VZCZCXRO5444
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #0609/01 1261351
ZNR UUUUU ZZH
R 051351Z MAY 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 1720
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 000609 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR 
TREASURY FOR MNUGENT AND SBLEIWEISS 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR ABRAMS/SINGH/YERGER/DEMOPOLOUS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: PRESSURE TO RAISE MINIMUM WAGE AND MAY 7 STRIKE; 
FINANCE MINISTRY SUCCESSFULLY RE-FINANCES PART OF EUROBOND 2008 
MATURITIES (ECONOMIC WEEK IN REVIEW, APRIL 28 - MAY 4, 2008) 
 
CONTENTS 
-------- 
 
-- INCREASING PRESSURE TO RAISE MINIMUM WAGE 
-- FINANCE MINISTRY SUCCESSFULLY ISSUES $882 MILLION IN EUROBONDS 
-- GOL WILL SET UP EQUITY FUND TO HELP PRIVATE SECTOR 
-- BANKING SECTOR REMAINS PROFITABLE 
-- EXPORTS GROW 41 PERCENT IN FIRST Q 2008; U.S. MAJOR IMPORT 
PARTNER 
-- LEBANON RANKS 9TH OUT OF 168 DEVELOPING ECONOMIES IN REMITTANCES 
RECEIVED 
-- ANTI-MONEY LAUNDERING CONFERENCES OCTOBER IN THE U.S. 
 
INCREASING PRESSURE TO RAISE MINIMUM WAGE 
------------- 
 
¶1. (U) Sources in the Finance Ministry expect the Lebanese cabinet 
on 05/05 to approve an increase in the minimum monthly salary 
(currently $200/month) of $100-130, of which part will be 
transportation allowance, according to moderate anti-Syrian 
An-Nahar.  An-Nahar indicated that the GOL will also announce other 
measures to alleviate the burden of rising prices.  Pro-opposition 
General Labor Confederation (GLC) says it will hold a strike on May 
7 regardless of the Cabinet decision, in order to maintain the 
pressure on the GOL.  Various economic sectors (banking, trade, 
industries) do not support the strike and the educational sector is 
distancing itself from the GLC and has called for a separate strike 
on May 14. 
 
¶2. (SBU) Marwan Khawli, head of the pro-GOL/March 14 National 
Salvation Committee, made up of 17 out of the 37 federations under 
the GLC, told us his group will not participate in the March 7 
demonstration, even if the cabinet does not agree on the salary 
increase during the 05/05 session.  Khawli believes that 
demonstrations will take place only in areas under Hezbollah/Amal 
dominance.  He noted that opposition Free Patriotic Movement (FPM) 
supporters support the demonstration on paper, but he doesn't expect 
many FPM members/supporters will be on the ground on May 7.  It is 
noteworthy that Egypt and Syria have recently approved salary 
increases for the public sector of 30 percent and 25 percent 
respectively to compensate for rising prices. 
 
FINANCE MINISTRY SUCCESSFULLY 
ISSUES $882 MILLION IN EUROBONDS 
--------------- 
 
¶3. (U) The Finance Ministry has announced that it has successfully 
completed a new six-year Eurobond issue, worth $882 million, of 
which $731.612 million is a voluntary debt exchange of May, June and 
August 2008 maturities and $150 million is additional borrowing. 
This issue aims to secure the Ministry's foreign currency financing 
needs for 2008 and reinforce financial market stability. 
 
GOL WILL SET UP EQUITY FUND TO HELP PRIVATE SECTOR 
----------- 
 
¶4. (U) Finance Minister Jihad Azour indicated that the GOL is keen 
to support the private sector and increase productivity.  Azour 
mentioned that the GOL is working on setting up a Venture Capital 
Fund, valued at more than $200 million, to help businesses 
restructure, develop, and expand operations.  Azour was speaking at 
the Arab Economic Forum on 05/02. 
 
