Israel’s war on Lebanon has dealt a devastating blow to the country’s already fragile prospects for economic recovery. The destruction of critical infrastructure, the displacement of hundreds of thousands of people, and the disruption of trade and essential services have compounded the economic crisis that has gripped Lebanon since 2019. While a ceasefire is in place, ongoing violations by Israel continue to destabilize the situation and deepen economic uncertainty.
A new government has been formed in Lebanon, tasked with leading reconstruction efforts and negotiating aid to support the country’s recovery. Ensuring transparency, accountability, and sustainability in this process will require meaningful reforms. However, past reform attempts under IMF agreements have largely fallen short, marked by delays, insufficient measures, and a persistent lack of political will.
As the new cabinet pledges to prioritize long-overdue reforms, two sectors require particular attention: public procurement and cement. Existing reform attempts within these sectors were largely insufficient: They either addressed peripheral issues and overlooked fundamental gaps, or lacked the necessary political will for full and urgent implementation. Lebanon’s recovery requires decisive action in these sectors to enforce reforms, strengthen oversight, and dismantle the entrenched interests that have long obstructed progress.
Lebanon’s post-civil war political economy
Since the end of the civil war, Lebanon’s political economy has been marked by extensive privatization and state disengagement. Key sectors operate with minimal central governance: oversight institutions are unreliable, regulations lack implementation, and national strategies are often missing altogether. This vacuum has allowed powerful business actors, often with the support of their political networks, to dominate private sectors without accountability and reap substantial profits. Any conversation about reform must first recognize the entrenched power interests of these actors and the reality that genuine reform threatens their control and profits. They will resist and obstruct any changes that undermine their influence, a dynamic that played a central role in Lebanon’s financial collapse in the first place.
Without proper oversight, reconstruction funds risk being funneled into politically connected firms through non-competitive bidding, leading to inflated costs, delays, and poor-quality work
Public procurement and cement are among the most deeply entrenched sectors in these dynamics. Public procurement governs how government contracts for reconstruction projects are awarded to private companies, covering everything from rebuilding roads and bridges to restoring essential public services. Without proper oversight, reconstruction funds risk being funneled into politically connected firms through non-competitive bidding, leading to inflated costs, delays, and poor-quality work. Meanwhile, cement is the backbone of physical reconstruction, as nearly all rebuilding efforts—from homes and hospitals to roads and public infrastructure—depend on its availability and pricing. When cement markets lack necessary regulation and are controlled by a few dominant players, costs tend to rise, limiting access to essential building materials and slowing down recovery efforts.
Procurement without accountability
Public procurement contracts accounted for approximately 21 percent of the national budget’s expenditures between 2010 and 2020, and have long been a major hub of corruption. The sector is marked by the lack of transparency, poor legal accountability, and limited competition. A 2021 report by the Lebanese Center for Policy Studies revealed that firms connected to the Council for Development and Reconstruction—a government agency responsible for planning and implementing major infrastructure projects—board members and their political allies consistently received larger contracts than unconnected firms.
Amid the financial crisis, the sector faced strong pressure from both local and international actors to implement reforms, leading to the passage of the Public Procurement Law on June 30, 2021. Designed by the Institut des Finances (IOF) Basil Fuleihan within the Ministry of Finance, the law establishes a number of promising provisions, including the establishment of the Public Procurement Authority (PPA) to oversee and regulate procurement based on efficiency, transparency, and competition. The PPA collects procurement plans from purchasing parties and compiles them in a central database. The law also covers all public sector transactions, including previously exempt state-owned enterprises, outlining ethical standards under Article 110 with penalties for violations. Despite some of its shortcomings raised by some legal experts, the Public Procurement Law represents a significant improvement over previous frameworks. The key issue remains its enforcement and implementation.
Monitoring progress has been significant, with public entities now required to publish procurement contract details. The PPA has published over 2,500 bids on its online platform, including information on contract values and winning contractors. However, its oversight remains limited by a lack of funding and insufficient staff. Moreover, the set of regulations that they have submitted related to their capacities have not been approved by the relevant authorities. A 2024 progress report by the IOF also stated that members of the Complaints Authority tasked to resolve contract disputes have still not been appointed, citing the political instability and presidential vacuum since October 2022 as major obstacles.
More concerning is the question of compliance. Once the Public Procurement Law came into effect, numerous procuring entities rushed to exonerate themselves from its provisions. When public institutions try to circumvent procurement laws, contracts can be awarded based on political connections rather than merit, driving up costs, lowering service quality, and reinforcing corruption.
For instance, in September 2024, the Interim Committee for the Management and Investment of the Port of Beirut requested independence from the Public Procurement Law in managing the port, arguing that the committee should be able to exercise the “broadest powers to manage the funds and operations of the Port of Beirut” in accordance with Article 21 of the committee’s bylaws. This request comes in the aftermath of the devastating 2020 Beirut Port explosion, which exposed deep-rooted corruption and negligence in the port’s governance. Granting such an exemption would increase the risk of financial mismanagement and unchecked favoritism in one of Lebanon’s most critical economic hubs.
Earlier in February 2024, Electricité du Liban (EdL) launched a tender to contract their health insurance management outside the purview of the PPA, reportedly with the intention of awarding the contract to a specific company. For decades, EdL has struggled with inefficiency, mismanagement, and political interference. The company’s attempts to bypass procurement laws risks reinforcing the same dysfunction that has long plagued the sector, keeping energy services unreliable and costly. Similarly, in April 2024, the Railway and Public Transport Authority bypassed the PPA and allowed Al-Kamal General Trading Company to convert parts of the long-defunct railway in Tripoli into a temporary garage for trucks.
