued to play a major role in preserving the stability
of Lebanon. The authorities remained committed to relevant United Nations
Security Council (UNSC) Resolutions and to working with UN Interim Force in
Lebanon (UNIFIL) in the south, where the security situation remained calm. The
LAF made an effort to lay out their needs in order to meet the range of
challenges they were facing. Lebanon and the EU started discussions on new
programmes to support the LAF and General Security in addressing these
challenges.

Lebanon continued to be a major destination for refugees from Syria (approximately 910 000 by the end of 2013). Commendably, Lebanon kept its borders open for refugees (with some restrictions on Palestinian refugees fleeing Syria), which strained its resources. The crisis was managed and assistance provided thanks
to UN agencies, humanitarian partners and some Lebanese institutions, with
financial assistance from international donors, the EU being in the lead. There
was need for deeper government engagement, more resources, and improvements to
the legal framework. The number of Palestinian refugees in Lebanon grew by around 51 000 through arrivals from Syria. Their legal status and living
conditions saw no improvement. Concerning the rights of migrant workers, the
level of legal protection remained deficient.

Lebanon did not advance towards ratifying key international instruments
such as the International Criminal Court (ICC) Rome Statute or the Geneva
Refugee Convention. Overall, human rights and fundamental freedoms were
well-respected in Lebanon. However, the National Human Rights Action Plan,
announced in 2012, was not adopted during the reporting period. There is
considerable media freedom, yet censorship continued to be used against alleged
blasphemy and religious insults. As regards combating corruption, a legislative
package from late 2012 was not implemented, which prevented further progress.
Lebanese civil society, while vibrant, continued to have little influence on
policies.

In the area of
justice, draft legislation aimed at reinforcing the independence of the
judiciary was not submitted to parliament. The government's commitment to limiting
the jurisdiction of military courts did not prevent the latter from continuing
to adjudicate on civilian cases and, in some instances, to pronounce the death
penalty. The substandard conditions in Lebanese prisons did not improve.
Regarding torture, not all its forms are criminalised under Lebanese law.

Affected by the
crisis, the economic and social situation in Lebanon deteriorated. No budget
was adopted, and public debt as well as deficit increased, further threatening Lebanon’s economic resilience. Lebanon’s energy demand continued to outstrip supply,
leading to continued daily power cuts despite the stop-gap measures introduced.
The lack of reform in the energy sector continued to strain public finances. Lebanon prepared a comprehensive scheme for renewables and energy efficiency, with the
first projects launched in June. Limited progress was made towards negotiations
of an EU-Lebanon Agreement on Conformity Assessment and Acceptance of
Industrial Products (ACAA) as well as in the area of customs. Owing to
legislative shortcomings, Lebanon did not advance towards World Trade
Organization (WTO) accession. The situation in the transport and communications
sectors did not change significantly. Progress was achieved in the education
sector through the implementation of the Lebanese Education Development Plan
and in drafting national standards for teachers.

In July, the EU
designated the military wing of Hezbollah as a terrorist organisation, while
making clear that dialogue with all political actors in Lebanon and cooperation with state institutions would continue. In December, the Council
adopted conclusions on Lebanon, calling for the implementation of the Baabda
Declaration, urging the formation of a government, looking forward to the
timely holding of parliamentary and presidential elections, and stressing the
EU commitment to support Lebanon.

During the
reporting period Lebanon took up several of the recommendations contained in
the 2012 Progress Report, including limited progress towards ACAA negotiations
as well as drafting legislation on public procurement, fight against
corruption, and migrant workers. That legislation, however, was not adopted by
parliament. On the basis of the assessment of progress made in implementing the
ENP in 2013, Lebanon is encouraged to focus its efforts in the coming year on:

·
keeping in place an effective government able
to address the immediate challenges facing the country and the needs of the
Lebanese people, while ensuring that legislation is duly discussed and decided
upon by parliament;

·
enhancing the national response to the
presence of refugees from Syria in coordination with international
partners, UN agencies and humanitarian organisations, including by improving
the legal framework and swiftly concluding negotiations on a Memorandum of
Understanding with the United Nations High Commissioner for Refugees (UNHCR);

·
continuing direct dialogue among political
forces on the basis of the Baabda Declaration to address immediate needs
emanating from the Syrian conflict, while aiming at a broader future-oriented
agreement including on the election of a new President and issues of national
defence;

·
continuing full support for developing the
capacity of accountable and democratically controlled security forces,
in particular the Lebanese Armed Forces, to enable them to deal effectively
with security challenges, integrated border management, law enforcement, and
other obligations;

·
carrying out an electoral reform in due
time before the November 2014 legislative elections, taking into account
international standards and recommendations of the previous EU electoral
observation missions;

·
progressing on public finance management,
particularly by adopting a national budget, and also with a view to
adopting and implementing legislation on corruption, as well as ensuring
availability of data (staffing the statistics authority);

·
enhancing the protection of human rights
and fighting all types of discrimination, particularly with regard to
vulnerable populations (including full implementation of the existing laws on
migrant workers);

·
taking forward the justice reform,
especially with regard to ensuring the independence of judicial appointments,
restricting the jurisdiction of military courts, improving prison management
and detention conditions, and fighting impunity at all levels including
through full cooperation with the Special Tribunal for Lebanon;

·
taking urgent measures to improve energy
supply and limit power cuts, as first steps in a broader overhaul of the
energy sector, encompassing also the development of renewable energies, energy
savings, and exploitation of oil and gas;

·
promoting sustainable growth and jobs through support
to productive activity and trade, including re-launching efforts towards
WTO accession and signing and ratifying the Regional Convention on
pan-Euro-Mediterranean preferential rules of origin.

