Exclusive: UN Shields Lebanon from Instability, Economic Deterioration

UNIFIL peacekeepers. File photo
UNIFIL peacekeepers. File photo
TT

Exclusive: UN Shields Lebanon from Instability, Economic Deterioration

UNIFIL peacekeepers. File photo
UNIFIL peacekeepers. File photo

The United Nations raises a security, economic, political and diplomatic umbrella over Lebanon – a country suffering from economic deterioration, security threats on the southern border, and tensions of political alignments.
 
With 26 offices in Lebanon, and other Beirut-based organizations, the UN spends more than $1 billion a year in the form of aid pumped into the Lebanese market.
 
This international diplomatic presence is primarily a lever for Lebanese affairs in global forums and has gained momentum strength amid a determination by the international community to protect Lebanon’s stability at various levels.

The country hosts tens of thousands of Palestinian refugees and more than a million displaced Syrians. It is also characterized by its pluralistic model of government, which is necessary to maintain, despite its fragility.
 
Based on the factors listed above, Lebanon enjoys a special international attention, and reportedly receives one of the highest rates of UN aid in the region, which gives it some economic immunity.
 
There are more than 26 UN offices that carry out diplomatic and service missions, led by the Office of the Special Coordinator of the UN Secretary-General in Lebanon. Entities include the United Nations Development Program (UNDP), the UN High Commissioner for Refugees (UNHCR), the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), the UN Educational, Scientific and Cultural Organization (UNESCO), the Food and Agriculture Organization (FAO), and many others.

The UN Resident Coordinator, Philippe Lazzarini, heads the United Nations team in the country. But the UN offices certainly do not include the UN Truce Supervision Force (UNTSO), the role of which is not confined to Lebanon.
 
In an interview with Asharq Al-Awsat, Lazzarini noted that the United Nations has developed during the past three years the so-called full approach to Lebanon.

“Our contribution to Lebanon will be to provide support to maintain stability and help in dealing with the impact of regional crises,” he said.
 
The UN approach initially focused on peace and security. To that end, the UNIFIL in the south plays an important role in maintaining stability on the southern border. UN contributions also focus on other pillars called the “pillars of stability” which address issues of governance, the rule of law and human rights, and support municipal or parliamentary elections.
 
The third pillar is represented by a socio-economic approach, divided into two parts. The first is to help the country mitigate the impact of the Syrian crisis, which means direct support for Syrian refugees and for host communities. The second is to assist the government in addressing existing reform programs in order to obtain a more favorable environment for economic activities.
 
UN figures show that there are more than 2,700 employees working within UN agencies in the country, 80 percent of whom are Lebanese, and 20 percent foreign nationals. These figures do not include the more than 10,500 UNIFIL peacekeepers in the south. The staff budget is part of the overall assistance provided by the United Nations to Lebanon.
 
Since 2015, the UN has spent an average of $1.3 billion to $1.5 billion a year in Lebanon. About $1 billion is spent through UN agencies and the rest through other partners and organizations in the country.

This aid represents an international shield for Lebanon’s economic stability. According to Lazzarini, this contribution certainly helped the country, although it did not address all the existing problems. Aid cannot resolve all the political, economic, social and security problems because most of the assistance is of a humanitarian nature at present.
 
“If you compare Lebanon with many other countries in the world, you will find that over the past four years, the country topped the recipients of humanitarian or international aid, because the volume of contributions exceeds $1 billion per year, excluding support for the Lebanese Armed Forces, Internal Security Forces, and the annual budget of UNIFIL,” the UN Resident Coordinator said.
 
“It is true that we have not compensated for the slow growth of the economy, but we have contributed to preventing its further decline; because a billion dollars and more, injected into the economy, helps reduce the burden,” he remarked.
 
The UN official believes that the organization’s work has also contributed to maintaining some stability, but without keeping Lebanon out of danger.

However, Lazzarini asserts that the country “is still outside the danger zone, and has shown its ability in the last eight years not to fall into it.”



Some European Firms Retreat from Israel-Linked Finance amid War Pressure

 An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)
An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)
TT

Some European Firms Retreat from Israel-Linked Finance amid War Pressure

 An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)
An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)

Several of Europe's biggest financial firms have cut back their links to Israeli companies or those with ties to the country, a Reuters analysis of filings shows, as pressure mounts from activists and governments to end the war in Gaza.

While banks and insurers are often vocal about their environmental and governance aims, they are less forthcoming about disclosing their potential exposure to war.

UniCredit put Israel on a "forbidden" list as the conflict escalated in October last year, said a source familiar with the matter, confirming a study by Dutch NGO PAX.