BANKING SECTOR 
REMAINS PROFITABLE 
------------------ 
 
¶5. (SBU) Lebanon's banking sector saw a 60 percent increase in 
branches and subsidiaries abroad in 2007, Chairman of the banking 
Control Commission (BCC) Walid Alameddine told us on April 29, and 
assets abroad reached $20 billion by the first quarter of 2008. 
This represents 20 percent of the overall profits of the top banks, 
and the objective is to increase this share to fifty percent by 
2012, President of the Association of Banks Francois Bassil 
remarked.  Net capital inflows reached $1.5 billion in the first 
quarter of 2008, while $600 million were converted into Lebanese 
Lira deposit despite the prevailing political and security 
situation, Alameddine remarked. 
 
 
BEIRUT 00000609  002 OF 002 
 
 
EXPORTS GROW 41 PERCENT IN FIRST Q 2008; 
U.S. MAJOR IMPORT PARTNER 
--------- 
 
¶6. (U) Figures released by the Higher Council for Customs show that 
exports reached $875 million in the first quarter of 2008, 
reflecting a 40.9 percent increase compared to the corresponding 
period in 2007.  This signals that demand for Lebanese products 
continue to grow, reflecting the appreciation of the Euro.  However, 
the appreciation of the Euro has affected the value of imports, as 
around 30 percent of Lebanon's imports originate in Europe.  Imports 
totaled $3.498 billion in the first quarter of 2008, a 29.5 percent 
increase compared to the first quarter of 2007.  The trade deficit 
reached $2.623 billion, an increase of 26.1 percent compared to the 
first quarter of 2007.  As the growth in exports surpassed the 
growth in imports, the export-to-import coverage ratio went up by 
two percent, from 23 percent in the first quarter of 2007 to 25 
percent in the first quarter of 2008. 
 
¶7. (U) Switzerland was the main destination of Lebanese exports in 
the first quarter of 2008, with $144 million (16.5 percent of total 
exports) followed by the UAE with $76 million (8.7 percent), Syria 
with $51 million (5.8 percent), and Iraq with $49 million (5.6 
percent).  As to sources of imports, the U.S ranked first with $489 
million (14 percent), by far surpassing Italy --Lebanon's 
traditionally largest import partner -- which came second with $316 
million (9 percent), France with $297 million (8.5 percent), and 
China with $275 million (7.9 percent). 
 
LEBANON RANKS 9TH OUT OF 168 
DEVELOPING ECONOMIES IN REMITTANCES RECEIVED 
---------------- 
 
¶8. (U) According to the United Nations Conference on Trade and 
Development (UNCTAD) report on Development and Globalization: Facts 
and Figures 2008, which ranks developing countries according to 
remittances received in 2006, Lebanon ranked 9th in terms of 
remittances received out of 168 developing economies and second in 
terms of remittances received as a percentage of GDP.  Lebanon 
received $4.924 billion in remittances in 2006, ranking third among 
Middle East and North African (MENA) developing economies.  Lebanon 
recorded $4.018 billion in remittances paid in 2006, ranking 13th 
among top 20 remittances paying countries. 
 
ANTI-MONEY LAUNDERING CONFERENCES 
OCTOBER IN THE U.S. 
-------------- 
 
¶9. (SBU) Secretary of the Special Investigation Commission (SIC) 
fighting money laundering and terrorism Mohammad Baasiri told us 
that his April 28-30 meetings with USG officials in Washington, D.C. 
were successful.  He discussed two upcoming events tentatively 
scheduled for October in Washington.  The first is a seminar for 
CEOs of Arab and American banks to be organized by the Treasury on 
the margins of the Annual World Bank/IMF meetings.  The other is the 
U.S.-MENA Private Sector Dialogue (PSD) Conference for banks' 
compliance officers, which will be organized around the time of the 
Arab Bankers Association Annual conference.  These events aim to 
strengthen the relationship between Arab and American bankers in 
combating money laundering and terrorism finance. 
 
 
SISON