2. POLITICAL
DIALOGUE AND REFORM

Towards
deep and sustainable democracy

Intense
negotiations on a new electoral law and a number of proposals submitted
by both political camps failed to produce agreement before the constitutional
deadline of 20 June and the parliament decided to extend its mandate by 17
months until 20 November 2014. Appeals against this extension were launched on
behalf of the President of the Republic and the Free Patriotic Movement
parliamentary bloc, but the Constitutional Council failed to find a quorum to
rule on the appeals. Civil society organisations (CSOs) were involved only to a
limited extent in the discussion on a new law and appealed for wider
representation of Lebanese society, including via an interim women’s quota in
the parliament. Negotiations focused on the electoral system and the
districting though not on alignment with international standards and the
recommendations of previous EU election observation missions. Nevertheless the
EU continued to support electoral reform in Lebanon through civil society
initiatives and the Lebanese Government (via United Nations Development Programme)
to increase compliance with international standards for genuine democratic
elections. The work of parliament was limited with only a few
legislative sessions in May prior to the prolongation of the parliamentary
mandate. The political tensions persisted throughout 2013, following the
resignation of the Mikati government in March. Government was still in
caretaker mode as the PM designate did not succeed in forming a new government
until 15 February 2014 when a new 'government of national interest' was
announced, headed by PM Tammam Salam.

The media
in Lebanon are relatively free to comment on all issues. However, the Lebanese
penal code prohibits blasphemy and insults against religion and the General
Security censors films and literature in this regard. Civil society
organisations reported cases of limitations on people’s freedom of
expression. The authorities’ poor record in prosecuting such violations is
a matter of concern. 2013 saw an increase in the number of assaults and attacks
against journalists in Lebanon, particularly when covering security incidents.
In June 2013, as part of an EU-funded project, 34 national media organisations
signed a pact on the media’s role in preventing conflict, promoting peace and
reconciliation. In the same month the EU granted the Samir Kassir Award for
Freedom of the Press to journalists from Syria, Egypt and Lebanon.

The independence
of the judiciary needs to be further improved. During the Subcommittee on
Justice, Freedom and Security in April 2013, the Ministry of Justice gave
information about two draft laws sent to the Council of Ministers aimed at
reorganising the Ministry and strengthening the High Judicial Council by increasing
its membership, revamping its secretariat and distancing it from the Ministry.
The EU launched several initiatives to promote the independence of judiciary
institutions, to reinforce trust in the justice system and to reinvigorate
legal aid mechanisms.

An outstanding
issue concerning fair trials is the continued use of military courts to
try civilian cases. In the reporting period several high-profile civilian cases
were tried in military courts, which continue to pronounce death sentences,
particularly on persons found guilty of espionage. During the 2013 Subcommittee
on Justice, Freedom and Security, the Ministry of Justice gave information
about a draft law proposing to limit the jurisdiction of military courts.

Lebanon continued to face challenges in fighting impunity, and
the lack of convictions for many serious violations (in terms of security or
economic matters) is of concern. As a positive step, the Lebanese authorities
have continued cooperating with the Special Tribunal for Lebanon (STL), with
financial commitment for 2013. However, no progress was witnessed on
apprehending the five indicted persons. Similarly, no progress has been
measured with regard to the missing and forcibly disappeared persons, and the
draft law on the ‘right to truth’ proposed by civil society groups in 2012.

There was no
progress either during the reporting period in the fight against corruption.
A number of laws aimed at combating corruption were prepared in November 2012,
but have neither been approved nor implemented. The 2013 Transparency
International Corruption Perceptions Index[1]
shows that the perceived level of corruption of the public sector in Lebanon is still at a very high level. According to this index, Lebanon ranks 127th of 177
with a slightly worse score compared to 2012.

Numerous demands
placed on the security services due to major incidents and clashes at the
borders and in the main cities (Tripoli/Saida/Beirut) made progress in
implementing structural reforms in the security and law enforcement sector more
difficult. The EU supported improvements to the Internal Security Forces’
(ISF) organisational capacity and professionalism through two ongoing projects.
New programmes are being discussed with the LAF and the General Security. More
work is needed to achieve closer inter-agency cooperation, clear mandates of
the security agencies, reduced overlaps and duplication and more pro-activeness
in respecting human rights as well as promotion of the integrated border
management concept.

As for democratic
control over the armed forces, the LAF launched a Capabilities and
Development Plan in May 2013 to strengthen the army’s role as the neutral
guarantor of national security and protection of the Lebanese borders and to
fulfil the obligations under UNSC Resolution 1701, as well as to minimise and
contain spill-over from the Syrian crisis. As part of the plan the government
approved an EUR 1.2 billion increase of the LAF’s funding over the next five
years and signed off its own contribution of EUR 750 000 for 2013.

Other
human rights and governance-related issues

The
parliamentary Human Rights Committee announced a National Human Rights
Action Plan on International Human Rights Day 2012, but the plan has not
yet been adopted by the Plenary. No progress was registered in the ratification
of key international instruments (ICC Rome Statute/Geneva Convention Relating
to the Status of Refugees) or the lifting of reservations (Convention on the
Elimination of All Forms of Discrimination against Women (CEDAW). During the Subcommittee
on Human Rights and Democracy in April 2013 the EU called for implementation of
the 2010 Universal Periodic Review (UPR) recommendations and timely
preparations for the next UPR in 2015.

During the
reporting period, delays in registration of international non-governmental
organisations (NGOs) were reported, prohibiting these NGOs from operating
effectively in Lebanon.

Existing laws
fail to criminalise all forms of torture, including psychological
torture. Nevertheless Lebanon ratified the UN Convention against Torture and
its optional protocol (OPCAT), but so far there is no national preventive
mechanism. In June 2013 Human Rights Watch published a report on the
ill-treatment and torture of vulnerable groups and the ‘culture of the
confession’ in some Lebanese police stations. An EU-funded programme planned
for 2014 will aim at improving oversight, accountability and inspection
mechanisms of security agencies.

