Lebanese Ponder Resource Discoveries…and a SWF

Ashby Monk

There is a growing likelihood of a major gas discovery off the northern shore of Israel. And, given the expected size of the gas reserves therein, some in neighboring Lebanon are also seeing dollar signs, as some of it may be within Lebanese territorial waters.

And what do all good politicians do when natural resources are discovered in their country? They immediately think of a SWF…or at least they should. And the Lebanese are on point apparently, as Sven Behrendt writes in The Daily Star today:

“The possibility that Lebanon might benefit from exploiting massive natural resources that exist off shore in the eastern Mediterranean has provoked a debate about establishing a sovereign wealth fund (SWF) to manage the accumulated revenues.”

Premature? Maybe. After all, the resources aren’t even discovered let alone out of the ground. Still, I can’t blame them for wanting to be prepared for the discovery; it’s always better to have the infrastructure in place before the windfall rents arrive.

Anyway, I know Sven pretty well, so I emailed him this morning to get some more details on all of this. Here’s what he said:

“…The debate is really just emerging. It is a couple of parliamentarians and government having initial discussions. Nothing like a public debate…”

Still, all any public debate needs to get started is “a couple of  parliamentarians” or champions. So I find all of this encouraging for Lebanon’s future. As I’ve argued many times, a properly structured SWF can go a long way to helping emerging market countries be good stewards of their natural resource wealth.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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