-----:-:,..:::to . :;·,1 "'~!.' .. _".-,.." ,.... '. IN~Eri~ t. . -" .i IONAL BANK FOR RECONSTRUCTION AND DEVEIJOPMENT £ , ? , lL_O_';'~_"L.-:-'"-~ ECONOMIC DEPARTMENT CONFIDE~ITIAL 66872 SUPPLEMENTARY MEMORANDUM ON SOMEl ASPECTS OF THI!l LEBANESE ECON'OMY Prepared by: F. G. Bochenski Approved by: William G. Welk March II. 1949 Some of' Mr. BuatlOn t 8 opWOD8 on th. 800D0117 ot the Lebanon are not oontirMd bT the flnt'Ungs 01" the lBRD Mission and bJ' the moet recent informa- tion. It _GlU, iB pu1;iaular, that there 1s no ..rioue intentiOD on ftither 8ide to d1erupt the existing e(mnomi.o links betwen S11"1& and the Lebanon; that there 1. a oertain def'icit in the Leba.neee belanoe ot Pfl~8 resulting in the lou of" toreign 88.ete, although the size of' this deticit cannot nov be ascer- tained; that present prices of most Lebane.. export. are not oompetit1ve in available foreign markets; and the.t, from • purel,. deftlOpn1eutal point ot 'I'i8W, ift'f'8atment in the field ot irriptiOD should, in sueral, be giWD priority OYer in'f'88tm.ent in hydroelectric powr. From the point or view of foreign exohange earning capacity 80Ule other projects ~,. perhaps be more attractive. On the other hand, Mr. ~8son's optimistic wluation ot the wealth, liquidi...,., and toreisn eX(1,~1JDge resources of Bei1",Jt1&13 .rohants ahould not 1:» complatel.r disregarded, in Yiewof' the tormer's un1~ onportunltia. to gain insight into the attairs ot th1s group .. The latest available eoonomio report at the U.s. Legation in !leirut cont1ru the Mil.ion' s findings v1th reprd to the oontlict of intereAs between some merchants 1JM t1Nlnclera of !3elru.t and the 8p'iau.ltural. and industrial ;:1"Od:uoaJ's in tI:r.e Hst of the country - " confliot re!,1eoted in di ver8'EJnt e~'luatlon. or the Lebanon', ~conomlc poaition. :JZlddle !astern developments of the last six months have contributed to a relatiw strengthening of the Lebanon f s position vis a vis other Arab countries, and, in particular, Syria. In the L!:banon itself, the part of' the population with t.'le more "",stern outlook, end, possibly, also the "tree trade" interests of Beirut have gained increased 1nf1.uenoe. So tar, hovever, political :bnprovement he. been only mildly reflected in the economio lit. of the oountry. A detailed anal1'tlis of the Lebanese '~v.rlll'llf&nt' s present foreign exohange resources ahows that therf) is little ohenoa of the Gowr1l1IIent be1.'tJg able to cover all it. dollar needs trrnl't dollar exchange received at the offioial rate. There Is no doubt, hovever$ that the Government could, v1thout diffioult7, service • $1 millioD loen tor develop.~nt purposes from dollar purchases in the tree market. The tree market 1e infinitely more L~ortant than the official oontrolled market; it i8 subject to the intluenoe or the interDal scneta17 position and the ohanc•• are that the head ot the Central 3e.Dk 1a risht when he as.uses that restrictions of credit 'Would bring about sales of foreign exchange. The Government's sterling PQsition is similar. though QOMpsratlvely easier than the '0119.r position; 8 repayment ot obl1ptioDS incurred in Frenoh francs 'WOuld, on the othor hand, p.r$ssnt no d1f'f'1oulty at sll. I. 11'ltroduotion 1 II. Revie", of Mr. Busson's ()pinions on Some Eoono~1e Proble~s of +.he Lebanon 1 1. Relatione with Syria 2 2. Balance of Payments Est_tea 3 J. Competitiveness of Export .?rloes 5 4. Inwstment Priorltlea 6 , III. Eoonomic Heport or the COlDl'llElroial Attache ot the U.S. Legation in Be!.rut 7 IV. I.atest D$wloymlente in the Lebenon 1. Political r'! 