Lebanon’s prisons do not meet international standards in terms of
space, food and water or hygiene. During 2013 several prison riots took place,
including hostage incidents and recurrent protests against pre-trial detention.
A case involving migrant workers who were detained in cages was denounced by
human rights defenders. The management and administrative capacity of prisons
remained weak, with limited monitoring of corruption, misbehaviour or abuses.
Lax security arrangements made it possible for some inmates to escape. Despite
the 2006 request from the Ministry of Justice to the Ministry of Interior to
take over responsibility for prison administration, the transfer did not take
place. However, the Ministry of Justice reported some progress, notably the
recruitment of staff with a view to the transfer. The EU supports the process
via the United Nations Office on Drugs and Crime (UNODC) (EUR 2 million). The
Ministry of Justice pointed out at the Subcommittee on Justice, Freedom and
Security in April that pre-trial detention had decreased from 71 % to 47 %,
a number contested by NGOs working inside prisons/detention centres. Together
with the rising number of refugees from Syria in Lebanon, the number of
pre-trial detainees of Syrian origin has increased.

No developments took
place as regards the abolition of the death penalty. At the Subcommittee
on Human Rights and Democracy in April, Lebanon confirmed its commitment to the
existing de facto moratorium on the death penalty, although the
authorities did not commit themselves to legalise the moratorium. Several
persons accused of espionage were sentenced to death by military courts in
2013. The total number of death row inmates remains unclear.

In the area of women’s
rights, Lebanon still lacks legislation protecting against domestic abuse.
In July 2013, a revised draft domestic violence law, submitted by the Council
of Ministers in 2010, was approved by the competent parliament subcommittee and
sent to the Plenary. Lebanese legislation continues to prevent Lebanese women
from passing their nationality to their children, and Lebanon has not lifted its reservation on the respective provisions of CEDAW. Female
participation in political life remains low; no woman holds a ministerial post
and there are only four female members in the 128-member parliament. In the
discussions on electoral reform, women’s participation and quotas were not a
significant factor. Forty-five women registered for the 2013 parliamentary
elections (later postponed), which represents only 6.4 % of the total
number of candidates, but a notable increase from the 12 women who registered
in 2009. In April 2013 the Ministry of Interior took the unprecedented step of
registering a civil marriage contract after a year-long campaign and Lebanon’s first non-religious nuptial was seen as a step towards a more secular society.

Several
associations reported cases of detention and abuse against lesbian,
gay, bisexual and transgender (LGTB) persons, following unofficial curfews
and closure of bars.

As regards rights
of persons with disabilities, Lebanon failed to ratify the UN Convention
on Rights of Persons with Disabilities and its optional Protocol, signed in
2007, and did not undertake to strengthen the implementation of the principles
of equal access and treatment for the persons concerned.

In the field of economic
and social rights, strikes of teachers and civil servants continued during
the reporting period. Pressure and intimidation of union activists were
reported. Lebanon has not yet ratified the ILO Convention no.87 on
"Freedom of Association and Protection of the Right to Organise". Demands
for broad social reforms to employment benefits and labour market regulation
resulted only in the approval of a salary adjustment by the government in March
2013 together with a package of fiscal measures that still need to be made
effective. The decisions were sent to the parliament’s committee on budget and finance
in June 2013. After three years of unsuccessful negotiations with the ‘Association
des Banques du Liban’ (ABL), unfruitful mediation by the Minister of Labour and
demonstrations by employees of the sector, an agreement between the unions and
ABL was finally reached in July 2013.

Education and
protection of children is an increasing cause for concern. Finding
solutions that will allow refugees’ children access to education without over-burdening
the already weak public school system is a challenge.

The Office of
the Minister of State for Administrative Reform has been implementing a
strategy to enhance public transparency, accountability and effectiveness. The
EU has provided EUR 9 million in support of administrative reforms since late
2011. Technical assistance to support reform in human resources management and public
procurement was contracted during the reporting period.

The government
did not achieve further administrative decentralisation or reform of the
Independent Municipal Fund. The Prime Minister created a committee to draft a
decentralisation law, but it has not yet delivered. An EU-funded project in
support of municipal finance reforms and the establishment of a Municipal
Development Fund (EUR 20 million) was launched in 2012, but made only slow
progress and was re-oriented to better mitigate the consequences of the influx
of refugees from Syria, in particular on local communities. In January 2013 the
Cabinet decided to dispense USD 1.2 billion from the telecom sector funds to
the municipalities. This decision represented a missed opportunity in terms of
sustainable local development as it was contrary to earlier plans for the
creation of a rural development bank, and a percentage of these funds was
retained by the Ministry of Finance to cover locally incurred but centrally
managed expenses. Another part was retained by the Ministry of Interior and
Municipalities pending a decree on the specific allocation per municipality.

Practices and
policies to consult with civil society are weak and inconsistent despite
the 2012 request from the Council of Ministers for all ministries to publish
proposed policies and regulations by public consultation prior to endorsement.
Civil society organisations were consulted by the EU on the new Action Plan
2013-2015 and the Single Support Framework in the context of the Structured
Dialogue in December 2012 as well as on the consequences of the Syrian crisis.
More than twenty meetings with mid- and high-level EU officials took place.

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

The government
remained committed to implementing UNSC Resolutions, mainly No 1701 and No 1757
(UNIFIL). Following UNIFIL’s strategic review (March 2012), the LAF developed a
roadmap to increase its capabilities in the south, but due to over-stretch of
operational capacity, limited progress was made in this regard. An increase in
security incidents all over the country caused LAF to move a number of its
contingents from the south. The security situation in the UNIFIL area remained
relatively calm. The UN, supported by the EU, called on Lebanon to advance implementation of the provisions of UNSC Resolution 1701 on the
disarmament of all armed groups and full control of arms distribution and
ownership by the authorities. Armed incidents continued to take place
throughout the country and possession of light weapons is widespread among the
various communities.

In seeking to
form part of the EU Chemical, Biological, Radiological and Nuclear Risk
Mitigation Centres of Excellence (CBRN CoE), the Lebanese Government appointed
its National Focal Point (NFP) in January 2013. The NFP started working on setting
up a national team of experts from a number of Ministries and Security Agencies
dealing with the issues involved. As part of the EU CBRN CoE, the Lebanon gained access to CBRN structures regionally and internationally.

