In a 40-page note that highlighted decades of inefficiency, the World Bank explicitly stated that the deadly explosion at Beirut’s port should be the catalyst for a long-overdue reorganization of the poorly managed port in Lebanon’s capital.
One of the largest non-nuclear blasts in recent history caused the death of 200 innocent civilians, and between $3.8 billion to $4.6 billion in damages, including $350 million at the port alone, wrote the World Bank on Tuesday.
The assessment by the World Bank is titled “Reforming and Rebuilding Lebanon’s Port Sector: Lessons from Global Best Practices.”
The investigation into the causes of the blast, which is currently seen as a result of unsafe storing of thousands of tonnes of ammonium nitrate for years at the port, has reached nowhere five months later.
According to the World Bank, the current port sector model, “with its opaque governance and lack of accountability, was one of the underlying factors that contributed to the tragedy.”
Set up at the end of Lebanon’s multifaceted civil war about three decades ago, a “Temporary Committee” is held responsible for cashing the port’s revenues and allocating work needs.
However, the Temporary Committee is not a legal body, it actually works with little to no governmental management and does not produce factual balance sheets or financial statements.
Despite its name, the Temporary Committee was stuck in place with no progress for decades due to the political parties never coming to terms on a board of directors.
Similar to all government entities, it must reflect the country’s main religious groups to respect Lebanon’s divided sectarian system. Of course, this is the main reason for slowing down or blocking important nominations.
Government critics have also made it clear that the obscurity created by this system acted as a justifiable excuse for corruption.
“The absence of a real port authority, coupled with mismanagement by the Temporary Committee, have involved serious governance, transparency, and accountability issues,” noted the World Bank.
“This has also resulted in a lack of focus on socio-economic development, a lack of planning, poor safety, and declining efficiency of operations.”
Beirut’s port is the main gateway for the external trade of Lebanon, but the World Bank states that it has failed in the key role as an enabler of economic development in the country.
Hence the reason why Lebanon’s ports are among the least competitive in the Middle East.
Moreover, the World Bank reported that after the port blast, shipping lines and the operator of the container terminal came to the conclusion that productivity was down by around 50 percent due to maintenance issues on cranes.
“Spare parts had been destroyed by the blast, and the private operator of the container terminal does not have the required financial autonomy to acquire new ones due to the nature of its contract with the Temporary Committee,” the World Bank explained.
The port’s mismanagement has been aggravated by the inefficiency of Lebanese officials, which is comprised of two competing bodies, the Higher Council for Customs and the Customs Directorate.
The adoption of a new Customs law, which has already been drafted, should be a priority of the new Hariri government, the World Bank’s note explained.
The head of Lebanon’s customs authority, Badri Daher, was formally arrested after being questioned over the massive explosion in Beirut, and was charged along with dozens of lower and mid-range officials after the blast.
Multiple media reports have said that Daher was aware that dangerous chemicals were stored at the port. Yet, Lebanon’s President Michel Aoun has refused to let go of him without a formal Cabinet vote.
To restore trust, the World Bank recommends that a new independent Port Authority should be created to substitute the Temporary Committee. The Port Authority should conduct transparent nominations and publish annual independent audits.
Parliament should pass a Port Law that would clearly identify the mandate of the government bodies overseeing the port. Only then, according to the World Bank, can basic infrastructure be rebuilt, with a transparent bidding process.
“Lebanon should rebuild its port as a public-private partnership along the model of major world ports such as Rotterdam, New York, Singapore, and Tangiers Med,” the World Bank stressed.
“Under this model, the port authority acts as a regulatory body and as a landlord, while port operations are carried out by private companies. This model has historically mobilized significant private sector investments in ports worldwide, with an average of $200 million per operation.”
Lebanon should avoid privatizing its port, a rarely used model that could hinder the government’s ability to steer its development and create a local monopoly, according to the World Bank.
The World Bank warned that ignoring this roadmap could exacerbate existing vulnerabilities, generate further crises, and delay meaningful change.