VZCZCXRO3069
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHDH RUEHIK RUEHKUK RUEHLZ RUEHROV
RUEHSL RUEHSR
DE RUEHLB #1006/01 2540603
ZNR UUUUU ZZH
R 110603Z SEP 09 ZDK
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 5694
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
UNCLAS SECTION 01 OF 02 BEIRUT 001006
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: ECON EFIN EIND EINT ETRD KFLU SENV LE
SUBJECT: LEBANESE MADOFF LOSES $1.6 BILLION IN INVESTOR FUNDS
(ECONOMIC WEEK IN REVIEW, AUGUST 31 - SEPTEMBER 6, 2009)
CONTENTS
--------
-- LEBANESE MADOFF LOSES $1.6 BILLION IN INVESTOR FUNDS
-- PUBLIC DEBT STABLE, RECORD BALANCE OF PAYMENTS SURPLUS FOR THE
FIRST HALF OF 2009
-- TRAVEL AND TOURISM INVESTMENT TO RISE IN 2009, LACK OF CABINET
PUTS PROJECTS ON HOLD
-- LOCAL PHARMACEUTICAL COMPANIES COMPLAIN HEALTH MINISTRY DOES NOT
TAKE THEM SERIOUSLY
-- BEIRUT TO HOST ARAB FORUM FOR ENVIRONMENT AND DEVELOPMENT
-- SWINE FLU CASES REACH 792, SECOND DEATH CONFIRMED
LEBANESE MADOFF LOSES
$1.6 BILLION IN INVESTOR FUNDS
------------------------------
1. (U) Local and international media have reported extensively on
the case of Salah Ezzedine, dubbed the Lebanese Bernard Madoff,
after he declared bankruptcy and gave himself up to the authorities.
Reports noted that Ezzedine may have lost as much as $1.6 billion
in investor money, mainly due to the drop in oil and iron prices in
the past year. Ezzedine, a Shi'a from the south who is close to
Hizballah, owns a travel agency catering to Muslim pilgrims, as well
as publishing house Dar al-Hadi, specializing in Shi'a religious
books and works by Hizballah officials. He also ran personal
investment schemes that attracted large amounts of money from Shi'a
in southern Lebanon, investors from the Gulf and Africa, as well as
high-ranking Hizbollah officials, including MP Mohammed Raad, Amin
Sherri and Hajj Wafiq Safa, according to the press.
PUBLIC DEBT STABLE, RECORD
BALANCE OF PAYMENTS SURPLUS
---------------------------
2. (U) Gross public debt in Lebanon reached $47.3 billion at the end
of June 2009, a slight increase of 0.6% from end-December 2008.
Local currency debt increased by 0.5% to around $26 billion, while
foreign currency debt rose by 0.8% to $21.3 billion. Prominent
local Bank Audi attributed the lack of a substantial increase in
public debt to a drop in investment in T-bills and greater
investment in 5-year certificates of deposit by local banks.
3. (U) Meanwhile, Lebanon's balance of payments posted a $2.1
billion surplus in the first half of 2009, compared to an $83
million surplus during the first half of 2008. Bank Audi attributed
this record high surplus to a $3.6 billion rise in net foreign
assets at the Central Bank of Lebanon (CBL), which offset the $1.5
billion decline in those of banks and financial institutions.
Capital inflows also recorded a high of $8.2 billion in the first
half of the year, up by 47%. The CBL noted that capital flows were
mainly composed of remittances, foreign direct investment,
non-resident deposit flow, and cash transfers by visiting tourists.
In its most recent report on Lebanon, the IMF assessed that 2009
economic growth could very easily surpass its 4% projection.
TRAVEL AND TOURISM INVESTMENT TO RISE IN 2009,
LACK OF CABINET PUTS PROJECTS ON HOLD
--------------------------------------------- -
4. (U) The World Travel and Tourism Council (WTTC) ranked Lebanon
nine out of the top ten countries worldwide, and fourth among MENA
countries, in terms of fastest growth in travel and tourism capital
investment in 2009. The WTTC forecasted travel and tourism capital
investment in Lebanon to rise by 8.5% in 2009.
5. (U) Meanwhile, head of the syndicate of hotel owners Pierre
Achkar publicly noted on August 27 that although the lack of a
cabinet has not affected the number of tourists in Lebanon in 2009,
it has delayed around $2 billion worth of investments and the
creation of 6000 new jobs in the hotel industry. The ministry of
tourism estimates around two million tourists will visit Lebanon in
2009, with 1.1 million tourists already recorded by end-July.
LOCAL PHARMACEUTICAL COMPANIES COMPLAIN
HEALTH MINISTRY DOES NOT TAKE THEM SERIOUSLY
--------------------------------------------
6. (U) According to Business Monitor International, the local
Lebanese pharmaceutical industry is expected to increase 4% in 2009
and is currently valued at around $500 million. Local French daily
L'Orient Le Jour quoted the report on August 28 and noted that the
market share of local products -- both under license from
BEIRUT 00001006 002 OF 002
international pharmaceutical companies and generics -- is a mere
10%.
7. (SBU) Chairman of Benta Pharmaceutical Industries Bernard
Tannoury told econoff and commstaff on August 27 that the ministry
of public health (MOPH) does not take local industry seriously, even
though it operates with state-of-the-art equipment and supplies
products that are up to international standards. Tannoury noted the
MOPH refused to accept a donation of locally produced medication for
swine flu from Benta and instead purchased the medication from a
local importer. Contacts report that the syndicate of importers is
a powerful lobby group that works to obstruct local industry and
allies itself closely to the MOPH, accused by many in the industry
of being rife with corruption.
BEIRUT TO HOST ARAB FORUM
FOR ENVIRONMENT AND DEVELOPMENT
-------------------------------
8. (U) The Arab Forum for Environment and Development (AFED)
announced that it will hold its annual conference on November 19-20
in Beirut. The conference is expected to attract over 500 leading
Arab and international delegates to focus on climate change in the
Arab world. Minister of Environment Tony Karam noted that the
conference would also help develop a common Arab position to be
presented at the UN Climate Change Conference in Copenhagen in
December. Lebanese environment NGO Indyact, active both locally and
in the Arab world, will also hold a conference on climate change
October 24.
SWINE FLU CASES REACH 792,
SECOND DEATH CONFIRMED
-------------------------
9. (U) According to the MOPH, the number of swine flu cases reached
792 this week, up from 500 in mid-August. The MOPH stressed that
the number of cases requiring treatment did not exceed 3% of total
cases, while it confirmed a second death attributed to the flu, a
three-year old baby already suffering from health problems. The
ministry also announced it will no longer track the number of people
diagnosed with the flu, following the lead of other countries
worldwide.
SISON