Spill-over from
the Syrian crisis to Lebanon continued to be of increasing grave concern
throughout 2013. Officially Lebanon ‘disassociated’ itself from the Syrian
crisis, but several political groups remained highly involved on both sides of
the conflict. Hezbollah officially acknowledged their involvement in Syria. Cross-border incidents, including shelling and the reported transfer of weapons,
were problematic for Lebanese-Syrian relations. The Lebanese Government
continued to keep the borders open for people seeking refuge in Syria and respected the principle of non-refoulement. By the end of December 2013, the
overall number of refugees from Syria was estimated at around 910 000. By
December 2013, 859 000 were registered or awaiting registration with the
UNHCR, up from around 180 000 refugees from Syria at the beginning of the
year. In addition there were 51 000 Palestinian refugees from Syria and an estimated 17 500 Lebanese returnees from Syria. The Lebanese Government,
together with the international community, worked on integrating its 2012
response plan into the Regional Response Plan 5, managed by the UNHCR. The EU
called for increased involvement of the government in managing the response to
the crisis, inter-ministerial coordination and contingency planning. By the end
of December 2013, the EU had allocated EUR 333.6 million to support
refugees from Syria and host communities in Lebanon including EUR 133.32
million in EU humanitarian aid, EUR 27.5 million through the Instrument for
Stability (IfS) and EUR 170.8 million through the European Neighbourhood and
Partnership Instrument (ENPI), of which 155.8 were committed in 2013.

3. ECONOMIC
AND SOCIAL REFORM

Macroeconomic framework[2]

Lebanon’s fragile macroeconomic situation deteriorated further in 2013 as a
result of the Syrian conflict. As a consequence, there was almost no progress
in key structural reforms devised as part of the 2006 Paris III (‘Rebuild
Lebanon’) international conference. The increasing number of refugees from Syria (+900 000 as of end-2013) put a serious strain on the Lebanese budget, in
particular through health and education expenditure and social safety nets.

GDP growth in
2013 was estimated at 1.5 % and is only projected to recover as from 2014.
Inflation remained high at 6.3 % on average (10.1% in 2012),
reflecting the continued demand from the refugee population in Lebanon and from the Syrian economy.

The fiscal
situation remained vulnerable, signalling the persisting need for fiscal
consolidation. The general government deficit, which increased in
2012 to 9 % of GDP from 6.1 % in 2011, growing further in 2013 (to
9.7 % of GDP). Political disagreements both within the government and in
the parliament and ultimately the collapse of the government in March stalled
fiscal reforms. Public debt increased to 141 % of GDP in 2013; it
is among the highest in the world. The current account deficit widened
in 2013 to 16.7 % of GDP from 16.2 % in 2012. The country’s large foreign
exchange reserves (USD 37.5 billion, or 11 months of imports of goods and
services, as of September 2013) helped protect its financial stability. The
banking sector remains large and influential. However, the absence of
comprehensive structural reforms, in particular in Public Finance Management
(PFM), will continue to exacerbate the country's fragile situation and
inequality (see below).

Social situation, employment and poverty reduction

Unemployment is expected to remain widespread as, according to World Bank
estimates, unemployment reached 20 %.

In addition, a
drop in wages of the low-skilled and an increasing informal economy were
observed due to the additional supply of Syrian labour force. A number of
illegal micro businesses were closed by the government in September. The
Ministry of Labour, in cooperation with the World Bank and through the revived
National Employment Office, continued implementing a programme that offers
first-time jobseekers accelerated training and traineeships in companies.

There was no
progress with regard to social protection reforms and despite the government’s
commitment to reactivate the Social and Economic Council, this did not happen.
A significant part of the population continued to be largely unprotected
through life risks (old age, disability, unemployment); private sector
employees continued to receive, after 40 years of service, a pension equal to
just over three years of income while losing their health insurance. More than
half the population was left without a pension or family allowances: informal
workers (agriculture, construction, domestic services, seasonal and occasional
labour; i.e. 25 % of the labour force) and the self-employed (28 %),
in addition to the unemployed and retirees. The World Bank assessment of the
impact of the Syrian crisis showed that there are 170 000 additional poor
people in Lebanon. A new programme addressing social cohesion in Lebanon (approved in July 2013) includes a large-scale household survey, to be
implemented jointly between ILO and the Central Administration for Statistics.
The Ministry of Social Affairs, with the World Bank, continued to implement the
‘National Poverty Targeting Programme’. This is the first national programme
dealing specifically with poverty in Lebanon.

4. TRADE-RELATED
ISSUES, MARKET AND REGULATORY REFORM

The EU was Lebanon’s main trading partner in 2012[3]
(imports 39.1 %, exports 9.9 %). Bilateral trade flows
increased in 2012. EU exports to Lebanon increased and consisted mainly of
machinery and transport equipment, energy products, agricultural products and
chemicals. EU imports from Lebanon continued to decrease and consisted mainly
of semi-manufactured products, agricultural products, fuel and mining products,
chemicals, machinery and transport equipment.

There have been
no significant developments in Lebanon’s WTO accession negotiations. Lebanon still needs to adopt a number of laws and make progress in its bilateral services
negotiations with WTO Members. Lebanon is yet to notify the EU of the
completion of internal ratification procedures for the Protocol on the Dispute
Settlement Mechanism (signed in November 2010).

In the area of customs,
Lebanon is yet to sign and ratify the Regional Convention on pan-Euro-Mediterranean
preferential rules of origin. Lebanese customs received support through an
EU-financed twinning project and the Integrated Border Management project.

With respect to
the free movement of goods and technical regulations, limited
progress was made in the preparations for negotiations on an Agreement on
Conformity Assessment and Acceptance of Industrial Products (ACAA). The implementation decrees for the application of the Technical
Regulation and Conformity Assessment Procedures law and the Metrology law are expected
to be drafted with the technical assistance of EU experts. The EU continued to
support quality infrastructure with a twinning project.