While in line with the Italian bank's defense-sector policy of not directly financing arms exports to any country involved in conflict, it goes beyond Italy's guidelines on arms exports to Israel.

UniCredit declined to comment on its move and the Israeli finance ministry also declined to comment.

Meanwhile, Norwegian asset manager Storebrand and French insurer AXA have sold shares of some Israeli firms, including banks.

Although corporate filings offer only a glimpse into such exposures, they show companies have been readjusting.

"We don't know whether this represents the beginning of a shift in the industry, one that recognizes the power banks have in choosing where to allocate capital, and where not," said Martin Rohner, executive director at the Global Alliance for Banking on Values, which focuses on sustainable financing.

"Investing in the production and trade of weapons is fundamentally opposed to the principles of sustainable development," Rohner added.

Israeli Finance Minister Bezalel Smotrich told a press briefing last week that although there are challenges to Israel's economy, firms are still raising money. "I sit with foreign investors and they believe in our economy," he said.

Reuters has reported that Israel's investor base has narrowed since it entered Gaza last year in response to attacks by Hamas, and it is feeling the effects of rising borrowing costs.

The potential wider effects can be seen in the approach taken by Storebrand, which a filing showed divested a holding worth about $24 million in Palantir, citing the risk of violations of international humanitarian law and human rights.

US group Palantir, which provides technology to Israel's military, did not respond to a request for comment.

Storebrand's annual investment review said that, as of the end of 2023, it had excluded 24 firms, including Israeli companies, across its portfolios in relation to the occupation of Palestinian territories.

The International Court of Justice, the United Nations' highest court, ruled in January of plausible risk of irreparable harm to Palestinian rights to be protected from genocide.

The same court said in July that Israel's occupation of Palestinian territories including the settlements is illegal.

Israel has rejected the rulings, which combined with growing pressure from activists and governments, are nevertheless having an impact on investment decisions.

AXA, one of Europe's largest insurers, British bank Barclays and German insurer Allianz have increasingly been targeted by campaigners.

"Increasing demand for greater transparency and scrutiny can only mean that financial institutions will intensify and broaden their self-assessment of their commercial associations with arms-related businesses or states," said David Kinley, professor and chair of human rights law at the Sydney law school.

The Ireland Strategic Investment Fund (ISIF) has exited six Israeli companies, selling holdings which amounted to about 3 million euros ($3.26 million), including some of Israel's largest banks, a spokesperson told Reuters.

Earlier this year, the 15-billion-euro Irish fund said that the risk profile of such investments were no longer within its investment parameters.

And Norway's $1.8 trillion wealth fund, the world's biggest, may divest shares of companies that aid Israel's operations in the occupied Palestinian territories which violate its ethics standards for businesses.

WAR EXPOSURE

Investments in Israeli banks are also under scrutiny.

The UN included them in 2020 in a list of companies with ties to settlements in the occupied Palestinian territories as part of its mission to review the implications on Palestinian rights.

A study by research firm Profundo, commissioned by corporate watchdog Ekō, shows that AXA sold almost all of its holdings in Israeli banks stocks earlier this year, retaining only a marginal stake in Bank Leumi.

Reuters verified the data with LSEG. A representative for Bank Leumi did not respond to a request for comment.

A spokesperson for AXA declined to comment on whether AXA had cut its holdings, adding that it is not invested in the banks targeted by activists. The UN list is among the criteria AXA takes into account for investment decisions, they added.

'A CLEAR LINE'

Foreign direct investment into Israel fell by 29% in 2023 to its lowest since 2016, UN Trade and Development data shows.

While UNCTAD 2024 figures are not available, credit ratings agencies have flagged the war's unpredictable impact on investment in Israel as a concern.

Although the US remains Israel's biggest military and financial backer, Spain, Ireland and Norway have recognized a Palestinian state, French President Emmanuel Macron has called for an arms export halt and Britain has suspended some licenses.

When it comes to international politics, "it should be down to the governments to take a clear line," said Richard Portes, professor of economics at London Business School, adding: "To put the burden on the private firms, where does this end?"

In an example of how activists are targeting companies directly, Barclays came under pressure from a campaign in Britain, prompting it to withdraw sponsorship from summer music festivals, while the Financial Times reported in August that it considered pulling out of an Israeli government bond sale.

Barclays said in a statement that it remained "fully committed" to its role as a primary dealer and that such activities fluctuated each quarter. The bank fell out of the top five dealers of Israeli bonds in the second and third quarters, after ranking third in 2023.