Wars spiraling out from the October 7, 2023, Hamas attack on Israel and Syria’s 14-year civil war have left large parts of the Levant in ruin.
Reconstruction costs are projected to be astronomic. While exact, credible figures are hard to obtain, by the end of 2024, it was estimated that the total economic damage wrought by Syria’s civil war amounted to $923 billion with rebuilding requiring between $240 billion and $400 billion. Meanwhile, nine of ten Syrians live in poverty and face severe food insecurity.
A damage and needs assessment conducted by the UN and partner organizations concluded that $53.2 billion is needed for the recovery of Gaza and the West Bank over the next decade, while a recent World Bank report put reconstruction costs for Lebanon at $11 billion. In the best of times, sustained financial support from multilateral and bilateral donors would be required to address these immense challenges. But due to seismic shifts in the liberal-led global order and the development sector, these are not the best of times and there is an urgent need for fresh thinking on how to finance the recovery of the Levant.
Classical development cooperation based on donorship by wealthy states faces an uncertain future, to say the least. European right-wing, populist governments, and even the UK’s ruling Labor Party have slashed aid budgets like never before. Budget deficits and a cost of living crisis place ever more pressure on governments to focus on domestic over foreign needs.
The “America First” foreign policy approach of the second Trump administration is clearly reshaping the world order and transatlantic ties in particular. Trump’s wavering support for Ukraine and NATO has pushed Europe for the first time since the Second World War to take more responsibility for its own defense and security. The ‘Rearm Europe’ plan proposed recently by European Commission President Ursula Von dr Leyen aims to mobilize €800 billion ($865 billion) over the next four years to boost Europe’s defense industry and capacity. This geopolitical reordering means that European donors are prioritizing domestic safety and security at the expense of social spending and foreign development cooperation.
According to the UN, the Biden administration spent $72 billion on foreign assistance in 2023, in keeping with America’s status as the world’s largest donor of international aid. However, the Trump administration has dismantled the U.S. Agency for International Development, with dire consequences for vulnerable communities worldwide including in Syria, Lebanon and Gaza. While some aid cuts could be restored by court rulings and policy reversals under Trump or his successors, some damage may be long-lasting or irreversible.
Time For A New Narrative and Modalities
With the durability, efficiency and legitimacy of an aid model established in a fundamentally different world order in question, there is a need for a new rationale and alternative funding structures for foreign assistance.
One idea that deserves serious attention is potential cooperation between the Islamic Development Bank (IsDB) and the European Bank for Reconstruction and Development (EBRD) to jointly initiate a Levant Reconstruction Fund (LRF). EBRD has a successful track record in financing major recovery efforts in Central and Eastern Europe, and broadened its mandate to the southern and eastern Mediterranean (SEMED) in 2012. IsDB possesses a solid, professional track record in funding recovery and development projects across 57 member countries.
Michael Koehler, former deputy director general of the European Civil Protection and Humanitarian Aid Operations (ECHO) of the European Union, told this author that this new modality would combine the strategic added values of both banks in pooling funds from multiple sources in the Islamic world, the Middle East and Europe, as well as catalyzing major public-private partnerships across diverse sectors. Compared to the time, structure and financial complexities associated with establishing a specialized bank for the reconstruction of the Levant, a joint venture between these two well-known financial institutions could be operationalized in a reasonably short time, Koehler said.
Clearly, major reconstruction efforts are contingent on re-establishing security. In an interview with the author, Karim Bitar, lecturer in Middle East Studies at Sciences Po Paris, said there is a growing risk of fragmentation in Syria due to interventions by multiple regional and international powers. Until a sort of modus vivendi can be established among those powers, Arab and European donors will not substantially support and invest in Syria’s recovery, Bitar said.
Fuad Al-Zayer, an independent consultant on energy transition and former senior Saudi official at OPEC, noted to this author that there is a growing goodwill from Gulf Arab states to again invest in Lebanon and to invest in and provide technical assistance to the energy sector in Syria. Despite doubts about Hezbollah’s readiness to fully disarm and the shaky nature of Lebanon’s ceasefire with Israel, Saudi Arabia and other Gulf monarchies have indicated that they could provide limited support provided that the new government in Beirut is willing to implement badly needed economic and banking reforms.
The Middle East and Europe have a shared interest in a stable and prosperous Levant that will not continue to be a source of instability, an incubator of terrorism and a producer of refugee waves towards Europe. A fund framed as a strategic, long-term cooperation between IsDB and EBRD possesses the potential to address the unprecedented recovery needs of the Levant at a time of decreasing political and financial support for traditional development cooperation in the West and fundamental global geopolitical reordering.
Kawa Hassan is a Nonresident Fellow with Stimson’s Middle East program, Founder of Shrova Strategies, a consultancy on Middle East affairs and EU-Middle East relations, Iraq expert with NATO Communications and Information Agency. He previously served as Executive Director of Stimson Europe, Director MENA Program & Senior Fellow, Vice President MENA Program, Director EU Office, EastWest Institute (EWI), where he led Track 2 diplomacy, policy research, and advocacy initiatives on mediation and conflict resolution.