Regarding sanitary and phytosanitary issues,
Lebanon continued implementing
a phytosanitary development strategy 2012-2016. The draft law on food safety,
developed with EU support, was still under discussion in the parliament. In
June, Lebanon’s request for derogation to a general ban on import of potatoes
was approved by the EU and a decision allowing Lebanon to export potatoes to
the EU was published in August. This is expected to provide a real boost to
Lebanese potato farming.

Traders of dairy
products from the EU faced difficulties with a Ministry of Agriculture
resolution on labelling requirements. The EU maintained a dialogue with
importers and the Ministry to facilitate a solution, in particular through
increased transparency and better understanding of the legislation. Traders
continued to raise concerns about restrictive measures for canned meat products,
as products with more than half of their shelf life elapsed (one year) were not
allowed into Lebanon. In August the shelf-life period for animal food products
was extended to three years.

As for company
law, there were no significant developments. The Ministry of Justice
continued cooperating with the International Finance Corporation and the EU to
modernise the Commercial Registry of Beirut, simplifying the registration of
companies and making online registration possible. Other areas requiring
further work are the debt resolution and insolvency regime, and the legal
framework for small and medium-sized enterprise (SME) loans. As in many other
areas, the relevant draft legislation is part of the backlog in parliamentary
decision-making.

Lebanon’s business climate deteriorated compared to the previous
year and Lebanon fell to 111th place[4]
(out of 189 economies) in the ease of doing business ranking in the World Bank’s
‘Doing Business 2014’ annual report. Difficulties in starting a business,
acquiring construction permits, getting credit and enforcing contracts
continued to inhibit investors. Lebanon dropped to 103rd place (out of 148) in
the World Economic Forum ‘Global Competitiveness Report 2013-2014’. Lebanon ranked very low in indicators such as effectiveness of anti-monopoly policy,
quality of infrastructure, intellectual property rights (IPR) protection,
judicial independence, wasteful government spending, etc. Other major
problematic factors for businesses were the overall macroeconomic situation in
the country, corruption, government bureaucracy, access to financing, a lack of
effective government and policy instability.

There were no
significant developments in the area of services. It had been decided in
2011 to establish a National Council for Financial Markets in Lebanon to regulate financial services, but this did not happen, owing to delays in
the administrative appointments. Movement of capital
and current payments did not undergo
substantial regulatory changes.

Other key
areas

There was
limited progress in the area of taxation. The debate on the financing of
the new salary grid in the public sector showed that the government is not
ready to review the tax system, which relies mainly on indirect taxes (71 %
of the total state revenues), many activities, notably in the construction
sector, being exempted from taxation.

With the support
of the EU, the Central Administration for Statistics (CAS) worked to
improve the availability and quality of national accounts, trade data and
social statistics, but the twinning programme was not extended as the government
did not recruit additional staff. The Central Administration of Statistics
published the National Accounts estimates for 2011 with a backward revision
according to international standards for the years 2004-2010, work that was
accomplished with EU support. A new strategy for developing agricultural statistics
was prepared together with CAS, the Ministry of Agriculture and EU experts, and
implementation should start in 2014. Additional support will be provided to CAS
by the EU to allow it to conduct new surveys on living conditions and
migration.

The public
procurement law (drafted with EU support), which was endorsed by the government
in December 2012 and transmitted to the parliament, is still pending. The EU
assisted Lebanon with development and implementation of an effective public
procurement system in accordance with international standards.

Lebanon does not have a
comprehensive enterprise policy, but it participated in the
Euro-Mediterranean Charter for Enterprise. An assessment of the SME policy
environment was carried out with reference to the Euro-Mediterranean Charter
for Enterprise and the Small Business Act for Europe. Preliminary conclusions revealed
that the institutional framework for SME policy remains
relatively weak and under-developed, but that there are multiple independent
initiatives and institutions operating according to high international
standards, including three regional business development centres, the
technological incubators, the equity funds and the Kafalat credit guarantee
institution. At regional level, Lebanon contributed to the implementation of the 2013-2014 work programme on
Euro-Mediterranean industrial cooperation and exchanged good practice on SME
development and in the textiles and clothing sector.

In the field of public finance management, there were no
developments in the upgrading of public internal financial control and
in the strengthening of the Court of Accounts. The Ministry of Finance
implemented a macro-fiscal and a debt management unit, upgraded the budget
nomenclature to the Government Finance Statistics
Manual (GFSM) 2001 and prepared a 2014 budget including a Medium-Term
Expenditure Framework.

The areas of competition
policy, state aid, intellectual property rights, internal
and external audit did not undergo substantial regulatory changes.

5. COOPERATION
ON JUSTICE, FREEDOM AND SECURITY

The border
between Lebanon and Syria is still not adequately delineated or controlled and
incursions into Lebanon by Syrian armed forces continued. Shelling from
opposition strongholds in Syria was also reported. In addition to the support
provided to relieve the humanitarian problem of refugees from Syria and support given to Lebanese institutions and host communities, the EU provided assistance to
Lebanon on integrated border management (IBM). A working group
composed of the four security agencies involved in border management led by the
Minister of State continued working on the development of a comprehensive IBM
strategy in this context and numerous IBM awareness-raising sessions were
conducted within the agencies involved to improve understanding of the IBM
concept. Despite the difficult context, progress could be registered and
stakeholder participation and ownership was commendable. The arrival of large
numbers of refugees from Syria throughout 2013 reflected Lebanon’s open-door policy but also exposed the security agencies’ inability to manage the
border in accordance with international standards.

