Source: EURLEX
Language: en
Format: md

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# 52011SC0637

**JOINT STAFF WORKING PAPER Implementation of the European Neighbourhood Policy in 2010Country report: Lebanon JOINT STAFF WORKING PAPER Implementation of the European Neighbourhood Policy in 2010Country report: Lebanon /\* SEC/2011/0637 final \*/**

  

JOINT STAFF WORKING PAPER

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

1.
Overall assessment

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

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

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

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

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

2.
Political dialogue and reform

Democracy
and the rule of law

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

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

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

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

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

Human Rights and Fundamental Freedoms

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3.
Economic and social reform

Macroeconomic framework and
functioning market economy

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

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

In the context of domestic stability,
commercial bank deposits held by non-residents (essentially the Lebanese diaspora)
grew at an average rate of 11 % in 2009 and 2010, despite interest rate
cuts during the second part of 2010. In the meantime, the foreign reserves of
the Bank of Lebanon (BoL), backed by strong export performance and by strong
and rising capital inflows, increased to a record level of over USD 29 billion
(EUR 21.8 billion) by the end of 2010.

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

Employment and social policy

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

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

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

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

Sustainable development

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

4.
Trade-related issues, market and regulatory
reform

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

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

Lebanon
continued to upgrade the IT capacity of its customs administration, in
particular by modernising its customs systems, including training, scanning
operations and related applications at the airport and at the port of Beirut. Lebanon
participated in the ‘SIROCCO’ operation carried out in June 2010. SIROCCO is a
joint customs operation coordinated by the European Commission Anti-Fraud
Office (OLAF) and carried out by the customs administrations of the EU and 11
partner countries from the southern rim of the Mediterranean[1].

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

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

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

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

Lebanon continued to implement the recommendations
of the IMF Financial Services Assessment Programme, and the Central Bank
followed the roadmap towards the adoption of International Financial Reporting
Standards (IFRS) for accounting. In bank regulation and supervision, a focus
on preventing excessive risk-taking continues to be warranted.

 No progress can be
reported in the area of auditing.

Other key areas

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

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

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

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

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

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

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

5.
cooperation on justice, freedom and security

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

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

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

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

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

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

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

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

6.
Transport, energy, environment, the information
society, research and development

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

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

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

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

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

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

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

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

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

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

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

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

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

7.
people-to-people contacts, education and health

In April 2010,
the cabinet approved a National Education Strategy and Development Plan for
2010–15. The main priorities identified in the strategy were: increasing
access, accreditation, quality assurance, improving teaching quality and
development of a national policy on diploma recognition. The strategy did not
cover technical education and vocational training, which awaits finalisation of
a strategic policy framework. The Council of Higher Education applied some
quality assurance procedures for the licensing of higher education
institutions, but an agreed national accreditation mechanism is still lacking.
As in 2009, significant challenges remain with regard to education governance,
resource management and measures to address student de-skilling and drop-out
rates. There was no change in the situation regarding the reorganisation of
private higher education or the University of Lebanon, though dialogue
did continue with the support of the Higher Education Reform Experts
(HERE) funded by the EU.

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

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

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

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

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

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

8.
Financial cooperation — 2010 key facts and
figures

Cooperation
framework

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

Implementation

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

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

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

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

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

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

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

Donor coordination

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

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

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