VZCZCXRO8458
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV RUEHSR
DE RUEHLB #0428/01 1031406
ZNR UUUUU ZZH
R 131406Z APR 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 4670
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 000428 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID FOR NANDY/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/AHERN 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR SHAPIRO/MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV ELAB PREL LE
SUBJECT:  LEBANON: REMITTANCES STEADY, FEW RETURNS OF LEBANESE 
EXPATS THUS FAR FROM THE GULF 
 
REF: BEIRUT 421 
 
SUMMARY 
------- 
 
¶1. (U) While Lebanon's economy and banking sector made it through 
the international financial crisis relatively unscathed in 2008, 
many have worried about the potential impact of Lebanese expatriates 
losing their jobs in the Gulf and either returning to flood the 
Lebanese job market, or cutting back on remittances to their home 
country.  There are no official statistics on the number of Lebanese 
expatriates who have been laid off as a result of the crisis. 
Nonetheless, anecdotal evidence suggests the impact so far is 
minimal, though the GOL is taking steps to prepare for an influx of 
workers during the summer season.  End summary. 
 
NO INFLUX OF EXPATRIATES 
BACK TO LEBANON 
---------- 
 
¶2. (U) Rumors abound in Lebanon that as many as 15,000 expatriate 
Lebanese workers have lost their jobs in the Gulf as a result of the 
global financial crisis.  Such a situation would threaten remittance 
flows -- which account for about 27% of current account receipts -- 
and potentially result in a flooding of the labor market as workers 
return home.  There are no official statistics on Lebanese workers 
abroad, however, so economists and government officials are 
examining anecdotal evidence to assess the impact of the crisis so 
far. 
 
¶3. (SBU) Prominent socio-economic consultant Dr. Kamal Hamdan 
believes the 15,000 figure is exaggerated, and points out that even 
if that many expatriates have lost their jobs, the relatively 
well-educated Lebanese have reportedly found other work within the 
Gulf region.  Finance Minister Mohammad Chatah agreed, telling the 
Ambassador April 7 that Dubai seems to be the only Gulf market hit 
hard by the crisis, and that other Gulf Cooperation Council (GCC) 
countries seem to be picking up the slack, hiring workers laid off 
in Dubai, in Abu Dhabi or Doha.  Nasri Abdelnour, project manager at 
Khatib and Alami, one of the major local engineering consultancy 
firms active in the Middle East and North Africa region, noted that 
while real estate development projects in Gulf countries have been 
put on hold, infrastructure and utility projects in the GCC 
countries (Emirates, Oman, Bahrain, Qatar, Kuwait and Saudi Arabia) 
are still on-going, requiring engineers and other skilled workers, 
with many Lebanese fitting the bill. 
 
REMITTANCES STEADY 
---------- 
 
¶4. (SBU) On March 23, the World Bank (WB) revised its 2009 
projections for remittance inflows to the entire MENA region, 
predicting that inflows will contract by 1.4% in a base-case 
scenario and by 5.2% in a worst-case scenario, compared to previous 
forecasts of 6.7% and 13.2% respectively.  In Lebanon in particular, 
there are no signs that remittances have fallen.  The Governor of 
the Central Bank of Lebanon (CBL), Riad Salameh, told the Ambassador 
April 8 that remittance figures for January-March 2009 remained 
steady, compared to their 2008 levels.  Minister Chatah noted that 
Lebanese banks saw continued 14% deposit growth in January and 
February, in line with the last months of 2008. 
 
¶5. (SBU) Hamdan believed the impact of return migration on 
remittances and employment may be felt in the second half of the 
year, when jobless Lebanese return home with their families at the 
end of the school year and stay, if they no longer have steady work 
in the Gulf.  Nonetheless, he believes it is too soon to make 
projections, given the absence of official data. 
 
NO PROBLEM NOW 
BUT PLANNING FOR THE WORST 
---------- 
 
¶6. (SBU) Despite their sanguine view of Lebanon's weathering of the 
international financial crisis, both Salameh and Chatah highlighted 
actions they are taking to promote job creation and investment to 
counteract any negative impact Lebanon might face in the coming 
year.  Salameh said the CBL would lower reserve requirements for 
commercial banks, resulting in an approximate 2.5% reduction in the 
 
BEIRUT 00000428  002 OF 002 
 
 
cost of borrowing for the private sector.  He believed this action 
should reduce the dollar borrowing rate to about 4.75% and the 
Lebanese pound rate to about 6.25%. 
 
¶7. (SBU) In addition, the Finance Ministry may attempt to institute 
a subsidy on these private sector loans, further lowering borrowing 
costs.  This, however, would require cabinet and parliament 
approval, which may be difficult to obtain before the June 7 
parliamentary elections, noted Chatah (reftel).  Chatah said he also 
plans to propose a waiver on social security payments for employers 
who hire summer workers, as well as tax breaks for those who hire 
permanent workers in 2009 and 2010, expanding job options for any 
expatriates forced to return home in the next two years. 
 
SISON