In the area of
migration, Lebanon maintained a system of informal sponsorship by families,
which makes migrants heavily dependent on employers and exposes migrant workers
to abuses, particularly domestic migrant workers. A new draft labour law aiming
at addressing this issue was submitted by the government to the parliament but
has not yet been adopted. A draft law was submitted by the Ministry of Labour
to the government in March, taking into account some of the articles of the ILO
Convention 189 on Decent Work for Domestic Workers. As this legislation was not
adopted, and owing to a lack of proper regulatory measures to monitor private
recruitment agencies, vulnerability of migrant domestic workers remained high.
Detention conditions for migrant workers, asylum-seekers and refugees with
irregular migrant status remained deplorable. Official plans to counter the
practice of arbitrary arrest of migrants and long detention periods in
sub-standard conditions have not yet been implemented.

The number of refugees
and asylum-seekers fleeing the violence in Syria and seeking refuge in Lebanon increased dramatically in 2013. Lebanon’s open-door policy in relation to persons
fleeing Syria is commendable; according to UNHCR, more than 859 000
refugees from Syria were registered in Lebanon while over 52 806 were
still waiting to complete their registration process by 31 December 2013. Lebanon continued to lack an adequate legal framework in line with international standards
for providing protection and assistance to persons in need of international
protection; it is not yet a party to the 1951 Geneva Convention on the Status
of Refugees. The government continued negotiations for a Memorandum of
Understanding with UNHCR which would allow the Agency to fulfil its mandate
without restrictions. The legal status of refugees in Lebanon therefore remained unclear. Women and children constituted a large proportion of
refugee populations and reports of abuses affecting these groups need to be
addressed as a matter of priority. A significant increase in the influx of
Palestinian refugees from Syria to Lebanon was registered; by the end of
December UNRWA estimated the number to have reached 51 000 individuals,
mainly hosted in the already overcrowded Palestinian camps in Lebanon. CSOs reported increased concern for the vulnerable situation of non-registered
Palestinians as well as indications of increased drug abuse.

In view of the
flows of refugees from Syria, the potential for activities involving illicit
trafficking of human beings increased. After adopting an anti-human
trafficking law in 2011, further consideration needs to be given to
ensuring that the protection of children comes within the scope of the law
(currently they are not covered) and that it is properly implemented, including
through proactive prosecution of suspected traffickers. The government did not
report any convictions of trafficking offenders or officials complicit in human
trafficking and allocated minimal resources to protecting victims. Victims of
trafficking, including domestic workers who ran away from abusive employers and
women holding artiste visas, continued to be subject to arrest, detention, and
deportation.

Following the
blacklisting of a Lebanese bank and two Lebanon-based money-exchange companies
by the US Department of the Treasury in February 2011 as ‘financial
institutions of prime money laundering concern’, the Central Bank issued
in 2011 directives to better control the operations of the money-exchange
companies. However, in April 2013, the US Department of the Treasury brought
new accusations of money laundering against two other money-exchange companies
based in Lebanon.

No progress was
made in relation to the draft law on cybercrime prepared in 2010. Several
arrests were made, based on charges of links to terrorist organisations, but
there were no successful convictions. Up to 200 individuals on terrorism-related
charges remained in pre-trial detention. In July 2013 the EU added
Hezbollah’s military wing to the EU list of terrorist groups.

There was no
systematic effort to reduce drug supply and demand in the absence of a
National Drug Policy. Reduced numbers of trained personnel, limited resources
and a lack of reliable data made the work of the ISF Counter-Narcotics Bureau
difficult. Eradication campaigns were difficult to implement due to the
security situation. Nonetheless, drug seizures continued, especially at Beirut airport, while laboratories producing captagon pills and other synthetic drugs were
discovered.

The rise in
synthetic drugs, particularly fenethylline, is due at least in part to local
law enforcement’s lack of familiarity with identifying these types of drugs and
the lack of import restrictions on precursor chemicals. While some synthetic
drugs are manufactured in Lebanon, they are primarily smuggled into the country
from Eastern Europe both for sale to high-income recreational users in Lebanon and for transit to the Gulf States. There are several detoxification and rehabilitation
programs. Lebanese citizens were involved in international cases of drug
trafficking and money laundering. The increasing demand, especially among the
younger population, is of great concern and Lebanon continued to follow
international workshops and seminars on the fight against drugs.

There is a
renewed interest for establishing a national drug information system and to
foster the exchange of experiences on Best Practice in Demand Reduction with
the EU. A preliminary discussion started during the last EU Dialogue on Drugs
with Lebanon in 2013, which could be further developed in 2014.

There was no
significant progress in the field of judicial and law-enforcement
cooperation and a number of international conventions regarding family law,
and particularly children, remain unsigned. Discussion began with the Ministry
of Justice/Office of the General Prosecutor on setting up a bureau for more
effective international cooperation in judicial affairs, with EU assistance. Lebanon participated in the 1st training seminar (Component II Resolution of Cross‐Border Family Conflicts) “Resolution of cross‐border
family conflicts: international, EU and national legislation” under the EuroMed Justice III Project, which took take place in Rome in October.

6. TRANSPORT,
ENERGY, ENVIRONMENT, CLIMATE CHANGE, THE INFORMATION SOCIETY, RESEARCH AND
DEVELOPMENT

Regarding
transport, the 2002 civil aviation law establishing an independent
Lebanese Civil Aviation Authority has still not been implemented due to the
absence of assignment of the Board of Directors. The non-implementation of this
core legislation has raised serious concerns, notably in regard to safety; Lebanon has, however, collaborated with the Mediterranean Aviation Safety Cell (MASC)
within the European Aviation Safety Agency (EASA) on regulatory convergence in
the field of safety. Regarding infrastructure, the EU-funded project
aimed at strengthening institutional capacity, coordination and leadership of
the Ministry of Public Works and Transport (MoPWT) and the Council for
Development and Reconstruction was launched in October. It should result in
better coordination on priority transport projects between the relevant authorities.
Under the Facility for Euro-Mediterranean Investment
and Partnership, the European Investment Bank will, as of 2014, support
technical assistance to conduct a comprehensive feasibility study for the
Tripoli-Beirut Railway. Lebanon is in the process of recognising certification
of seafarers in accordance with the IMO-STCW Convention.