Between August 2022 and August 2023, some of the biggest procuring entities have remained heavily dependent on direct contracting with private contractors
Monaqasa, a public procurement monitoring platform, revealed that between August 2022 and August 2023, some of the biggest procuring entities have remained heavily dependent on direct contracting with private contractors. This undermines transparency by allowing deals to be made without public scrutiny and prevents fair bidding processes.
Therefore, to address persistent shortcomings in public procurement, the PPA must be empowered with adequate funding, staff, and technical resources to effectively monitor and enforce compliance. Strict measures should be introduced to penalize entities circumventing the Public Procurement Law, while ensuring procurement processes adhere to principles of fairness and transparency. Without these steps, meaningful progress in the sector will remain elusive as funds for reconstruction make their way into the sector.
Cracks in the cement
The cement market in Lebanon is almost entirely dominated by a business cartel made up of three companies: LafargeHolcim, Ciment De Sibline, and Cimenterie Nationale, all of which benefit from extensive political connections. Sibline’s largest shareholder, for example, is MIB Investment S.A.L Holding, which is owned by Bankmed, a bank led by members of the Hariri family.
The three dominant companies contravene the law without any government penalties as they operate their quarries outside the legally dedicated zones to reduce cost of transportation and increase profits. Cement prices are inflated due to their uncontested control over the market, with a ton of cement in Lebanon prior to the economic crisis costing three times the international market price. Controlling around half of the cement market, Holcim made $65 million in profits by 2018.
Following the economic crisis, the price of a ton of cement for the final consumer in August 2021 reached 1.4 million LBP ($70 at the black market rate) including value-added tax and transportation costs. However, despite the steep decline of the construction industry, the progress on reforms remains minimal.
In 2020, the dominating trio agreed to keep prices under a ceiling of 240,000 LBP ($16 at the black market rate) per ton of cement in exchange for maintaining import tariff levels that protected them from foreign competition. However, sources indicated that this agreement was never followed. Later in February 2021, the Ministry of Industry supposedly stepped up against the cement oligarchy and lifted import tariffs on cement. In theory, this should have allowed more cement to enter the market, increasing competition and lowering prices. However, Lebanon did not witness an increase in imports due to the difficult trading requirements that were placed instead. As a result, the local cement cartel maintained its dominance. In 2021, Holcim’s profit margin reached 18.4 percent and its annual profits increased by 101 percent. The following year, their profit margin rose to 23 percent and profits increased by 385 percent.
Since the end of the civil war, administrative “grace periods” have been used by governments in Lebanon to provide the biggest cement companies with authority to operate their quarries beyond the legal regulations on the pretext of urgent demands for reconstruction. Operating outside designated zones means they can extract raw materials from locations closer to production sites and reduce their transportation costs, but it comes at a societal cost—causing environmental degradation, air pollution, and health risks for nearby communities due to unregulated extraction.
The destruction caused by Israel’s war on Lebanon has amplified the need for reforms in Lebanon’s cement sector to ensure fair practices in reconstruction efforts
On January 19, 2022, the State Shura Council—the judicial body tasked with resolving public law disputes—made two decisions to invalidate these administrative decisions. However, the government continued to grant administrative grace periods despite their explicit illegality. Moreover, on May 28, 2024, the Council of Ministers issued a decision extending the license “exceptionally” for the big cement companies to extract the raw materials needed to meet the needs of the local cement market for a period of one year. This decision thus revives the “grace periods” that the State Shura Council had established to be in violation of regulatory laws. It gives cement companies a blank check to continue harming the environment while amassing substantial profits in their control over the sector.
The destruction caused by Israel’s war on Lebanon has amplified the need for reforms in Lebanon’s cement sector to ensure fair practices in reconstruction efforts. The new government must permanently end the illegal grace periods that cement companies enjoy. Restrictive trading conditions should also be lifted to break the monopoly that these three companies maintain in the sector. Additionally, environmental safeguards must be prioritized, with stricter penalties for companies operating outside legal quarrying zones.
The path to meaningful recovery
Public procurement and cement exemplify the systemic challenges facing sectors across the Lebanese economy: monopolies, lack of transparency, and weak law enforcement. These are not the only areas in urgent need of reform. Sectors such as telecommunications, pharmaceuticals, and waste management also suffer from entrenched inequalities and corruption, limiting Lebanon’s ability to rebuild infrastructure and provide reliable services. Without broader structural changes, reconstruction risks reinforcing the same power dynamics that have long obstructed progress.
Without broader structural changes, reconstruction risks reinforcing the same power dynamics that have long obstructed progress
Moving forward, Lebanon must prioritize the enforcement of existing laws, empower oversight institutions with adequate resources and independence, and break sectoral monopolies. In the context of reconstruction assistance, aid and investment should be tied to clear benchmarks for transparency and accountability, ensuring that funds are allocated based on local needs and objective merits rather than political favoritism. Establishing an independent reconstruction authority to oversee aid disbursement, track project implementation, and prevent misuse could be a crucial safeguard. Additionally, revising procurement laws to include stricter anti-corruption measures and ensuring public reporting of contracts and spending would improve accountability.
Lebanon’s political economy has long been shaped by entrenched capital interests and their political networks that thrive on weak governance and institutionalized favoritism. Without addressing these barriers, reform efforts will continue to face resistance and Lebanon’s path to recovery will remain elusive.
Jad Baghdadi is a PhD candidate in political economy and a Rhodes Scholar at the University of Oxford. His research intersects with a wide set of topics, including state formation, capitalist networks, and sectarianism.