Smart Initiative

Behold one of President Bush’s best ideas on Lebanon.

Who should rebuild this?

When Hezbollah started distributing aid to victims after the Israeli war on Lebanon, American commentators went crazy demanding their government to “beat Hezbollah” to the hearts and minds and pockets of the Lebanese by immediately sending bigger and fatter cash to the war-ravaged country.

In the midst of that frenzy however, two level-headed people, Carlos Pascual and Martin Indyk wrote an influential op-ed piece in the New York Times (no subscription version here) suggesting better ways to help the Lebanese. The methods were articulated as “six guiding principles” for reconstructing Lebanon, of which the third and fifth are particularly sensible:

The third principle is to use local capacity. Iraq taught us how not to rebuild: using international contractors that take months to get in place and spend perhaps a third of their budgets protecting themselves. Lebanon has world-class engineers and experience from rebuilding the country after its civil war. Lebanese and Arab contractors who employ local workers should be given priority. Of course, international donors will need to help the Lebanese government design streamlined procurement rules with external auditors. Again, let’s learn from Iraq: payments should be based on results, not on level of effort.

A fifth principle is to make maximum use of the private sector. As they showed in recovering from civil war, the Lebanese are among the most entrepreneurial people on earth. Rather than having the West send huge amounts of food aid that can depress local markets, families should be given cash grants that will allow them to buy food.

Bush seemed to have taken notice; after meeting yesterday with executives from CISCO, Dell and other big companies, he announced a public/private partnership to help Lebanon.

The Idea is simple: American companies would invest in Lebanon, while American banks would offer capital to already existing small and medium Lebanese enterprises. The purpose, as Mr. Bush announced, was to help Lebanon flourish.

Of course, nothing is as innocent as it sounds. The White House is betting that if enough investment is poured into the southern part of Lebanon (like Cisco’s $10m for a youth jobs program), in the medium term a middle class would emerge that finds little in common with Hezbollah which, remember, recruits its foot soldiers by being generous in social welfare.

It is essential however that Mr. Bush follows the ideas of Pascual and Indyk. The people on the ground should all be Lebanese, and one thing we have in excess is talent. If he can pull that off, it would be one of Bush’s best money spent.