Lebanon’s systemic dysfunction is a story of state capture – a political elite hollowing out public institutions while outsourcing their responsibilities to multilateral lenders and NGOs (Fawaz and Harb, 2020; Merhej, 2021; Merhej and Ghreichi, 2021; Heller, 2023). As government accountability evaporates, multilateral development banks including the World Bank Group (WBG), have stepped in to fund critical infrastructure, while the third sector scrambles to fill gaps in healthcare, education, and social services (Heller, 2023). Yet this arrangement has perverse consequences: development loans and aid, rather than stabilising Lebanon, often reinforce the very corruption they carefully detail in their own country risk assessments.
This article examines the World Bank’s role in Lebanon, where opacity surrounds major projects managed by state entities like the Council for Development and Reconstruction (CDR) and the Litani River Authority (LRA). Repeated mismanagement of funds documented in audits and watchdog reports (The Lebanese Politics Podcast, 2021), has ballooned the country’s foreign debt and reinforced political elite, while delivering little for its citizens.
The World Bank has long deployed anti-corruption tools like Third-Party Monitoring in fragile states such as Afghanistan. Yet in Lebanon, a country the Bank itself flagged for „opacity and weak regulatory governance” (Lebanon Economic Monitor, 2020, p. 30), these safeguards were not implemented until 2021, despite years of documented graft.
A closer look at Lebanon’s infrastructure contracts reveals how World Bank financing enables mismanagement through unchecked delivery of funds to politically connected contractors, lax oversight, and a system that rewards cronyism over competence.
Case Study: The Litani River and Qaraoun Dam – A Cycle of Pollution and Patronage
Since 1955, Lebanon’s water infrastructure has depended heavily on foreign loans, beginning with a US$27 million World Bank loan to develop the Litani River basin and construct the Qaraoun Dam (The World Bank Group, 1955). By 2016, another US$55 million was allocated to clean up the same waterways, now choked by sewage and agricultural runoff. Nearly a decade later, the Litani remains a toxic artery, its waters linked to rising cancer rates in nearby communities (Nasreddine, 2022).
The reasons for this failure are entrenched in Lebanon’s political economy. The Bekaa Valley, where the Litani flows, is a hub of clientelism, reinforced by the French Mandate period, when colonial administrators bought loyalty from landlords and community strong-men by bankrolling landowners’ agricultural interests (Thompson 1999; Traboulsi, 2007; Marshall, 2012).
Today, the same dynamics persist: private interests engage in business practices that result in polluting runoff and waste management, operating with impunity under the protection of political bosses, while environmental laws go unenforced (Nasreddine, 2022; Amery, 2025).
The World Bank’s loans have fed into this crisis. Not only do politically shielded industries continue dumping waste into the river, but the cleanup contracts themselves have been awarded to firms tied to some of Lebanon’s most powerful figures (Nasreddine, 2022; Amery, 2025).
Two of the primary contractors for the US$55 million Litani project have direct links to former minister Gebran Bassil and Speaker of Parliament Nabih Berri (Nasreddine, 2022). Berri and Bassil are also key players in Lebanon’s concrete and quarrying cartels, industries notorious for environmental violations (Minkara and Boswall, 2021). One contractor, Dany Khoury, is particularly emblematic of the system’s dysfunction. Khoury’s company, Khoury Construction, has faced criminal complaints over its management of the Bourj Hammoud dump in August 2019 (United Against Corruption, 2019), was nonetheless awarded World Bank-funded contracts, including for a sewage treatment plant in Qaraoun, in December 2019 (CDR, 2019), raising concerns about the selection of the Bank’s partners and their due diligence processes. Khoury has subsequently been sanctioned by the U.S. in 2021 for his role in the Bourj Hammoud landfill, which has attracted considerable criticism for increasing Beirut pollution index (Open Sanctions, 2021). Lebanon has faced severe challenges with waste management, triggering an anti-corruption campaign in 2015, fittingly named ‘You Stink’ (Civil Society Knowledge Centre, 2016).
Khoury is not alone. LibanConsult SAL, a firm involved in the disastrous Bourj Hammoud landfill as a consultant, later secured a World Bank contract to rehabilitate a dumpsite in Bar Elias, Bekaa Valley (Litani River Authority, 2020). The same company was also linked to the Mseilha Dam project, promoted by Gebran Bassil, where several contractors are currently suspected of embezzlement of public funds (Liban Consult AGM, 2025; L’Orient Today, 2025).
In a World Bank publication, the systematic country diagnostic for Lebanon 2016, the authors state that:
“Illegal activities are not sanctioned by the state when involving politically/confessionally connected and/or wealthy actors, exacerbating elite capture and the pervasive patronage system. Influence of economic stakeholders and personal connections (known as “wasta”) is more likely to influence policy execution and enforcement of the rule of law. Thus, elite capture and corruption is endemic.” (Le Borgne and Jacobs, 2016, p. 6)
The incongruity between such quotes and the reality on the ground, from Qaraoun to Bourj Hamoud, is striking. Further examination of the Bank’s internal standards framework raises further questions as it lays responsibility of risk assessment with the borrowing nation:
“ESS1 sets out the Borrower’s responsibilities for assessing, managing and monitoring environmental and social risks and impacts associated with each stage of a project supported by the Bank through Investment.” (The World Bank Group, 2025)
Such a stance in fragile contexts where borrowing nations are subject to “elite capture” (Le Borgne and Jacobs, 2016, p. 6) is counterproductive to say the least. The fact that the Bank’s reports detail these risks in the Lebanese context, raises further questions of the Bank’s integrity, accountability and responsibility.
The question remains: why does the World Bank continue financing projects under conditions that virtually guarantee not only failure but reinforcement of systems identified by the Bank itself as responsible for Lebanon’s lack of development? Perhaps the answer lies in a broken feedback loop between the Bank’s analysts, diagnosing Lebanon’s governance ills, and its lending arms, which keep writing checks to the same compromised system. As the World Bank approves a US$4 million loan in April 2025, to develop Lebanon’s electricity infrastructure, addressing these issues becomes all the more pressing.
This research was initially developed for an assignment at the International Anti-Corruption Academy (IACA).
Indi Phillips is an enhanced due diligence researcher in Lebanon. Currently she is completing a Masters at the International Anti-Corruption Academy (IACA), focusing on transnational grand corruption between Lebanon and France.
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