2. FoO't'lO%llic g v. Eatimated f'.,ol.lar. Sterling. and French FreDa Resources ()f t..hs LeOO!leSS Government 10 1. Loller~ 10 8. Exports 10 b. Emigrant Remittance. 11 c. Foreign Investment 11 d. Expenditure or Foreign Diplomats 12 e. t,ascel1aneou15 12 f. Estimated Totel Dollar Availability 14 g. EXisting (lollar comml t'ftcnta 14 h. Conclusions 15 2. Sterling 17 8. F.xports 17 b. ::migrant remittances 17 o. Peoeipts froUl Foreign Invtut1;,'1lent 17 d. Expenditure of ii'oreign D1,lo"lBtlc M18Sio1'lS 17 e. !11ecellaneous 18 r. Estimated total. of .Available Sterling IP g. Conclusions 18 3. French Francs 19 ~iIl12J:9_ntau MtmonooYJI op §2¥ A_o~, 2(jb.e,.L!.'biP!H Ecopq;q I. Imt2dy.rD;Mm. Qol Meroh 2lW, during s meeting in Hr. !liftt S oftice, in whioh Mea..8. Il1f'£, Scbmit!t, Consolo, SVoboda, and Boobenaki took part, the latest develop- _nts in the eooDOI'Ily ot the Lebanon, 8S well 8S Hr. R. Busscm t s opinions on this subject, vere discussed, aDd th~ :requeat vas made tor a report on the dollu availabilIties of' the Lebanese OoTernment from the point or new or the possibil- 1ty or eerv10ing an lBRD loan of about $1 million. The following report contdns,.) a Nview of tho .. of t~. au.eon'. opinion. which seem to disagree with the tindings of the Bank Hission, alter analY8is ot the latest available information; b) a study 01' the eat_ted dollar, sterling, and French tranc resources of the Lebene. Government. II6 ReyllN 2f !ir •. BWIPOP " wWonp 9" I!!O!I e2QJlO¥1io Rl2!?l9!... of Y1! lebam; 0 f1r .. R. Busson, President or the Benque de Syrie at du l1bsn, during his conversations with officiels of the IBRD, expressed several general opinions about the eooDomy of' the Lebanon, which deserve oareM ana17ais, 88 they partly contradiot the findings of the TaRD Mission and bear direotly on elements or the country' 8 creditworthiness or 1mportBnce for the Bank's decision on the Lebanese loan application. As rer 8S Hr. l1us8on'a views are know to the w.riter, he agreed with the Mission with regard to the very limited foreign exchange resources of the 1.ebanE:1&}ovGl"1'l!llent. bur disagreed on the :rolloving problemll: 1) future of economic relstions with Syria, 2) belanoe of' payments estimat.es, J) competitiveness of Lebenese export 1:')ricea, 4) priority of investment projeots. dis vievs on the merits of' 8 possible Clewluatior. the Lebenese pound oen probably be dieegarded., beoeuse any direot reference to this problem has now been removed from the Mission' til - :2- reports, and also because l...f:r. Busson's opinion in this respect doe. not seell definite. (In til oonYerNtlon with '>!losers. Ilitt end Consolo, he mentioned - contrary to his preyious opinions - that a devaluation of about 20;' oould perhaps be recommended in a fev months. ) 1. R!l.i~1 wa.1t! im:H' Mr. SuBSOil declared him_lf all advocate OfD complete rupture of t."1.e existing oustoma union wit.