VZCZCXRO9908
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV RUEHSR
DE RUEHLB #0209/01 0541419
ZNR UUUUU ZZH
R 231419Z FEB 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 4266
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 000209 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID BEVER/LAUDATO/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/CORREA 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON:  LOW EXPECTATIONS FOR NEXT WTO WORKING PARTY 
MEETING (ECONOMIC WEEK IN REVIEW, FEBRUARY 16 - 22, 2009) 
 
REF:  BEIRUT 199 
CONTENTS 
-------- 
 
-- LOW EXPECTATIONS FOR NEXT WTO WORKING PARTY MEETING, 
PARLIAMENTARIANS REQUEST WTO TRAINING 
-- NO PROGRESS ON 2009 BUDGET LAW 
-- LEBANON TO SEND SECOND SHIPMENT OF ASSISTANCE TO GAZA 
-- MOODY'S UPGRADES LEBANON'S CREDIT RATING TO POSITIVE 
-- IIF CONSIDERS THE LEBANESE FINANCIAL SYSTEM RESILIENT TO GLOBAL 
SHOCKS 
 
 
LEBANON TO PRESENT NOTHING NEW AT WTO WORKING PARTY MEETING, 
PARLIAMENTARIANS REQUEST WTO TRAINING 
------------------ 
 
¶1. (SBU) On February 20, Lama Oueijan, Senior Advisor to the 
Minister of Economy and Trade, told EconOff that Lebanon has no new 
offers to bring to Geneva on goods (as budget considerations prevent 
lifting tariffs) or services (where lawyers groups resist opening up 
legal services) during the upcoming WTO Working Party meeting on 
February 27.  Oueijan said Parliament Speaker Berri promised 
parliament will approve WTO-related legislation in its next session 
on March 19, therefore Oueijan prefers to postpone bilateral 
meetings with the U.S. until March, when she might be able to 
present progress on legislation.  Nonetheless, Lebanon already has 
bilateral meeting requests for next week in Geneva from the EU, 
Qatar, Cuba, China, Australia, and Canada, she said.  Oueijan also 
noted that two parliamentarians from Berri's bloc, Yassin Jaber and 
Anwar Al-Khalil, sent a letter to the Ministry of Economy and Trade 
requesting a WTO training session in parliament. 
 
NO PROGRESS ON 2009 BUDGET LAW 
------------- 
 
¶2. (SBU) The budget for the Council for the South (CFS) continued to 
hold up passage of the 2009 budget law, despite attempts by 
President Sleiman, who met separately with Finance Minister Mohammad 
Chatah and Speaker Berri's envoy MP Ali Hassan Khalil early in the 
week to reach a compromise.  CFS head Hajj Kabalan Kabalan told us 
February 19 that Chatah agreed to allot $40 million to the CFS for 
on-going infrastructure and utility projects in the south and West 
Bekaa, and submitted the proposal to the cabinet.  Ministry of 
Finance DG Alain Bifani told us PM Siniora is using the CFS budget 
to "torpedo" passing the budget, in an attempt to constrain spending 
during this election year.  This may be true, but we note that 
Bifani is a frequent critic of Siniora. 
 
LEBANON TO SEND SECOND SHIPMENT 
OF ASSISTANCE TO GAZA 
-------------------- 
 
¶3. (SBU) On February 19, President of the Lebanese-Palestinian 
Dialogue Committee (LPDC) Ambassador Khalil Mekkawi told us that 
Lebanon plans to send a second shipment of assistance to Gaza "very 
soon hopefully."  This second shipment will consist entirely of 
medical supplies, and Mekkawi estimated the value of this shipment 
at about $250,000-$300,000.  With this second shipment, the GOL 
would have spent about $450,000-$500,000 out of its one million 
dollars in assistance pledged to Gaza.  Mekkawi added that as of a 
few weeks ago, about $70,000 in public contributions had been 
donated to the LPDC account opened for this purpose at the Central 
Bank of Lebanon.  He said that as yet no money has been transferred 
from this account to Gaza. 
 
MOODY'S UPGRADES LEBANON'S 
CREDIT RATING TO POSITIVE 
-------------------- 
 
¶4. (U) On February 17, Moody's upgraded Lebanon's credit rating 
outlook to positive following an upgrade from negative to stable in 
December 2008.  Moody's attributed the upgrade to the proven 
resilience of Lebanon's public finances to shocks.  Commercial 
banks, the GOL's main lender, remain willing and able to rollover 
government debt given the continuing growth in bank deposits.  The 
GOL has appointed Byblos Bank, Credit Libanais, and Credit Suisse as 
lead managers to rollover $2.3 billion in Eurobonds maturing in 
¶2009. 
 
BEIRUT 00000209  002 OF 002 
 
 
 
IIF CONSIDERS THE LEBANESE FINANCIAL 
SYSTEM RESILIENT TO GLOBAL SHOCKS 
-------------------- 
 
¶5. (U) According to a recently published report by the Institute of 
International Finance (IIF), the Lebanese financial system remains 
resilient to global shocks, and if relative political stability is 
maintained, GDP growth will reach about four percent in 2009, as 
compared to an estimated seven percent in 2008.  The peg of the 
Lebanese Pound to the U.S. dollar has maintained Lebanon's financial 
stability, and the banking sector will remain sound and profitable 
with adequate liquidity to expand credit to the private sector and 
support economic growth, the report asserted.  The GOL's main 
challenges remain huge fiscal and debt burdens.  However, investors 
and depositors are comforted by Lebanon's track record of zero 
default in debt repayment, ample liquidity in the banking sector, 
and continued support by donors including international financial 
institutions, the IIF said. 
 
SISON