Wars spiraling out from the October 7, 2023, Hamas attack on Israel and Syria’s 14-year civil war have left large parts of the Levant in ruin.
Reconstruction costs are projected to be astronomic. While exact, credible figures are hard to obtain, by the end of 2024, it was estimated that the total economic damage wrought by Syria’s civil war amounted to $923 billion with rebuilding requiring between $240 billion and $400 billion. Meanwhile, nine of ten Syrians live in poverty and face severe food insecurity.
A damage and needs assessment conducted by the UN and partner organizations concluded that $53.2 billion is needed for the recovery of Gaza and the West Bank over the next decade, while a recent World Bank report put reconstruction costs for Lebanon at $11 billion. In the best of times, sustained financial support from multilateral and bilateral donors would be required to address these immense challenges. But due to seismic shifts in the liberal-led global order and the development sector, these are not the best of times and there is an urgent need for fresh thinking on how to finance the recovery of the Levant.
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Classical development cooperation based on donorship by wealthy states faces an uncertain future, to say the least. European right-wing, populist governments, and even the UK’s ruling Labor Party have slashed aid budgets like never before. Budget deficits and a cost of living crisis place ever more pressure on governments to focus on domestic over foreign needs.
The “America First” foreign policy approach of the second Trump administration is clearly reshaping the world order and transatlantic ties in particular. Trump’s wavering support for Ukraine and NATO has pushed Europe for the first time since the Second World War to take more responsibility for its own defense and security. The ‘Rearm Europe’ plan proposed recently by European Commission President Ursula Von dr Leyen aims to mobilize €800 billion ($865 billion) over the next four years to boost Europe’s defense industry and capacity. This geopolitical reordering means that European donors are prioritizing domestic safety and security at the expense of social spending and foreign development cooperation.
According to the UN, the Biden administration spent $72 billion on foreign assistance in 2023, in keeping with America’s status as the world’s largest donor of international aid. However, the Trump administration has dismantled the U.S. Agency for International Development, with dire consequences for vulnerable communities worldwide including in Syria, Lebanon and Gaza. While some aid cuts could be restored by court rulings and policy reversals under Trump or his successors, some damage may be long-lasting or irreversible.
Time For A New Narrative and Modalities
With the durability, efficiency and legitimacy of an aid model established in a fundamentally different world order in question, there is a need for a new rationale and alternative funding structures for foreign assistance.
One idea that deserves serious attention is potential cooperation between the Islamic Development Bank (IsDB) and the European Bank for Reconstruction and Development (EBRD) to jointly initiate a Levant Reconstruction Fund (LRF). EBRD has a successful track record in financing major recovery efforts in Central and Eastern Europe, and broadened its mandate to the southern and eastern Mediterranean (SEMED) in 2012. IsDB possesses a solid, professional track record in funding recovery and development projects across 57 member countries.
Michael Koehler, former deputy director general of the European Civil Protection and Humanitarian Aid Operations (ECHO) of the European Union, told this author that this new modality would combine the strategic added values of both banks in pooling funds from multiple sources in the Islamic world, the Middle East and Europe, as well as catalyzing major public-private partnerships across diverse sectors. Compared to the time, structure and financial complexities associated with establishing a specialized bank for the reconstruction of the Levant, a joint venture between these two well-known financial institutions could be operationalized in a reasonably short time, Koehler said.
Clearly, major reconstruction efforts are contingent on re-establishing security. In an interview with the author, Karim Bitar, lecturer in Middle East Studies at Sciences Po Paris, said there is a growing risk of fragmentation in Syria due to interventions by multiple regional and international powers. Until a sort of modus vivendi can be established among those powers, Arab and European donors will not substantially support and invest in Syria’s recovery, Bitar said.
Fuad Al-Zayer, an independent consultant on energy transition and former senior Saudi official at OPEC, noted to this author that there is a growing goodwill from Gulf Arab states to again invest in Lebanon and to invest in and provide technical assistance to the energy sector in Syria. Despite doubts about Hezbollah’s readiness to fully disarm and the shaky nature of Lebanon’s ceasefire with Israel, Saudi Arabia and other Gulf monarchies have indicated that they could provide limited support provided that the new government in Beirut is willing to implement badly needed economic and banking reforms.
The Middle East and Europe have a shared interest in a stable and prosperous Levant that will not continue to be a source of instability, an incubator of terrorism and a producer of refugee waves towards Europe. A fund framed as a strategic, long-term cooperation between IsDB and EBRD possesses the potential to address the unprecedented recovery needs of the Levant at a time of decreasing political and financial support for traditional development cooperation in the West and fundamental global geopolitical reordering.
Kawa Hassan is a Nonresident Fellow with Stimson’s Middle East program, Founder of Shrova Strategies, a consultancy on Middle East affairs and EU-Middle East relations, Iraq expert with NATO Communications and Information Agency. He previously served as Executive Director of Stimson Europe, Director MENA Program & Senior Fellow, Vice President MENA Program, Director EU Office, EastWest Institute (EWI), where he led Track 2 diplomacy, policy research, and advocacy initiatives on mediation and conflict resolution.
