VZCZCXRO7583
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHLB #0063 0151203
ZNR UUUUU ZZH
R 151203Z JAN 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 3998
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS BEIRUT 000063 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR F 
STATE FOR NEA/ELA 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID BEVER/LAUDATO/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/AHERN 
USDOC FOR 4520/ITA/MAC/ONE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: ASSESSING THE IMPLICATIONS OF THE GLOBAL FINANCIAL 
CRISIS ON U.S. ASSISTANCE PROGRAMS 
 
REF: A. 08 STATE 134905 
      ¶B. 08 BEIRUT 1534 
 
¶1. (SBU) The international financial crisis is not expected to 
affect the results of ongoing bilateral assistance programs in 
Lebanon.  As highlighted in detail in Ref B, Lebanon has sofar 
managed to avoid most of the impact of the global financial crisis. 
Lebanese banks have minimal lQks to foreign counterparties affected 
by the crisis, and the regulatory framework prevented Lebanese 
banks' exposure to structured financial products.  Because of the 
strength of the banking sector, bank deposits have actually 
increased in Lebanon since the crisis began, with funds coming in 
from the Lebanese diaspora. 
 
¶2. (SBU) Nonetheless, the slowdown in the Gulf may yet have an 
impact on the Lebanon in the short and medium term.  The Lebanese 
economy has long been boosted by a regular stream of remittances 
from Lebanese in the Gulf and elsewhere; around 350,000 Lebanese, or 
one third of the workforce, are employed in the Gulf at salaries 
more than four times those of workers in Lebanon.  If the Gulf 
economy declines, the impact on Lebanon's economy will clearly be 
negative.  Already some laid-off Lebanese workers have returned from 
the Gulf, and if the trend continues, the result will be higher 
unemployment and less disposable income for families used to 
receiving remittances.  Addressing the Association of Banks in 
Lebanon in December 2008, Governor Riad Salameh of the Central Bank 
of Lebanon urged local banks to offer more loans to the private 
sector in 2009, in an attempt to create jobs and boost GDP growth. 
 
¶3. (SBU) To address the potential negative impact in Lebanon, USAID 
assistance programs in Lebanon in 2009-2011 will continue to focus 
on economic growth through increasing job opportunities, new 
business creation, income generation, access to finance, and 
exports. 
 
GRANT