SARG KEEPS QUIET ECONOMIC PRESSURE ON LEBANON

1. (C) Summary. Economic relations between Syria and
Lebanon remain problematic. In addition to security
concerns, the SARG,s disincentives for travel to Lebanon
remain effective in dissuading the average Syrian from
visiting or shopping across the border. Lebanese workers in
Damascus report feeling their own position is increasingly
precarious. Our contacts point to the quiet halting of
electricity transmissions to Lebanon as proof that the Syrian
regime continues to relish the opportunity to economically
punish its neighbor. In August and September, many advised
the SARG to abandon its policy of economically coercing the
GOL, but in the post-Mehlis environment those same critics
are largely silent. End summary.



2. (SBU) After restarting suspended electricity
transmissions to Lebanon on September 6 (ref A), the SARG
quietly cutoff electricity to Lebanon again on October 19.
Dr. Muataz Sha,rani, director of the studies department at
the Syrian electricity parastatal, PEE, told us that
electricity was cut off to Lebanon in accordance with the
agreement that was negotiated between the SARG and the GOL in
August-September of this year. Sha,rani said the agreement
stipulated that electricity transmissions would halt anytime
the GOL was more than ten days late with a payment.



3. (C) The suspension of electricity comes at a time when
the local Lebanese business community is feeling nervous.
One Lebanese manager related to us a story making the rounds
in the community about a Lebanese-plated car that took a
wrong turn during last week,s demonstrations and ended up on
the edge of the crowd. According to the Lebanese
businessman, the crowd hit and rocked the car before the
driver was ultimately able to break free. Though no one was
hurt, our Lebanese contact told us that the story is only one
of a number of recent developments that make the Lebanese
working in Damascus feel increasingly vulnerable.



4. (C) Other Lebanese professionals have told us about the
ongoing difficulties they face with acquiring Syrian work
permits and residency cards for themselves and their staff.
Previously, the SARG issued work and residency cards with a
one-year or more validity, though many Lebanese didn,t
bother applying as the requirement was not enforced. After
the Syrian army,s withdrawal from Lebanon, work and
residency permits became mandatory for all Lebanese in Syria
with the SARG deporting some white collar workers without
papers in July. At the same time, the validity of the permit
was reduced to three months. In addition to the delays and
difficulty in acquiring the permits, Lebanese professionals
tell us Syrian officials at the border do not now hesitate to
turn away any Lebanese whose paperwork is in any way
deficient. A consultancy firm manager told us that as a
result of the increasingly strict SARG enforcement, he went
out of his way to advise his Lebanese staff to bring all of
their documents with them during the upcoming Eid holiday as
he expected problems when they attempted to return to Syria.



5. (C) Since the publishing of the Mehlis report, the mood
towards Lebanon has shifted in Damascus. When the SARG began
its policy of economic coercion against Lebanon last summer,
some business leaders and others spoke out against the tactic
and lobbied the regime to heal the rift (ref B). Today,
those same critics just shrug off the suggestion the SARG is
returning to a policy that has already proven to be a
failure. One Baathist reformer pointed out to us that it is
in his Party,s nature to return to a policy of coercion when
it felt challenged. A seemingly increasing number of Syrians
insist to us that their country has very little to lose
economically from continuing difficult relations with
Lebanon. Official Syrians also continue to publicly downplay
the costs. At approximately the same time the electricity
was cut off to Lebanon, D/PM Dardari commented to the press
that Syrian workers returning from Lebanon will easily be
reintegrated into the economy thanks to new real estate
development investment expected from the Gulf.



6. (C) Comment. Though it is not yet clear the SARG has
returned to a policy of economic confrontation with Lebanon,
the mood in the capital is at best indifferent to the
possibility. As the electricity cutoff and work permit
difficulties highlight, it is clear that the SARG won,t
hesitate to economically bully its neighbor if given a
chance. Potentially more serious, the lack of internal
criticism on this issue is symptomatic of the nationalist
backlash to the Mehlis report increasingly apparent in
Damascus. It has left usually bold critics of the regime
leery of voicing even the most oblique dissent.
SECHE