U.S. to Pledge $770 Million in Redevelopment Aid for Lebanon; Top Businesses to Contribute to Effort

PARIS – The United States plans to more than triple its economic aid to the fragile democratic government in Lebanon as U.S. business executives detail new investment and development plans in the tiny, troubled country.

Secretary of State Condoleezza Rice said the Bush administration is seeking $770 million in new aid for Lebanon. The money, which must be approved by Congress, would fund long-term redevelopment and immediate rebuilding from the devastating summer war between Hezbollah militants and Israel.

A 35-nation pledging session was expected to bring in about $5 billion for Lebanon on Thursday, two days after deadly protests in Beirut offered fresh proof of Lebanon's deep political and sectarian divisions.

Top American business executives are also detailing private investment in Lebanon as part of the Paris session. As one example, Citicorp has pledged $120 million to underwrite mortgage and commercial lending by three Lebanese banks, Assistant Secretary of State Dina H. Powell said.

Executives including Cisco Systems Inc. Chairman and CEO John Chambers were to hold a news conference with Rice and Lebanese Prime Minister Fuad Saniora on Thursday.

Chambers has already pledged $10 million to expand computer training in Lebanon and there are other plans to vastly improve national Internet capability, place 500 Lebanese interns in U.S. companies and generate up to 3,000 new jobs in Lebanon over the next few years.

"This is a chance to make a difference in a nation and perhaps even a region," Chambers said in response to an e-mail query from The Associated Press.

Lebanon's economy is virtually at a standstill, despite two other Paris donor conferences since 1998 and another in Stockholm, Sweden, in August that pledged about $1 billion for postwar reconstruction.

The U.S. government contribution would include $220 million in military aid for Saniora's beleaguered Western-backed government. The money could buy small arms, ammunition, spare parts and Humvees, U.S. officials said.

Lebanon estimates it needs about $3.5 billion to repair buildings and infrastructure damaged in the war with Israel. Lebanon owes a staggering $40 billion, some of it dating to the 1970s and the country's long civil war.

The U.S. money would more than triple last year's pledge of $230 million, and represents a major increase over past years' annual offerings of approximately $40 million.

The largest chunk of the new U.S. pledge would be a $250 million cash reserve to be meted out as the Lebanese government meets targets for financial and structural reform. About $184 million would go to the U.N. peacekeeping force that is supposed to keep postwar order in southern Lebanon, and $60 million would support internal Lebanese security services.

It is not clear whether any of the money would directly fund efforts to disarm Hezbollah, something the United States insisted must be part of a settlement to end the war but which has never happened.

Other aid pledged Thursday will come with conditions — mainly assurances that Saniora's government will make good on economic reforms announced this month that have infuriated labor unions and Hezbollah supporters. They argue that the international aid — which is expected to include loans as well as grants — will leave the country further indebted.

Lebanon remained tense Wednesday, a day after Hezbollah-led protesters who want to topple Saniora clashed with government supporters across the country.

Iranian-backed Hezbollah is a military and political organization that controlled much of southern Lebanon before the war. The United States considers the group a terrorist organization. Its popularity among many of Lebanon's majority Shiites rose after the war, but its political clout is uncertain.

Rice did not directly answer a question about whether Tuesday's demonstrations reveal that Hezbollah is strong enough to bring down Saniora. His collapse could re-ignite civil war in a nation of 4 million that has traditionally been a Middle East battleground.

"I assume they would not want to plunge Lebanon into open conflict and to kill lots of innocent Lebanese to pursue their political goals," Rice told reporters traveling with her to Paris.

The United States was instrumental in forcing Syria to withdraw its army from Lebanon following the assassination of former Prime Minister Rafik Hariri two years ago, a killing his supporters blamed on Syria.