VZCZCXYZ0000
RR RUEHWEB

DE RUEHLB #0658/01 1631356
ZNR UUUUU ZZH
R 121356Z JUN 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 5117
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS BEIRUT 000658 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/ELA AND EEB/IFD/ODF 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID LAUDATO/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 EAIR EIND PGOV KFLU LE
SUBJECT: LEBANON: EGYPT WILL SUPPLY LEBANON WITH NATURAL GAS 
STARTING IN AUGUST (ECONOMIC WEEK IN REVIEW, JUNE 1 - 7, 2009) 
 
CONTENTS 
-------- 
 
-- EGYPT WILL SUPPLY LEBANON WITH NATURAL GAS STARTING IN AUGUST 
-- CABINET PASSES PART OF THE BUDGET 
-- THREE CONFIRMED CASES OF SWINE FLU HAVE FULLY RECOVERED 
-- WORLD BANK BEGINS DISCUSSIONS ON NEXT COUNTRY PARTNERSHIP 
STRATEGY 
-- GOL LAUNCHES SECOND PHASE OF THE BEIRUT-DAMASCUS HIGHWAY... 
-- ...AND THE EXPANSION OF TRIPOLI PORT 
 
 
EGYPT WILL SUPPLY LEBANON WITH 
NATURAL GAS STARTING IN AUGUST 
-------------------- 
 
¶1. (U) Minister of Energy and Water Alain Tabourian announced the 
signing on April 30 of an agreement with Egypt, whereby Egypt will 
supply Lebanon with a total of 600 cubic meters of natural gas per 
year.  This agreement is part of the regional power grid project, 
which includes Lebanon and Egypt.  As a first step, starting in 
August 2009, the supply of gas will be used to operate half of the 
capacity of the Beddawi power station in the north, and by October, 
Lebanon is expected to receive enough gas to run the entire station. 
 Tabourian said that by using natural gas instead of fuel oil, 
Lebanon could save up to $200 million a year.  The agreement set a 
fixed price at which Egypt will supply gas and also called on 
Lebanon to encourage the use of natural gas in local industries and 
households.  Following the June 7 parliamentary election, the 
process now begins to select a new prime minister and cabinet. 
Beginning June 21, Tabourian and all other ministers will be in a 
caretaker government status until the new cabinet is selected. 
 
 
CABINET PASSES 
PART OF THE BUDGET 
------------------ 
 
¶2. (SBU) During its last session before the parliamentary elections, 
the cabinet separated the budget for the Ministry of Health from the 
2009 budget law and endorsed it on June 2.  This is the first time 
in Lebanon's history that the cabinet has passed only a portion of 
the budget law, and it is unclear whether the cabinet will forward 
just this portion of the budget to the new parliament.  (Comment: 
The budget process is already far behind.  The Lebanese constitution 
mandates that the cabinet pass a budget law for the following year 
by September, and send it to parliament for approval before the end 
of the year.  The passage of part of the budget nine months late is 
par for the course in the Lebanese system.  End comment.) 
 
THREE CONFIRMED CASES OF SWINE 
FLU HAVE FULLY RECOVERED 
-------------------- 
 
¶3. (SBU) On May 30, Minister of Public Health (MOPH) Mohammad 
Khalifeh announced that three cases of swine flu had been confirmed 
in Lebanon.  One Lebanese residing in Spain and two Canadians 
entering Lebanon suffering from the flu were given the proper 
medical treatment in time and have now fully recovered, according to 
an advisor to the Minister.   The advisor added that the ministry is 
implementing all WHO recommendations related to the flu and 
distributing brochures at Beirut International Airport for 
awareness.   Ministry representatives based at the airport are also 
available in case of an emergency. 
 
WORLD BANK BEGINS DISCUSSIONS ON 
NEXT COUNTRY PARTNERSHIP STRATEGY 
-------------- 
 
¶4. (SBU) On June 3, Chris de Clerq, UNDP Project Manager at the 
Finance Ministry, told us that World Bank Country Manager Demba Ba 
and Director for the Middle East Department Hedi Larbi met on June 2 
with Finance Minister Chatah to discuss the framework for the World 
Bank's assistance to Lebanon for the next five years, taking into 
account the GOL's Paris III reform pledges, the recent 
Cabinet-approved measures to counter the impact of the global 
financial crisis, as well as the GOL's regional development vision. 
Bank officials will also meet with representatives of the private 
 
sector and civil society and will complete their report in 
September, to be approved by the Banks' Executive Board in 
February/March 2010, de Clerq said. 
 
¶5. (SBU) De Clerq added that since the July 2006 war, the Bank's 
assistance to Lebanon has been based on an interim strategy note 
that expires in June 2009.  Bank officials informed Chatah that they 
will discuss an interim arrangement on financial and technical 
assistance with the new government to cover the period until the 
Bank's Board approves the new Country Partnership Strategy, de Clerq 
said. 
 
GOL LAUNCHES SECOND PHASE OF 
THE BEIRUT-DAMASCUS HIGHWAY... 
-------------------- 
 
¶6. (SBU) The GOL launched the second phase of the Arab Highway 
project linking Beirut to Damascus, when Prime Minister Siniora laid 
the cornerstone for the Mdeirej to Taanayel strip in the Bekaa last 
month, Dr. Wafaa Charafeddine, advisor to Council for Development 
and Reconstruction (CDR) Chairman told us June 1.  The project is to 
cost $153 million and will be financed by a $40 million grant from 
Saudi Arabia and soft loans from the Saudi Development Fund and the 
OPEC Fund for International Development.  Construction of the first 
phase of the Arab Highway linking Taanayel to Masnaa (border with 
Syria) is on-going, financed by a soft loan from the European 
Investment Bank (EIB), she said.  The Arab Highway will expedite the 
transport of Lebanese exports and transit goods to Damascus and from 
there to Jordan, Saudi Arabia, and the Gul, Ministry of Public 
Works and Transport director general Abdel Hafeez Kayssi told us 
June 1. 
 
..AND THE EXPANSION 
OF TRIPOLI PORT 
-------------------- 
 
¶7. (SBU) The expansion and development of the northern Tripoli Port 
is expected to resume, as the GOL recently resolved its conflict 
over technical and financial issues with the Chinese company working 
on this project, Kayssi told us.  He said the GOL has also tasked 
the company to further dredge the quay from 12 to 15 meters in order 
to enable large ships to dock.  As a result, the cost of the Tripoli 
port expansion project increased to $50 million, entirely financed 
by a soft loan from the European Investment Bank (EIB).  This 
project is vital for economic development and job creation in 
northern Lebanon, said Kayssi, especially with the GOL's plan to 
create an industrial and Special Economic Zone in Tripoli.  This 
project will enable the Tripoli Port to compete with the Syrian 
ports of Lattaquieh and Tartous by attracting large ships carrying 
goods primarily for Iraq, former Chairman of the Tripoli Port 
Antoine Habib told us June 2. 
 
SISON