~ Syria, or the araation of Ii oustoms frontier b&t'l..'8en Syria and Lebanon, and of 8 oomplete abolition of' taritfa tor Lebanese 1.1lpOrts. fig also be11eyed that thlB vas the ultilMte a1n\ or Lebanose leaders, who tfin their heartefl wished such e solution. As all the Lebanes. statesmen, interviewed b1 the i!fisaion in September 1948 on this llJ8tter, took an exactly opposite stand, the qw;stion ar16s vhether the situation has been basically changed in the meantime. The latest information obtained ysaterda7 trOll the State Department (interview with Hr. Brewer, Beoretary or the U.S. Legation in Beirut, who returned bere in JaD\lIIlJ7 1949) shows that, during the negotiations carried on between Septqbar 191..8 and .January 1949, the Lebanese made Hveral conoessioDa to the Syrians. t;arly in Heron 1949, the Syrian Prime ':-11nisterp Mr. Khaled El Azem, dealared during a pres. oonference in Damasouss "Our discussions with the Lebanese GowrDlDent wre character- ized b1 the greateat hal"l'/lOD)". They took place in a lIIltually cordial atlaosphere and we have reviewed all the problems ot interest tor both countries. It appeared to us that a rupture ot the present economio union 'WOuIn be hamM to both countrieSe That is the reaeon vl:ty we have decided to continue and e'Y&tl to reinforce it, but to do it 011 • tranc and clear basis, in order to .'VOid all friction or dispute in the t"uturG. This new policy haa been generally established; further meetings will decide about deta!ls." Another member ot the Syrian cabinet deolared on~1aroh 4th to one of the foreign diplomats that he had complete oonNdenae in the future of' Syrian- l.ebenese relatione and poh1ted out thet Syria hid raoilitated negotiet1ona 'b.Y reoedh1g from the program of oomprehensiWt 1mport controls. ~\bout 8 fortuigh.t ago the Syrian frontier has baeD reopened unoOl1- dltionelly tor unlimited sale. of lllOst food articles to the Lebanon. 1'0 sUtI up this recent informations there 18 00 indication whatao- ever, on either side, of an intention to carr)~ out the program recommended b.r i'Jr. Buaeon. 'rile main nev element which developed during the last month, and .... consiat. of' a strengthening of" Lebanon t 8 position vis-a""",i. Syria, ..ema to faoUi- tIlte a rapprool:wmlent al it makes Syr1e more cooperative than before. Jiir. Hussou believes that the Lebanese balance of pa;yments is strollg and that transactions on current acc~unt on both sides are balanced without the necessity to cover any large defioits b.7 ~~e liquidation of easets. In a 1'.1810 'Where practicelly all the elements ere uncertain, lUI in the case of the Lebanese lJalenoe of oayments, wide diverpnciea of view 8re cult for e1ther dde or the argu,'1l$nt to prove the trutho Yet~ there remains th", tll.lOisputed adverse balance of trade of the detail, opU.mistic e6t1m.ates ere tlIcoepted II have rang&d in 1948 £'rom 200 to 3'0 million leave the field ot economic anal18is altogether, SOtOO idea at least or the order 01." magnitude involved must 'be obta1.neO. .. 