In 2021, as the shadows of the economic crisis haunted the Lebanese people from every direction — collapsing wages, shortages of essential goods and supplies, the scarcity of medicines, and the spread of the pandemic — a new nightmare emerged: complete darkness. This came after the near-total halt of electricity supply from Electricité du Liban (EDL). Citizens suddenly found themselves at the mercy of private generator owners, who exploited their vital need for electricity by imposing exorbitant prices, controlling power hours, and interfering in people’s daily lives — becoming, in effect, parallel authorities governing the livelihoods of entire communities.

Amid this collapse, and as Lebanon’s central bank reserves of foreign currency dwindled, the government of Hassan Diab announced in 2021 an agreement with Iraq to supply Lebanon with heavy fuel oil, to be exchanged on the global market for fuel types suitable for operating the country’s power plants. At the time, this agreement was presented as a lifeline — a rescue solution for a state caught in the depths of financial and economic turmoil. Although initially portrayed as an Iraqi “donation,” it later became clear that it was a fuel-for-services exchange, whereby Lebanon would offer various services to Iraqi ministries and institutions in return. The financial structure of this deal, however, remained — and continues to remain — largely opaque to the public.

The current government’s and the Ministry of Energy and Water’s decision not to renew the Iraqi contract beyond its expiration in early 2026 is considered a bold move aimed at halting financial hemorrhage and preventing further debt accumulation. Yet, it opens the door to numerous questions — particularly about the real financial cost of this agreement and the constitutional, legal, and institutional ambiguities surrounding it. Instead of serving as an entry point for reform in the electricity sector or as a step toward better governance, the deal appeared to follow the all-too-familiar Lebanese pattern: bypassing legal procedures, sidelining relevant institutions, and accumulating off-budget financial obligations — all without sufficient transparency or effective oversight. This raises serious doubts as to whether the agreement stemmed from a coherent national energy policy or merely perpetuated a long-standing practice of ad hoc, unaccountable spending.

In this series of articles, we revisit the Iraqi fuel agreement more than four years after its signing, with the aim of unpacking its legal, institutional, and financial trajectory — from the initial negotiations to the signing and subsequent renewals of the contracts.

Download the full article on PDF

Part I will focus on the circumstances that led to its conclusion, the negotiation phase that preceded it, and an analysis of the constitutional and legal framework governing the agreement and its renewals.

Part II will delve into the content of the agreement itself — particularly the payment mechanisms it introduced, the risks involved, and the additional loopholes embedded within it.

Part III will examine the operational and commercial breaches that enabled participating companies — along with members of the local oil cartel — to engage in fraudulent practices that yielded massive profits at Lebanon’s expense between 2021 and 2025.

By Ali Souidan
Part I: Constitutional and Legal Flaws in the Iraqi Oil Agreement
Part II: The Iraqi Oil Agreement — Risky Payment Mechanisms and a Platform That Never Saw the Light

By Marc Ayoub
Part III: Operational Gaps in the Oil-for-Fuel Exchange Between Lebanon and Iraq

This intro article was originally written in Arabic and translated into English using AI.
Source: Legal-Agenda.com