Cablegate: Lebanon: Chatah Says Government United On Economic

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RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHLB #1523/01 2981518
ZNR UUUUU ZZH
R 241518Z OCT 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 3360
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
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RUEATRS/DEPT OF TREASURY WASHDC
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UNCLAS SECTION 01 OF 02 BEIRUT 001523

SENSITIVE

SIPDIS

DEPT FOR EU MEMBER STATES COLLECTIVE
STATE FOR NEA/ELA
STATE PASS USTR
TREASURY FOR MNUGENT AND SBLEIWEISS
USDOC FOR 4520/ITA/MAC/ONE
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT
STATE PASS USAID FOR BEVER/LAUDATO/SCOTT

E.O. 12958: N/A
TAGS: ECON EFIN EAID PGOV LE
SUBJECT: LEBANON: CHATAH SAYS GOVERNMENT UNITED ON ECONOMIC

REFORM

SUMMARY AND COMMENT
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1. (SBU) During a Paris III donor briefing on October 23, Finance
Minister Mohammad Chatah stressed the current government's
commitment to improving the standard of living of the Lebanese
people by fostering an economic climate that encourages investment,
creates jobs, and supports its people through strong social
services. He insisted that the government does not view itself as a
transition government, and that it is cooperating across party lines
to accomplish significant reforms during its short mandate. To
start, he said, the cabinet would take up the 2009 budget law and a
new IMF Emergency Post Conflict Assistance (EPCA) program in its
next meeting October 30. Chatah's presentation provided a coherent
vision of how the Lebanese state should work on behalf of its
people, and could serve as a model for March 14's campaign platform
for the 2009 parliamentary elections. End summary.

WIDE POLITICAL SUPPORT FOR ECONOMIC REFORM
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2. (SBU) Ambassador and Embassy officials attended Lebanon's Fifth
Donor Meeting on the Implementation of the Economic and Social
Reform Program on October 23 at the Grand Serail. Finance Minister
Mohammad Chatah said political stability following the Doha
agreement opened the door for the resumption of a national dialogue
to address certain high-profile political issues, but stressed that
the government was still focused on economic reform, noting it had
reaffirmed the "principles of Paris III" in its ministerial
statement. While he said the current international economic climate
might affect the speed of reform in certain areas, he emphasized the
commitment of the government to sectoral reform, liberalization of
the telecom sector, and fiscal improvement as outlined in the
ministerial statement.

3. (SBU) Chatah repeatedly stressed that the current government does
not consider itself a transition or interim government, and that
ministers from all political parties -- even those who disagree
strongly on other national policy issues -- were coordinating
efforts to accomplish reforms in the electricity, telecom, and
social sectors, as well as in the fiscal realm. Speaking in Arabic
for the press microphones, Chatah spoke passionately of the
government commitment to improving the lives of the Lebanese people
by creating an economic climate that promotes job creation and
higher salaries, and by building government institutions that
provide the social and economic services the people need.

ECONOMIC BRIEFING:
ON TRACK WITH THE IMF, ECONOMY STABLE
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4. (U) Chatah briefed participants on his discussions at the World
Bank/IMF meetings earlier this month in Washington. He said the IMF
Board will approve a new EPCA Agreement with Lebanon in November
2008, giving the GOL a good framework for policy implementation, and
calming investors. He also held an investors' forum where he met
with investment bankers and private sector actors interested in
investing in Lebanon.

5. (SBU) Chatah said the Lebanese economy continues to show
resilience, and estimated growth to reach six percent in 2008 and
five percent in 2009, which, along with fiscal responsibility, he
noted, would help lower Lebanon's debt-to-GDP ratio. In addition,
Chatah reiterated his previous pleas that donor countries convert
assistance pledges for development projects into budgetary support
for the GOL.

6. (SBU) While Chatah said that Lebanon would be indirectly affected
by the slowdown in the Gulf region and its impact on Lebanese
working or investing there, he believed the negative impact of the
slowdown would be relatively small. He asserted that the banking
sector remains solid, with significant growth in deposits during the
international financial crisis. Despite the crisis, he noted, there
has been no major turmoil in Lebanese sovereign bonds.

COMMENT
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7. (SBU) Chatah's briefing on the economy was comprehensive, but the

BEIRUT 00001523 002 OF 002

most striking part of his presentation was the coherent strategy it
offered for economic reform and strengthening of Lebanese government
institutions, along with a passionate commitment to the people whose
state has so long underserved them. His comments should serve as a
template for a March 14 policy platform for the upcoming
parliamentary elections.

SISON

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