1~ .. It is again undisputed that income trom tourist trade bas recently been negligible; in fact, it seeme doubtful ",hether this souro. of foreIgn exchange ws not more than counterbalanced by the expenditure of' Lebaneee travelling abroad. ;<:migrant remittBnoes were never estimated II1t more than lid.. 45 mUlion, but even it", for argument' e sake, they are aocepted at I.L 60 million, that would still leav. a gap trom hL 140 to ~L 290 million. As donations from abroad, expenditure of tOl'eign investment and re'WilIlU8 from Lebanese assets held abroad are oomparatively measurable faotors, and are roughly b9lsnoed by transters of roreign enterprises, etc .. , there remains the Lebanese income trom transit and entrepot trade 8S t....'1e only possibility to oover the above deficit. It is absolutely true that estimates oi' income an vague and that the total of these .arn1J:1ga of foreign exohan&!'0 maY' be sewrel t1us larger than it vas IUlsumed on Table IVII of' the eoonom1c report of the IBRD J.fission. There are, however, certain I11111ts to this !'J8rgin of 10rI'or. total value of transit goods whioh paas through Syria end l.ebanon averages trail iJ.. 150 to -.L 200 million.. Professor S. Himadeh. ot the American iJ:n1versity in Beirut, estimat•• thet the P1"offt of Syrian and Lebane. ndddleamen on th1s trade amounts to 5 percent, which would point to an even lower figure tban the ODe used in Table XVII. To argue, however, that this inoama is euffic1ent to coyer the deficit in the balance of pa)'ments would mean to ••8UIJ1e, not only that all or these profits go to the Lebanon and none to Syria, but aleo that the prot! ts ot Lebene .. middlemen exceed 100 percent ot the value of the handled merchandise itselt. - :5 - That the :r,."banon draws on its foreign assets oan alao be proved by' the undisputed fact thBt 5 billion French francs from the tl'Jld No. 2 Acoount tl , and, in addition, probably soma ~~hel' 2 billion French francs trom the ftJld No. 1 .Account" have disappeared (~uring 191..~.. equiwlent for these sums ie to be found :!.n the foreign exchange holdings ot the i;;xchangeottioe; Mr. Busson, howver, believes that aqllivalellts ()t' them ere helc b;.r Lebanese individuals in the form of YBrioua roreiL~ exchange assets. He elso holds that any meaS'lJre of credit tightening would 1.1) effect hrin~ eb:lut It.!rge sales of foreign exchsnge to the CElntral Bank or in the mer)l:et. 1'0 sum up, H. can be said that, while the existence of a t'ief'loit in the Lebanese balance or ~)"!'Ilents ~8t be 9ceepted as !!l cert.81nty, Us aotual magnitude C8Mot at m-esent be !t3(U~rt!!ljnoo. Thb creftoit t.'IJ'l.:'/oubtedly r@preaente an unfavor.... able factor in th" oountry's economic position, 81thou~ it (".an be explained by the effects of wr end post-war deftlopm4lllnts, and, U' gradually diminished, -7 in Usel! not aauee en eWl'ltusl economic bt"eskdow.. The torei.gn exchBnge 1"8- 8ourooe ~)'t LeMnese merchents, which no one has yet oo('·m able to estf.ute vUh eny assurance, but which - ecoord1ng to Mr.i1-uJI80n t s testimon..v -- ere ooneldereble, -7 act as Ii ss.f'ety cushion for the country, during the t1merequired for the t"e@stsbl:tshment of its financial equilfbrlUIt. 