Lebanon's Oil and Gas Wealth: Policy Recommendations for Escaping the "Devil's Excrement" Curse

Dr. Nasser Saidi

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Many argue that developing Lebanon’s oil and gas industry may be the solution to propel the country out of its current economic lethargy. But how valuable are Lebanon’s oil and gas revenues really? This paper addresses four major risks in exploiting the country’s oil and gas wealth and advances several policy recommendations on how best to avoid the curse of “devil’s excrement” which Lebanon could all too easily fall prey to.

Before lauding the existence of oil and gas reserves in Lebanon and setting irrational expectations on the industry’s potential to solve the country’s economic problems, it is worth determining its actual value first. The following issues need to be addressed: should Lebanon develop its oil and gas wealth in an age of renewable energy transformation? How large are these reserves realistically? How is Lebanon to address the geopolitical conflict over maritime borders with its neighbors? And finally, are Lebanon’s political institutions capable of assimilating the revenues?

Given Lebanon’s poor governance and fiscal unsustainability, the author argues that the country’s oil and gas reserves are no manna from heaven. The first part of this study explains how exploiting this industry may in fact deteriorate the country’s prospects. The second part of this paper advances several policy recommendations for the good governance of Lebanon’s oil and gas wealth including a framework for better transparency, disclosure and accountability. The author concludes that the stakes are high and that sound management of Lebanon’s oil and gas wealth are critical to a positive future in Lebanon.

published

Lebanon, September 28, 2016