LEBANON: PM-DESIGNATE MENTIONS ECONOMIC REFORM (ECONOMIC

UNCLAS SECTION 01 OF 02 BEIRUT 000743

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 EIND ETRD EAIR PGOV KFLU SENV LE
SUBJECT: LEBANON: PM-DESIGNATE MENTIONS ECONOMIC REFORM (ECONOMIC
WEEK IN REVIEW, JUNE 29 - JULY 5, 2009)

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

-- HARIRI: NEW GOVERNMENT COMMITTED TO ECONOMIC REFORM
-- LEBANON'S FORESTS ABLAZE
-- WORLD BANK GROWTH ESTIMATES FOR 2009 LOWER THAN LOCAL FORECASTS
-- RAYTHEON DELEGATION IN BEIRUT TO EXPLORE NEW INVESTMENT
OPPORTUNITIES
-- LEBANON'S CONSUMER CONFIDENCE STRONGEST IN THE REGION
-- SWINE FLU CASES REACH 47


HARIRI: NEW GOVERNMENT COMMITTED
TO ECONOMIC REFORM
--------------


1. (SBU) In a June 30 meeting with CENTCOM Commander General David
Petraeus, Prime Minister-designate Saad Hariri said that, as head of
the new government, in parallel with his efforts to build up
Lebanon's security services, he plans to pursue economic reforms,
streamline business procedures, and improve the investment climate.
He stressed the need for investment in electricity and water, and
noted that $3.3 billion in money pledged for infrastructure
investment at the 2007 Paris III donor conference was still not
disbursed, pending reforms by the government. To follow the Paris
III portfolio, Hariri said he would insist that the new Finance
Minister come from his own Future Movement.

LEBANON'S
FORESTS ABLAZE
--------------


2. (U) Since June 30, fires have left many of Lebanon's forests and
green areas ablaze. GOL officials have been quoted as saying that
the main reason for the fires has been exceptionally high
temperatures, along with high winds. However, caretaker Minister of
Interior Ziad Baroud noted that the huge number of fires in recent
days might indicate that the fires are the result of arson.
Following massive forest fires in 2007 and 2008, and a fundraising
campaign launched in 2008, the GOL procured fire-fighting
helicopters and other equipment in June 2009.

WORLD BANK GROWTH ESTIMATES FOR 2009
LOWER THAN LOCAL FORECASTS
--------------


3. (U) In its latest Global Economic Prospects report, the World
Bank (WB) forecasted Lebanon's GDP growth in 2009 at 2.5%. WB
estimates are similar to those of the IMF and JP Morgan, at 3% and
3.5% respectively. However, the Governor of the Central Bank of
Lebanon Riad Salameh and caretaker Minister of Finance Mohammad
Chatah estimate 2009 growth will reach up to 6%. Local officials
base their estimates on a strong upcoming tourism season, continued
high capital inflows, and a resilient banking sector. By contrast,
international financial institutions seem to believe tourism and
banking in Lebanon will be hurt because of the economic crisis in
the Gulf, lowering growth prospects. The Central Administration of
Statistics estimated 2008 growth in Lebanon at 8.5%.

RAYTHEON DELEGATION IN BEIRUT
TO EXPLORE NEW INVESTMENT OPPORTUNITIES
--------------


4. (SBU) A delegation from Raytheon visited Beirut on July 2,
meeting with officials from the Civil Aviation Authority (CAA) at
Beirut's international airport and the Council for Development and
Reconstruction (CDR),exploring investment opportunities and looking
to expand Raytheon's current business activities in Lebanon.
Raytheon representatives told us the CAA expressed interest in
procuring additional equipment and sensors, following its successful
collaboration with Raytheon in 1995 for the supply and installation
of the primary and secondary radars at the airport. Nonetheless,
the CAA told Raytheon it would need to secure USG or other outside
financing for future projects.

LEBANON'S CONSUMER CONFIDENCE
STRONGEST IN THE REGION
--------------

BEIRUT 00000743 002 OF 002




5. (U) According to the biannual MasterCard Worldwide consumer
confidence index survey, MasterIndex, Lebanon had the highest
consumer confidence in the MENA region during the first half of
2009, with historically high scores. Lebanon's consumer confidence
score more than doubled when compared to the first half of 2008.
The index measures consumer confidence based on five indicators:
employment, the economy, regular income, the stock market, and
quality of life, on all of which Lebanon scored well. The report
noted that Lebanon was the only country to see a yearly surge in its
consumer confidence in the region, as other countries were hit by
the global economic crisis.

SWINE FLU CASES
REACH 47
--------------


6. (U) According to the Ministry of Public Health the number of
swine flu cases reached 47, up from 35 at the end of last week. All
patients have recovered or are in the process of recovery, the
ministry noted. No deaths have been attributed to the flu in
Lebanon.

SISON