3. Comoe~it!"-D!I. 2t ~lQort~~Q!I. During some of hill converMtions, iT. au.lIOn seemed either to GOD7 that Lebanese P2'ices were an obstacle to exports of those goods or lil1eh the country produce(! a surplus, or elae to regard exports !"rom the Lebanon as s not very impo~tant problem. i.JhUe the latter vi.v would b3 roughly in linp vith Hr. 3u88on' s general aOr)roaeh to the Lob8nese economy - emphas1e on I!!ervioes :rather than "lroduction - and can be disputed J the former opinion 1s obv~ouely wrong', which can be t)roved by a lifi.'!'IIple inquiry at any Cham.ber of COIlllll:erce dealing \lith the Middl&East~ - 6 - Mere17 to poiDt out that the LebaM .. Goftrrmaent is well avera ot this serious handicap in the oountry· fI development, the followtng extract :f'rQla 8 speeoh h"J ljr. Z. Biter, head of the Fconomic DiviBion of the Lebanese Foreign atf1oe, deH.vered 6 fortn:tgl'rc ago :1n Beirut, ie quoted: "Is it necesMry to remind you of. the unftl"'mouJ'.l'table diffi- oulties whioh 'We enoounter 'because or our h.igh prices, 'When we t!7 to ..11 our rew product8~ Whene".r ve sxplOl'e foreign urket8, we alwys hear the S8t'!'l,~ anS'Werl 'Your prices ere too high Itt. 4. 11'1D~Dt pr~Qrlt~!J.. Hr. a-uasoll favored tnvest.ment in b~.l.ctric projects ratl'tAI" than in iJ-ricatiOll. It has been alwys the view of the lBRD Miasion that l:'.ydroelectrio projects in t.h~ t"benon _elll II highly' interesting and proaising venture, which should be .further in"Y'9/:1tigated. Priority is, howver, gift» to some irrigatioll project8 tor the following Nasons, ., MYeral technical expert. haft atated thet in utilising the lWted water resources of the tebaJlon~ first priority should be gi.,.n to use of 'W8ter for general purpose t i.e., ht.I.t'Un and animal oolulJ'Ultption, "COM priorit;y to irrigation, third priority to power uroduction. b) irrigation would ,rovicie permanent &iifitionel aploy.aent on a larger IIc81e than power projects and it "WOuld either inerease the self-sutfioiency of' the oountrtJ 1.n cerealn or !.ncrM8e exportable surpluses ot other crops; e) while ~roe1ectrio projects haw not even reached the blue cr1nt stage end require thorough studies such as flow reoordinge and geologiool researoh, the dmple.r irrigation f)l'ojecta are largel,. worked out in detail, an0 9 to Ia oonsiderable extent t already under lOn8truat1on and part".l operation. NothiDg has happened in the I.ebenoll between SEI"!ltam'ber 1948 and :>!aroh 1949 'Which '!lOuld render theee considerations unconvinoing. - ? - The latest available pariodi081 economio and t1nsncial report of the I GOlIt"!!eT'oial Attache in P.eirut, (leted December z:', 194f1t, covers the third "The h~ and cry of th~ Lebeneae press during the first 19/c+~ f'ol" f~Vqrnm~nt!ll ection to lI.ttem:ot economio stabilhation ormt1nuea u."lsbateo during the thirc quarter. OOTICArn a~d uneeeins88 over the countr.y's aoanemia 'Plight vere heard in oertain trade, :f"inanc1nl e.nd offield e'rclee., chaos