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Cablegate: Lebanon: Taste the Reconciliation: Businesses

VZCZCXRO9167
PP RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #1395 2670833
ZNR UUUUU ZZH
P 230833Z SEP 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC PRIORITY 3139
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/NSC WASHDC

UNCLAS BEIRUT 001395

SIPDIS
SENSITIVE

DEPT FOR NEA/FO, NEA/ELA
ALSO FOR EEB/ODF DEMARCELLUS
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT
COMMERCE FOR ITA SAMS AND WIEGLER

E.O. 12958: N/A
TAGS: PGOV ECON EIND LE
SUBJECT: LEBANON: TASTE THE RECONCILIATION: BUSINESSES
ENTHUSIASTIC ABOUT POLITICAL RECONCILIATION

SUMMARY
----------

1. (SBU) It has been an outstanding summer for Lebanon's
tourism industry and service sector generally. Hotels have
been full, restaurants packed, and it is impossible to find a
rental car on short notice. Businesspeople are saying that
political reconciliation initiatives among Lebanon's feuding
political and confessional groups could bring the stability
necessary to keep the visitors coming and the money rolling
in. End summary.

BUSINESS IS BOOMING
----------

2. (U) For the first time since the Israel-Hizballah war in
2006, tourism in Lebanon has taken off, with a combination of
Gulf Arabs and Lebanese expatriates pouring in for their
summer vacations. Lebanon's Ministry of Tourism reports a
29.2 percent increase in tourists in the first eight months
of 2008 over the same period in 2007, with the number of
visitors in August alone jumping almost 34 percent compared
to 2007. According to the firm Global Refund, Value Added
Tax (VAT) refunds to tourists are up 57 percent
January-August 2008 over the same period last year.

3. (U) Embassy commercial contacts are thrilled at how well
the summer season went. Nadim Assi, president of the Beirut
Traders Association, called the August tourist numbers
"unprecedented." He added that after the president was
elected in May, the business mood improved markedly, and
summer commercial activity helped traders catch up after a
rough beginning to 2008. Robert Fadel, the owner of Beirut's
ABC mall, the largest in Lebanon, said sales at the shopping
center increased 50 percent this summer over last. President
of the Hotel Syndicate Pierre Ashkar reported a fantastic
summer for his industry, with Lebanese expatriates and Gulf
Arabs filling rooms, and the chairman of Beirut Port said
port activities increased 25 percent this summer year on
year.

CAN THE POLITICIANS KEEP IT GOING?
----------

4. (SBU) With business prospering, recent "reconciliation"
meetings among Sunnis and Alawites in Tripoli as well as
between Walid Jumblatt's Progressive Socialist Party (PSP)
and Hizballah, have been welcomed by the business community
in Lebanon as harbingers of continued political stability.
Rumors of a possible meeting between majority leader Saad
Hariri and Hizballah SYG Hassan Nasrallah have businesspeople
talking about the summer boom continuing.

COMMENT
----------

5. (SBU) After the May Doha negotiations that ended the
months-long political impasse, the Beirut Haagen-Daaz outlet
launched a campaign under the banner "Taste the
Reconciliation" and introduced a new product, the "Doha
Agreement Cone." The Doha Accord and subsequent presidential
election lowered political tensions, having an almost
immediate impact on the economy. The bounce in summer
visitors shows the resilience of the Lebanese tourism sector
and the economy in general. Lebanese expatriates in
particular seem to view any period of relative calm as an
opportunity to visit, before the next cycle of violence
begins. Ghazi Kraytem, President of the Beirut and Mount
Lebanon Chamber of Commerce, said that Lebanese business can
handle "small incidents" like assassinations as long as
political groups do not let violence get out of hand.
Because of this, all of our contacts say business leaders are
excited about their prospects if the string of
"reconciliations" continue. The pickup in business does not
translate into political stability. A American Chamber of
Commerce President Salim Zenni notes, the mood may improve
for now, but in the end, "people don't trust politicians
anymore." End comment.
GRANT

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