Lebanon’s energy demand continued to outstrip supply, leading to
daily power cuts of up to thirteen hours in parts of the country and
encouraging those who could afford it to rely on fuel-operated backup
generators. The government aimed to restore uninterrupted supply by 2014, but
this requires substantial investment in power plants. To support the energy
strategy’s implementation, an EU-funded project was launched in October aimed
at strengthening institutional capacity, coordination and leadership within the
Ministry of Energy and Water. The same project supports the development of the
sector strategies for water within this Ministry, and land transport within the
MoPWT.

Lebanon took some short-term measures including power supply from offshore
barges: a first barge was connected to the grid in March and a second one in
August. The tender for the first large wind farm project (60 MW) was
launched and the evaluation process is being finalised. In April 2013 the
Ministry of Energy and Water announced a call for interest for the ‘Beirut
River Solar Snake’ project, which is aimed at installing 10 MW of solar
photovoltaic panels on the Beirut River. With EU assistance, Lebanon prepared a comprehensive scheme for investment in renewables and energy efficiency,
and the first projects were launched in June.

No significant
progress was noted in the unbundling of Electricité de Liban (EdL) or in the
establishment of an Electricity Regulatory Authority. Treasury transfers
to EdL continued to impose a substantial burden on the national budget. Lebanon continued to promote offshore exploration for oil and gas, and the
pre-qualification procedure of the first offshore licensing round was launched
in February, following the establishment of the Petroleum Authority in 2012. However,
the Ministry of Energy and Water postponed the deadline for submission of bids
for the offshore licensing round, after failure to pass two decrees related to the
delineation of the offshore blocks and the model of exploration and production
agreement. There is no known decision about how revenues would be distributed,
but the petroleum law provides for the establishment of a Sovereign Wealth
Fund.

Lebanon took part in the regional project MED ENEC II, which aims to
promote energy efficiency measures and renewable energy systems in buildings as
well as participating in the ‘Paving the Way to the Mediterranean Solar Plan’
regional project. The recently launched ‘Cleaner and Energy Saving
Mediterranean Cities’ regional project was also welcomed by the Lebanese
authorities.

Lebanon established an inter-ministerial committee on climate change,
composed of the Ministers of Environment, Foreign Affairs, Social Affairs and
Economy and Trade, to complete the national report for RIO+20. The newly
launched regional technical assistance project for climate action ‘CLIMA South’
deployed a fact-finding mission to Lebanon. The respective national
administrations have been actively cooperating with the team. As a result of
the mission, Lebanon is encouraged to devise a low-carbon development strategy,
for which the project can provide support. Additionally, the regional office of
the CLIMA South project was established in Beirut.

Lebanon strengthened its Ministry of Environment, including through
the appointment of five new heads of service. It also established a National
Council for the Environment bringing together Lebanese authorities and
non-governmental bodies, the first meetings of which were held in January and
July.

The Cabinet
approved legislation establishing an environmental prosecutor. The Council of
Ministers established a ministerial committee to draft a water code and
approved laws and decrees related to quarrying, nature reserves and hunting,
and a plan to combat pollution in the Qaraoun Lake (Lebanon’s largest body of
fresh water). Draft legislation on integrated solid waste management was
approved and funds were allocated to reduce the use of hydro-chloro-fluoro-carbons.
A strategy on marine-protected areas was completed, decrees were issued on oil
spills, and Lebanon began preparing a strategic environmental assessment of the
petroleum sector. An EU-funded project aiming at supporting the implementation
of the national water sector strategy (through institutional capacity building
and specific technical support) was launched in October.

Lebanon participated in EU-financed regional projects including the
Sustainable Water Integrated Management project and those falling under the
Horizon 2020 de-pollution initiative (the Mediterranean Environment Programme
and the Shared Environmental Information System support project led by the
European Environment Agency). The extension of the Al-Ghadir waste-water
treatment plant was one of the four leading projects selected by the
Mediterranean Hot-Spot Identification Programme’s Project Preparation
Implementation Facility. Lebanon also participated in the ‘Integrated
Maritime Policy in the Mediterranean’ (IMP-MED) and ‘Motorways of
the Seas’ regional projects, which are funded by the EU.

In the area of civil
protection, the flagship programme for Prevention of, Preparedness for, and
Response to natural and man-made disasters (PPRD South) contributed to the
establishment of a regional framework of disaster management authorities that
could intervene collectively in the event of disasters.

On information
society, the State remained the sole owner of the mobile and fixed line
networks and no progress was made towards liberalisation of the sector. The
Ministry of Telecommunications continued to act as a licensing authority. The
Telecommunications Regulatory Authority is still not financially independent
and its decision-making power remained suspended. Internet access remained relatively
expensive and slow by international and regional standards. Both the Lebanese ICT Ministry and the National Regulator for
Electronic Communications participated in the first EU-South Mediteranean
senior officials meeting on Electronic Communications & the Information
Society held in Athens in November.

Regarding audio-visual
policy, the role of the Conseil National de l’Audiovisuel remained purely
consultative and decisions on licences for electronic/audio-visual media are
taken by the Council of Ministers. Lebanon commercial media remained free.

Lebanon has a small and dispersed, but diverse research and innovation
community. Public spending on research is low and no ministry is in charge of
this area, yet Lebanon has good potential due to its highly educated and
skilled human capital. However, lack of reliable statistics continued to
challenge the development of research and innovation programming. Lebanon increased its participation in the EU’s Seventh Framework Programme for Research
and Technological Development (FP7), reaching 25 projects. The EU contribution
to the Lebanese entities participating in these projects amounted to EUR 2.7
million. The Lebanese entities continued to participate most actively in the
areas of food, agriculture and fisheries, ICT, health, the environment,
international cooperation, science in society and research potential.