fino near-benkruptC1 pointed to her hE"..avy :1mbaJtmoe of' c~:n'!ts cf labor on!i rooteriala on industry, and exportation stH"led l'In !1i'lte of this eituetion, th9re remained. a herd oore of mer¢hants and tinanoiers who worried le8s, oon~ldent in Lebanon's role as 8 l3enter of' transit trode and tMJe market !IOney aperatione. tt The above quotations not only reneat opinions or the U.S. Legation, wtdoh are not very c~1rrerent f"rom the views of the Bonk's mission, but elso point out again the basic oont"11et of vievB end of interests mtween Beirut btnkers and merchants and the agricultural and industrial prod11oers in the rest of' the coun't:r7. Thb may also account for some of the extremes in the opinions of l·ire Busson, who, b"l viJ'tue of' his position and the main interests of his bank, must largely identify himself vith the first 01' these two groups .. IV. Latlat sltvelf1Pl!!mt.!J.!l.l9s Lel!!nmJ. 1) folitiga.!.. "!"he Llowrnment of t..~e Lebanon is the only one in the Arab countries which fought in Yalestll'.8, to survive defest.. As the LeooneM war effort was always half-hearted and diotated ma1nlr, if not solely, ty solidaritY' with the .Arab I..eague, r~el:tnes of hurt national prioe cUd not arise to 8 ooint endangering the stability of the regime" At toP, lSar,e tiM, the weakening, if not complete colls"pse, of Arab Lt"'8fJ;1~e re1l1ovao S'..loh obstaoles to e Lebanese independent policy which resulted .from the ties with the League, respeoted by the Lebsnese Government in J:rrudent o0l1a.iderat1on for thq sentiments or the Moslem heIr of' the populstlone E;f'f'ects of th~s dmtble-oorrii1l11ed, relative and absolute improvement in the !..eben~n'!B poslt1.on are i~edlntel;y reflected in agreements vith France Emt' v.Uh the 'l'i\,P line~ and seems to fsvor & prolongation of the oustoms union with the Lebanon" iR,b~non itselt g the C;"rististl, pro- Frenoh ant! "'h~stern or1ent".!lt~d part of the popu.lation becBm~ atrengthaned, .·h1ch, of" Deirutian :"derehtmta and financiers on the government of' the countrY'. The may be t!t i"'.rrthl}1" reflection of this Eoonom:ic f1evelopments . in tJ~r" r,,~banonl') . . the t'avo:rable;)olith'ml trend of events \dth dull' respect. to the d:!saentlng stand or the n4F (motivated by f'ormal considerations) now Foreign ,Sxohange legulat1ons, although -- it Is -9- WhU. the cost of' living has tallen slightly, the Lebanese pound -- liberated from the encumbrances of' unlawful operators - j ~ so'nawhat stronger. Ii resel'V'S of gram has be~n assembled, trade zone of the port of Be~.rut has ~en enlsrgeo, some progress is taking ploO$ tn ~l:ie construction of the KhajUd& Airport all develop"nents which. strangely i~nout!h, seem to antioipat13 the rar.j) ,Ussion IS suggestions. 