LEBANON: GOL TAKES PRECAUTIONS AGAINST SWINE FLU (ECONOMIC

UNCLAS SECTION 01 OF 02 BEIRUT 000502

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STATE PASS USTR FRANCESCKI
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TAGS: ECON EFIN EAIR EIND PGOV KFLU LE
SUBJECT: LEBANON: GOL TAKES PRECAUTIONS AGAINST SWINE FLU (ECONOMIC
WEEK IN REVIEW, APRIL 27 - MAY 3, 2009)

CONTENTS
--------------

-- GOL TAKES PRECAUTIONS AGAINST SWINE FLU
-- LEBANON SHOWS LIMITED PROGRESS IN 2008 UNDER EUROPEAN
NEIGHBORHOOD POLICY
-- MEA EXPANDS FLEET AND INCREASES DAILY FLIGHTS,
GROUND HANDLING AFFILIATE RECEIVES IATA SAFETY CERTIFICATE
-- TOURISM ACTIVITY AND INFLATION RISE DURING FIRST QUARTER OF 2009
-- SIZE OF IT SECTOR ESTIMATED AT $251 MILLION IN 2008

GOL TAKES PRECAUTIONARY
MEASURES AGAINST SWINE FLU
--------------


1. (U) GOL officials have quickly begun taking necessary precautions
to deal with the potential swine flu pandemic. No cases of swine
flu have been reported in Lebanon. The Ministry of Agriculture
(MOA) has already banned the import of pigs and pork products
(except canned and smoked products),and announced that any
shipments of swine arriving from blacklisted countries would be
destroyed. The Ministry of Public Health (MOPH) put in place a
national emergency committee to deal with the possible pandemic.
MOPH Director General Walid Ammar said that there are no plans yet
to restrict travel from countries with confirmed cases of the
disease.

EU DISAPPOINTED WITH LEBANON'S PROGRESS IN
2008 UNDER EUROPEAN NEIGHBORHOOD POLICY
--------------


2. (U) The annual progress report of the European Neighborhood
Policy (ENP) issued by the European Commission in Beirut on April 24
said Lebanon showed "very limited" progress in 2008. The document
indicated that the difficult political situation throughout the year
slowed down the process of implementing the EU-Lebanon Action Plan.
It also noted little progress in implementing the Paris III economic
reform program, while progress in other fields (human rights,
judicial reform, social sector reform, and administrative reform)
was also slow. The EU-Lebanon ENP Action Plan was adopted in
January 2007 and provides EU support to Lebanon's reform efforts
through 187 million euros allocated for the period 2007-2010.

MEA EXPANDS FLEET AND INCREASES DAILY FLIGHTS,
GROUND HANDLING AFFILIATE RECEIVES IATA SAFETY CERTIFICATE
--------------


3. (SBU) Lebanon's national carrier Middle East Airlines (MEA)
received three new Airbus A320 aircraft and two A330 in the first
quarter of 2009, and expects to receive an additional A330 in May
2009, MEA Chairman Mohammad El-Hout told us April 30. The three
A330 will replace three leased A330 whose lease term expires in

2009. In October 2007, MEA started its fleet expansion plan. MEA's
current fleet consists of four A330, three A320, and six A321. MEA
will receive three additional A320 by 2010.


4. (SBU) El-Hout said MEA recorded $60 million in net profits in
2007 and expects $91 million in net profits in 2008. He believes
MEA will remain profitable if there is political and security
stability. Meanwhile, the company has already increased its daily
flights, mostly to Europe and Arab countries, anticipating increased
demand with the June parliamentary elections and the start of the
summer season.


5. (U) El-Hout noted that MEA affiliate Middle East Airlines Ground
Handling (MEAG) has recently obtained the IATA Safety Audit for
Ground Operators certificate. This certificate shows that MEAG is
compliant with international standards in terms of ground handling
for safety and security. MEAG is the 9th company worldwide to
receive this certificate, El-Hout said.

HUGE INCREASE IN TOURISM ACTIVITY
SLIGHT RISE IN INFLATION IN EARLY 2009
--------------


6. (U) According to the Ministry of Tourism (MOT),the number of
tourists visiting Lebanon rose by 53.6% during the first quarter of
2009, compared to the first quarter of 2008, reaching 297,579

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visitors, a significant increase over recent years. The Economist
Intelligence Unit (EIU) recently noted that the spillovers of the
economic crisis would reach Lebanon through a slowdown in tourism
activity. However, with such a robust start, and provided relative
political stability, tourism prospects for the rest of the year look
promising.


7. (U) Meanwhile, private firm Consultation and Research Institute
(CRI) noted that the consumer price index (CPI) during the first
quarter of 2009 rose by 0.43% relative to December 2008, and 4.12%
compared to the first quarter of 2008. The rise in CPI was mainly
attributed to the rise in the prices of food and beverages, whose
weight in the overall index is 35.4%.

SIZE OF IT SECTOR ESTIMATED
AT $251 MILLION IN 2008
--------------


8. (U) Business Monitor International (BMI) estimated the size of
the Lebanese information technology (IT) sector at around $251
million in 2008, and expected it to increase to $350 million in

2013. BMI stated that the sector remained below its actual
potential, constrained mainly by an unstable political outlook. One
of the most critical issues facing the IT sector is a weak telecom
infrastructure; broadband can be a catalyst for stronger economic
growth, BMI noted. Recently, Telecom Minister Gebran Bassil
publicly blamed the government for not issuing broadband licenses
and for delays in the necessary administrative and legislative
framework.

SISON