A new FP7
project (R2I-Research to Innovation) involving the Chamber of Commerce,
Industry and Agriculture of Tripoli and North Lebanon was launched, covered by
total EU funding of around EUR one million and aiming at fostering
research-industry partnerships, supporting Lebanese capacities in the
innovation domain and facilitating the commercial exploitation of research
results. A new FP7 regional project, ERANETMED, involving the Lebanese National
Council for Scientific Research was launched in November for four years, aiming
at increasing coordination among national research programmes of EU Member
States, Associated Countries and Southern Mediterranean Countries. The project
cost is around EUR 2.9 million, of which EUR 2.5 million is EU contribution.

7.
PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH

Some progress
was achieved in the implementation of the Lebanese Education Sector
Development Plan during 2013, with 136 schools piloting new learning material,
adoption of new decrees implementing the law of enactment of compulsory
education up to the age of 15, the rehabilitation of 183 schools, and equipment
of 46 schools with lab infrastructure. National standards for teachers were
drafted, steps taken to modernise school management and standards for textbooks
identified. A National Plan for Citizenship Education, Extracurricular
Activities and Community Engagement was prepared and an Educational Technology
Strategic Plan was published. The EU provided assistance in three areas under
the National Education Strategy (retention and achievement, citizenship
education and institutional development).

The influx of
refugees from Syria continued to pose a particular challenge for the education
system and put a considerable strain on the public education infrastructure in
parts of the country that were already poor. During the 2012-2013 school year,
40 000 Syrian children were enrolled in the normal Lebanese public
school programme. For the 2013-2014 school year, the number of available spaces
for Syrian children in the normal programme of Lebanese public schools has been
reduced to 33 000 while space for Syrian students will be increased in new
second shift classes held in the afternoon in selected schools across the
country. The education offered to Syrian children will to a large extent focus
on accelerated learning programmes taking place in the afternoon in public
schools as well as non-formal education. The number of Syrian children of
school age (5-17 years old) among the refugees that had approached UNHCR by 31
December 2013 was approximately 285 000. In addition, an estimated 13 000
Palestinian refugees from Syria are of school age. The EU is supporting access
to education for both Syrians and Palestinian refugees from Syria.

The reform of
the vocational education and training (VET) system continued on the
basis of the 2011 Action Plan. But work on further implementing the National
Qualifications framework was delayed. The principle of entrepreneurship as a
key competence in the education system was introduced with the help of the
EU-funded GEMM project (Governance for Employability in the Mediterranean). A
National Committee (composed of key actors in VET in Lebanon) monitored the
mapping of VET governance in the country and the identification and selection
of pilot projects.

Governance of
the higher education sector continued to be highly centralised. Adequate
quality assurance and accreditation mechanisms have yet to be put in place. Two
draft laws were submitted to parliament concerning the organisation of higher
education and the establishment of a Quality Assurance Agency for Higher
Education.

Lebanon continued to be active in Tempus. New projects in which Lebanon is involved increased from seven to twelve in 2013 thanks in part to a budget increase for
the Southern Mediterranean region and the growing experience of Lebanese higher
education institutions with the programme. In 2013, 114 students and staff from
Lebanon were selected for scholarships to attend a European higher education
institution under new Erasmus Mundus partnerships. In addition, nine
Masters students and one doctoral candidate were awarded scholarships to take
part in Erasmus Mundus joint programmes of excellence. Since 2007, 32 Lebanese
researchers have benefited from Marie Curie funding, and three Lebanese
institutions benefited from this programme.

Lebanese young
people and youth organisations participated in the Youth in Action
programme, with 36 projects reaching 135 beneficiaries. Under the Euromed
Youth programme, nine projects were selected in Lebanon for support and
participation.

The Ministry of Culture
continued to suffer from lack of resources and Lebanon is not yet a party
to the 2005 UNESCO Convention on the Protection and Promotion of the Diversity
of Cultural Expressions. In September consultations with relevant stakeholders
(Lebanese culture and arts organisations, foundations and cultural institutes)
took place in the context of the EU Preparatory Action on Culture in EU
External Relations.

In the public
health sector, Lebanon faced additional demands for medical services from
refugees from the crisis in Syria. Consequently, primary healthcare centres in Lebanon have faced shortages in the supply of chronic medications; an Instrument for
Stability programme for EUR 20 million was launched to help support public
healthcare services, in particular primary healthcare, disease prevention and
control as well as access to chronic medications.

Faced with
threats of epidemics from Syria, especially measles and polio, Lebanon launched a polio campaign in November targeting all Palestinian and Syrian refugee
children under the age of five (560 000 children), which provided
mandatory polio vaccinations. In December it carried out a second campaign
aiming to vaccinate all children (including also Lebanese) in the same age group.
Both campaigns had WHO and UNICEF support.

The influx of
refugees from Syria put new pressures on Lebanon’s water, sanitation and solid
waste management infrastructure, which even before the crisis had been
insufficient. The EU began preparing new programmes to support the provision of
these basic services for the Lebanese host communities most affected by the
influx of refugees from Syria.

Lebanon continued to receive support from EU programmes and through
cooperation with the European Centre for Disease Prevention and Control. It
participated in the EU-funded ‘Episouth Plus’ project, which aims to enhance
health security in the Mediterranean region and South-East Europe.
Policy-makers from Lebanon attended a TAIEX multi-country workshop on the EU acquis
on prevention and control of communicable diseases, as well as participating in
the EU-supported Mediterranean Programme for Intervention Epidemiology Training
project (MediPIET, which supports training infrastructure and a regional
network of competent field epidemiologists in order to contain cross-border
health threats).

[1] http://www.transparency.org/cpi2013/results

[2] Figures are from the national statistical office, the central bank,
the IMF and European Commission staff estimates, as indicated in the
Statistical Annex. Any other data sources used are indicated.

[3] Data for 2013 was not available at the time of writing.

[4]
Comparison is made with the ‘Doing Business 2013’ ranking, which was adjusted
for changes in methodology and any revision of data due to corrections. For
more information, see http://www.doingbusiness.org

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