'I'll,a unfavorable dewlopments oontdst of' an increase in t.he volume of the budget, and of' dues imposed t1' the (;ovarnment on sales or de-rationed suger end rica.. {'This step intended to offset the deficit, provi,:;;usl1 inourred by auba:td1s1ng t.he prices of r8tloned tood, is obriously 8 wrong decision, contributing t~ e rurth~r high cost of liv1ng$) Apart trorn the aoove-merlt1oned elements, there era no signs or 8r.:I¥ bUlle chang& 1u the ecoMmic poEl:1tion of the country" BenefIcial results csn be expected from renewed .oonando relEitl::mB with i'slelt1ne. To dst~t ho~v&r, BOCOr;ht ha,Ye ~~ hr~T. been .65 million. ,!LTa14ble fl~R tor the fir!:!t half of lqhS lnd.lcf.l.te ti< fW"thlltJ' dearlf'lalle of the total of expo"~ for both countrle~ by So~. Iilli:l there 1 __ no tl"~nd.** price countr:f" , I • Flt:ur~ rOl" 1947 bs.!:K '~n .~ eqti·~~, .Beirut; Trans-Arabian Pi'f,e!1ne Oompa.n;y, Ht"i1ru:t t United 3t;~te5 r~ub'ber :~Xl)Ol"t CompaD7. ltd •• !1tl11l"'tlt - 13 - - tnTe~t1Uent WId current 8"1'e1'1941$ ot wrlCAD R'UciA'l1 H'~dQDih, 1Ilclu.dlnt~ their ~cMol!!l fUld hoapitall; there i'&''''~ e1,,ht ~ueh r<{lnlon~ op!:Jratin~ in the' Iiil'1d 19 l"ICilool'H thair 'otal 1nVfH'Jtment to d':.te 11l eeUmllted. at Sl.1.~15.0on. Investment and OW'"l"ent e:rpen$B!I or 'Rr:\$l:all 2a~J&al aNQ'1~Sh!)"l!! (not with a1'tY Mbdon;; 3 collet'!0lit. 1 ho~p1tal, '78 roreign 67 e~tiill.i".ted. ~t ~,6t 975,000. In:V'I'HJtment aJ'..d. current *'yPen.&a of ABrig. gbif'lid11 Inf!'t1tuUrmah numbe:rln~~ 6 wi th 46 to)'"ulgn &nd ~r1c.tUl fltaf''f and an edbltlted In''A!'t~nt ot ..- Gu:rrent eX1Cl4u'ldl tu!"e of AYlIt1gAll tAbUJ- Sl!tventy-f1Ye!\merican 'Ph1p~ ""Uh fl. tott'/,l net ton~ft of 366.l~16 arrtY-eo. in ;:tlt!"t dUl"l~ 19''''(. Fltty-dx of th$m '!l;"ere tre1ghteX"~ or thft A1rlerican 1!xport line"" In6. fr'om Y.. b:J.t the Compa!l3' ha9 no CA.'pi ttr.l lnYft!'\ltmsnt ill !~~'b5\1'l«)n. -- Pollaf' 1lI:2atd. lIi tra ~}i_H lm:!"tatn \e la tM u. ~u Iln 1H! the, <:;3"~ tl"~tJll!lffllrr\1td. to the r.banon. lto 0~t1I1l1;tefl are avdlable. -- Current expeM.1ture of !2Uthto.. It ill! e~t1l'l:;,ttec1 thC4t litU"l~ 19J~e the num~r of toul'"itlt'h mi«ht have been ,:,.'bout 3.000 (us ~n.~t 9,000 in 194 7). I""nr.l thl;)..t thel!'" total expenditure m1pJlt h.&ve 1l.IIOunted to thA e1'l'uiva- lent of 1:..1)0'11\ MIllon.. Met or . . from r::G"Pt the tourhh Or and. lra~, and. the ,..mount of dollare spent tv them must 'be collipletelT !2.egl1g1b19. 7'here Wa9, ntlWI1;IVeX". 1II0me dollar inflow from deleg:Lte9 to th" Oonter~n.ce. li!'lte b:t - 14- In view of the l&ck of 'better data for tMs gpotfP of doll~u" rece1ntA. H 18 propo~ed to &ccept. the Govern.ment r1cure of around. :1il.SOO,OOO.!llld 1:xf'()1"t a i; 3,000 'J.:ltltl1'l"ant J'ttfd.ttancel'J 450.000 Foreign lnft·!!tment 50,000 Foreign d1plol!2Qts 20.000 "the" 1II0UJ"CfUI 1.500 ,000 Total 52,02).000 m11110n, the foll "'!Wing - 15 - reco{::n1tloD of tt... £1'$8 lIarDt tOl' forel&n CtU"!'encle~, it elm p:rol)o:bly be thl~t t.he Le'ban.~e Gove!"1.Ullent will !'lOt ;liO.llocr~t. doll!:I.I". for &1X3 iml:'Ortfl GQ,)a.rt f!'Om oereab. "he ~':.cver~ annual defiel t of aerl'3!1.1s foT' local colllll'Wnption in the 1$'bi~n{)%l if? libout 120.000 5Ulian ton., Md thh q~t1tT na9t to be lU1jJorted. At tM price of 'i'h1e. woul;l m~(.n thAt thf) 9l!lO'iltlt of {lo11n1"9 ~quired for the purCfl<.