International donors at a conference in Paris have pledged $7.6 billion US in grants and loans — including up to $20 million Cdn in new money from Ottawa — to help Lebanon's U.S.-backed government and its economic program for the war-scarred country.

The total was announced Thursday by the conference host, French President Jacques Chirac, after the more than 40 countries and financial institutions took turns listing their contributions.

French President Jacques Chirac greets Canada's minister of international co-operation, Josée Verner, at a Paris conference to raise funds for Lebanon on Thursday.
(Charles Platiau/Associated Press)

Canada's international co-operation minister, Josée Verner, said Ottawa was reconfirming $30 million in previously announced aid to Lebanon and adding as much as $20 million to it.

Verner — whom Chirac greeted with a kiss on the hand — outlined the Canadian aid plan in a CBC Newsworld interview from Paris.

"What we will do is to help the government of Lebanon to reinforce their institutional structure so it will be easier for them to give results to the population and to make sure it will be sustainable to ensure security and democracy in the country," she said.

Saudi Foreign Minister Prince Saud al-Faisal said his country would channel $1 billion US in development funding and a $100-million grant for the Lebanese government.

The United States said it plans to more than triple its economic aid.

'Your support will be essential in seeing Lebanon through.'-Lebanese Prime Minister Siniora at Paris conference

Secretary of State Condoleezza Rice said on the eve of the meeting that the Bush administration is seeking $770 million in new aid for Lebanon. The money, which must be approved by the U.S. Congress, would finance long-term redevelopment and immediate rebuilding from last summer's war.

Rice would not speculate on the fate of the donation should Hezbollah militants take power.

"This is a package that is for Lebanon," Rice said when asked if the money is contingent on the survival of a U.S.-backed government in Beirut. "Lebanon is a democracy."

Lebanese Prime Minister Fouad Siniora told the conference that his country is "on the verge of a deep recession.

"Your support will be essential in seeing Lebanon through," he said. "The cost of failure is too great to contemplate."

The conference comes as Siniora's government is locked in confrontation with Iranian-backed Hezbollah and its allies, struggling under mountains of debt in addition to rebuilding parts of southern Lebanon in ruins after the summer war between Hezbollah militants and Israel.

Chirac said half of a new $650-million loan from France would be extended this year. The European Commission, the EU's executive arm, pledged some $649 million in loans or aid.

Political turmoil and debt

Lebanon has $40 billion in state debt, equivalent to about 185 per cent of its annual economic output, making it one of the world's most indebted nations.

This week's clashes in Lebanon between pro- and anti-government factions hearkened back to the country's civil war days and offered a stark glimpse of how quickly events could spiral out of control if the confrontation between Siniora's government and Hezbollah and its allies is not resolved.

Hezbollah gained new public support in its war with Israel and is thought to have given out many millions of dollars worth of aid to residents in areas devastated by the fighting. Western powers hope to counter that influence by pouring in more funding of their own.

No Hezbollah representatives were invited to the Paris event. France and other donors said they were working only with the elected Siniora government, and it was up to him to work with opponents at home.

The political turmoil has raised concerns that the government may be too paralyzed to fully rebuild even with newly injected funds. Aid will come with conditions — mainly assurances that Siniora's government will make good on economic and structural reforms announced this month, which have infuriated labour unions and Hezbollah supporters.