LEBANON: ELECTRICITY FROM EGYPT EXPECTED TO RELIEVE POWER

UNCLAS SECTION 01 OF 02 BEIRUT 000516 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: ELECTRICITY FROM EGYPT EXPECTED TO RELIEVE POWER SHORTAGES (ECONOMIC WEEK IN REVIEW, MAY 4 - 10, 2009) CONTENTS -------------- -- LEBANON STARTS RECEIVING ELECTRICITY FROM EGYPT -- GOL CONTINUES TO IMPROVE SECURITY AT BEIRUT AIRPORT -- IMF, S&P DELEGATIONS TO VISIT BEIRUT NEXT WEEK -- BANKING DEPOSITS REACH $80.5 BILLION IN FIRST QUARTER 2009 -- LEBANON IS MOST OPTIMISTIC COUNTRY IN THE REGION IN TERMS OF JOB PROSPECTS -- LEBANON FALLS IN QUALITY OF LIFE SURVEY LEBANON STARTS RECEIVING ELECTRICITY FROM EGYPT -------------- ¶1. (U) On April 27, Lebanon started receiving 50 megawatts (MGW) electricity from Egypt as a start, following the signing of an agreement in February 2009 whereby Egypt would sell Lebanon between 150 and 450 MGW electricity through the power grid passing through Jordan and Syria. The additional electricity is expected to help reduce power shortages since Lebanon's national power utility Electricity du Liban (EDL) supplies 1500 MGW, while local demand is around 2300 MGW. GOL CONTINUES TO IMPROVE SECURITY AT BEIRUT AIRPORT -------------- ¶2. (SBU) On May 7, Civil Aviation Director General Hamdi Chaouk told us that x-rays, explosive detection machines, and high-tech equipment for passengers and baggage checks were installed at the Beirut International Airport (BIA) recently. Three companies, including two U.S. firms Rapiscan and American Science and Engineering, won the ICAO-organized international tender, Chaouk said. Total cost of this project is $16 million, entirely paid by the GOL. This project is part of the government's efforts to improve security procedures at BIA. ¶3. (U) Meanwhile, Byblos Bank research department reported that the Ministry of Public Works and Transportation signed a cooperation agreement with French Bureau of Enquiry and Analysis for Civil Aviation Security (BEA) to help Lebanon implement better civil aviation safety norms. BEA will help Lebanon maintain the safety of aircraft flying over Lebanon to the European Union as well as develop systems to maintain the public safety of civil aviation in Lebanon. IMF, S&P DELEGATIONS TO VISIT BEIRUT NEXT WEEK -------------- ¶4. (SBU) On May 6, Finance Ministry Senior Economic officer Zeina Kassem told us that an IMF mission is expected in Beirut May 13 for a one-week visit to follow-up on the Emergency Post-Conflict Assistance (EPCA II) program. The mission will evaluate macro-economic indicators and monitor the GOL's fiscal performance. ¶5. (SBU) Kassem also said that a delegation from international rating agency Standard & Poor's (S&P) will visit Beirut next week to evaluate macro-economic performance. This is the first visit of an S&P delegation since 2005, Kassem noted, adding that other international rating agencies such as Moody's and Fitch visit Lebanon yearly to prepare sovereign rating reports. S&P will meet with Central Bank Governor Salameh, Finance Minister Chatah, and commercial banks. BANKING DEPOSITS REACH $80.5 BILLION IN FIRST QUARTER 2009 -------------- ¶6. (U) According to leading Bank Audi research department, Lebanese banking sector deposits rose by $2.7 billion in the first quarter of 2009, reaching $80.5 billion at end-March 2009. The resilience of the local banking sector has continued to attract deposits in spite of the global economic crisis. Local financial experts have noted that given such an increase in banking deposits and the fall in the BEIRUT 00000516 002 OF 002 dollarization of deposits, more bank lending should take place to stimulate growth and decrease bank exposure to foreign currency vulnerabilities. LEBANON IS MOST OPTIMISTIC COUNTRY IN THE REGION IN TERMS OF JOB PROSPECTS -------------- ¶7. (U) A survey by Middle East job website bayt.com conducted in March-April 2009 showed that Lebanon was the country most optimistic about work conditions in the MENA region in view of the global economic crisis. 42% of respondents in Lebanon are not worried about their current job situation, compared to 65% in the region. Lebanon also posted the lowest level of actual and expected job cuts, with 25% witnessing job cuts at their workplace and 24% expecting future job cuts, compared to 43% and 40% respectively in the region. The situation seems to be different for Lebanese abroad, as some economists expect unemployment in Lebanon to rise in 2009 with the return of Lebanese expatriates, mainly from the Gulf region, that may have lost their jobs as a result of the global financial crisis. LEBANON FALLS IN QUALITY OF LIFE SURVEY -------------- ¶8. (U) In Mercer Human Resource Consulting annual Worldwide Quality of Living Survey, Lebanon ranked 175 out of 215 countries worldwide, and 14 out of 18 MENA surveyed countries. In comparison, Lebanon ranked 171 worldwide and 13 within the region in 2008. Overall security was noted as a continued concern for Lebanon. The survey evaluates cities based on political, economic, and socio-cultural factors, as well as environment, housing, entertainment, health care, education, transportation, and other public services. SISON