\fiIA of Cfill"f.uUS Ql!II:)unh 7'~h:%:rl;y to about 14,SQQ.OOg. (3) 0'3": so_wa'" At 'Prel!llent the Le'bentUUI Govermwnt haft no foreign debt in dollar~. If t~~ $700,000 credit re~u1red tor the electronic .tuil),f~nt of the rhaldIAi1"por'. to be tl/uppllfKt 'b7 the I. '1'. ~; T., mf;j.tfilri~l11:eM. ~ome of the {lo11.:U" income of the Lebanon ~ be eIA!'mat'ked for tM. fl"M'ioihl: of thh lOiUl. CgUQ~J6dqDI. \,Uh all the re~eM'f4t1on8 dicta-ted by the crude n.:'\.tUl"e of the doove e~t1uu,tA'(!!t the following conalll"lonlll can bellL"l..J.., Le'b&ne~e Gove1"fiJl1lm.t Ct'i!l exp~ct at rre,,~nt to race1.,.e from its ~;xeha.n~e ff1C{,1, ~,.t the. oft1elal exer~ I'l.t.ta. fIO_ m1IllOD per Yf'i'.?i;.'r" It 1. co;:l!fd.tt~d to $,!,;)f.\!nd ~ome .3 ml1110n for foreign ~nrfH!!f.mt!!.,tion. r-e~t of ." million lA e~-l"~l"kl'td. for the purchalt. of cereal$. but b not ~ufi"1elent for thi~ ?~~O~•• !t f'ollov1! that the grf*~~te,. 1'41"\ cf VI-dn purcha".!'!t trom the dollar i~rea w111 not be :r1n~,J1eea from ehe&-p doll£\r* allocRted b7 the '';oTf.U''nment to - 16- 1mporters. bu\ -- l1ke ~11 the other lmport~ -- will be ba~ed on doll~r9 boUitht at the free 1I'II:!I.'I"ut rate. which. naturally. 111'111 contl'll,ute to keer>11't1: trerld 1n tn. free ma;t"ot price cauaed by thh ~d{U tional demand, 1n p:;,rUeu- 1Ia' if the pu:r~aflHJ~ <:.1"$ prope!'l,y plamled and .t~-;el"&d. .. If'. ep:.. g :~l million loan were made at 4i% oftr a 2O-yo(.'''.:r per! M, rUld H' the f1l"'flt 4 7e'~s were to 'be tre~ from ~·tbattQn r,1\te'll, ~A"1elD.g of the lo~ wo'l1ld req'lire $45,000 annlJtt.ll,. d:uring th~ flrftt 4 78fi.r",. ~"n'l $S8.o00 bJUlua1q 1n the follO\l..ing yefAl"R. ... 17 ... the t.b~e~e Gov$:rmnent wl11 encounter no Pt'l.rticul!U" diff1oult1e~ tn moblHdng the nece~~a.!7 m{:\;Ul~ out of i h b1.lii~t, which -- in 1949 -- &mOunt~ to .L, 7? million; ~lthout\h net ther in thh nor in the t1.#O preceding ¥('(tr~ ':JU'!",t.',lu\1E'R were rea-lhad. 01" untieip".ted. thh bwlstet llIeem~ ~lt:.need and no clalm~ ~re ~lde ~gain~t the ~P'~6rve f~~. ;Jt§rllA& 191.1'7 cX1)ort~ of STria and Lp.b(;;Jlon to tlt.,.e !J.7 • ..:uaounted to Uttle more thl\!l 1'1'" 1 million. ",hUe imporh rf;Jnre~~nted over :t~ 6S mHHI')l1. 11' 1"1f1"" thh f~lct, the }e'bI:.nI'Hle t1ovent!ll$l"lt'tjill ~~t1m.~t. of ~ 2Q.QQO. from thh «Iourcs h ilOV:1,)US'lly too btgh. It hi '\:,ropo~9(1 t,o aCOtr;:lt an ed1mate of ,:'l.rou."d ~ ll.,1~OQt w-hich would corrp'!!l)oni ro~17 to lO,t ot the value of expo!"t~. b. :;'-i&ta:w'l\ remUtYCI! !t b. propo!lted to l ..ecept the Gove:r"M1ent' ~ e~timate of ;, lOQ,OOQ. annu..dl¥ from thh ~ourc.. af3 th~re . .il"f) no element. i«.v~n"1.blft ",!hleh vould. jUAtU'y .'JlI.j :r"~vhlQn of this figure. c. T{QQ11tlh :XCiii (Prlh:; lQVIf\_f1~ ,]overmiient e!'!tlznro:..te •• 6.Q02. d. ~Qltyr! 2(.tPta1cn d~R~QII'la I'~plong r:'be U. t. :r.eg~.l.t1on h one of the few foreign re-pre~entH,tlon" whlch Mlls all itB "lterltn~ thro~ the }:xchange Office. Tht!!: appll• ..,. abo to !'(ul".."tldltii1.1 !'I'ums ""hieh ~eY'e Md still t"Y'6 paid", the t1. K. 'rrUtlt'tUI7 aft ~ub­ ddios for '~Qlhh ref~e8 in the Lebanon. In .,1e", of theM tnch, it h 'Prcrp,10u111 undou.bted.lT finr1 t t o::\dor to ~f;lM'lce tit f'Q"i,t", loan 1n French i'r1:1.:ac$ t~ in ",!IT other ot t~ tvo prevl.'JU.dy dhCU~llIed eurrsncle@.