TFLE01: CENTRAL BANK REQUESTS USG ASSISTANCE IN

C O N F I D E N T I A L BEIRUT 002412 SIPDIS SIPDIS NSC FOR ABRAMS/DORAN/SINGH/HARDING LONDON FOR TSOU E.O. 12958: DECL: 07/17/2016 TAGS: PREL MOPS EFIN ASEC LE IS SUBJECT: TFLE01: CENTRAL BANK REQUESTS USG ASSISTANCE IN TRANSPORTING CURRENCY Classified By: Ambassador Jeffrey D. Feltman for reasons 1.4 (b) and (d ). ¶1. (U) This message contains an action message for the Department -- see para 6. ¶2. (C) Finance Minister Jihad Azour alerted us this morning to a forthcoming request from the Lebanese Central Bank for assistance in transporting cash in US dollars from Cyprus to Beirut. The Central Bank planned to consign this cash shipment to a private Lebanese currency trader in Cyprus. However, it would need Israeli permission for the consignees and their shipment to cross the ongoing blockade of the Lebanese coast. Azour asked for USG assistance in securing permission from the Israeli government. ¶3. (C) In a subsequent telephone conversation, Central Bank Governor Riad Salame confirmed this request and said that the amount of cash to be shipped would be in the range of USD 20-30 million. It could be made available for shipment from Cyprus within 24 to 48 hours of a green light from the Israeli government, Salame said. ¶4. (C) Governor Salame told the Ambassador that this shipment would ease a serious shortage of cash in the Lebanese economy -- which is over 70 percent dollarized. This shortage was being wrongly interpreted as a sign of impending financial crisis, and threatening to lead to even greater panic among the general public as a result. Salame strongly urged the Ambassador to secure USG assistance in allowing the shipment to go through. ¶5. (C) Minister Azour asked us to consider having USG personnel, rather than Lebanese consignees, handle the cash from Cyprus to Beirut. That way, there would be less reason for the Israelis to object, as the Israelis could be more certain that nothing but cash was aboard. Also, the Lebanese consignees would not risk being accused by the Israelis of having abused their permission to cross the blockade. ¶6. (C) Comment and action request: Were USG personnel to handle the cash shipment, they could carry it in a helicopter from Cyprus via the Beirut airbridge, which has been operational since July 15. Post requests that the Department work with Embassy Tel Aviv to secure Israeli permission for the cash shipment, and that it make the Beirut airbridge available for this purpose. We know from our economic and financial contacts that, indeed, there are pending signs of panic, as depositers are unable to get currency for transactions (which, in Lebanon, are largely dollar-based). As part of our strategy to help make sure that the Siniora government is not fatally weakened by the Israeli attacks, we hope that we can persuade the Israelis to help us prevent a financial panic that will inevitably cast a deep political shadow over Siniora and his cabinet. End comment and action request. FELTMAN