VZCZCXRO3305
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHLB #0538/01 1121137
ZNR UUUUU ZZH
R 211137Z APR 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 1582
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 000538 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR 
TREASURY FOR MNUGENT AND SBLEIWEISS 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR ABRAMS/SINGH/YERGER/DEMOPOLOUS 
DEPT FOR EU MEMBER STATES COLLECTIVE 
 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON:  INTELLECTUAL PROPERTY GROUP ASKS USTR TO UPGRADE 
LEBANON TO WATCH LIST; SOCIAL UNREST ON THE RISE (ECONOMIC WEEK IN 
REVIEW, APRIL 14 - 20, 2008) 
 
 
CONTENTS 
-------- 
 
-- INTELLECTUAL PROPERTY GROUP RECOMMENDS UPGRADE TO WATCH LIST 
-- SOCIAL UNREST ON THE RISE 
-- CALLS TO LIFT CUSTOMS TAX ON BASIC FOOD 
-- GOL ACCUSED OF FAVORITISM IN CONTRACT AWARD 
-- GOL BLAMED FOR SLOW PROGRESS ON INDUSTRY PLAN 
-- KUWAITI INVESTMENTS IN LEBANON 
-- CBL FOREIGN CURRENCY ASSETS CONTINUE TO GROW 
 
INTELLECTUAL PROPERTY GROUP RECOMMENDS 
UPGRADE TO WATCH LIST 
---------- 
 
¶1. (U) The International Intellectual Property Alliance (IIPA) asked 
The United States Trade Representative (USTR) to upgrade Lebanon 
from the Priority Watch List to the Watch List.  The IIPA attributed 
its recommendation to the fact that anti-piracy efforts by the 
Lebanese authorities have shown signs of success, while increased 
cooperation continues despite difficult political and security 
concerns.  The IIPA represents more than 1,300 American companies 
that produce and distribute copyright-protected materials throughout 
the world.  This request is part of IIPA's recommendations to the 
USG for the annual "Special 301" Review of copyright piracy and 
market access problems in 51 countries. 
 
SOCIAL UNREST ON THE RISE 
---------- 
 
¶2. (U) The Federation of bakery syndicates threatened on April 16 to 
stop producing Arabic bread as of April 23 because of a shortage in 
the quantity of subsidized flour.  The President of the Federation 
told moderate anti-Syrian An-Nahar that "no bakery will stop 
production before Economy and Trade Minister Haddad returns to 
Lebanon, and then we'll see."  Haddad has repeatedly denied that 
there is a shortage of subsidized flour for the production of Arabic 
bread. (Note:  Haddad, who attended the World Bank/IMF Spring 
meetings in Washington, D.C., is expected back in Beirut this week. 
End note.) 
 
¶3. (U) The General Labor Confederation's (GLC) executive council has 
called for a syndicate gathering on April 23 to approve the action 
plan leading to a strike on May 7.  The council also has decided to 
hold a rally on May 1, Labor Day in Lebanon, on the theme: "May 1, 
2008: Day for defending decent living," the GLC announced on April 
¶16.  The GLC insists that the GOL raise the minimum monthly salary 
from $200 to $640, and called on the GOL to adopt measures to help 
improve citizens' purchasing power.  At the same time, presidents of 
economic organizations insist on having a rational dialogue with the 
GLC in order to reach an acceptable increase in the minimum wage 
while keeping inflation contained, they said following a meeting 
with PM Siniora and Finance Minister Azour on April 16. 
 
CALLS TO LIFT CUSTOMS TAX ON BASIC FOOD 
-------- 
 
¶4. (U) President of the Syndicate of Agro-industries Arslan Sinno 
(also American Lebanese Chamber of Commerce VP) called on the GOL to 
remove the five percent customs tax on basic food products, 
particularly rice and sugar, in a note sent to the Prime Minister 
and to the Ministers of Economy and of Finance.  This measure will 
reduce inflationary pressure without seriously affecting the 
Treasury, Sinno said, explaining that Lebanon has commercial 
agreements lifting tarrifs over time with most of the exporting 
countries. 
 
GOL ACCUSED OF FAVORITISM IN CONTRACT AWARD 
--------------- 
 
¶5. (SBU) Alain Bifani, Director General of the Ministry of Finance, 
complained to us about the infrastructure work that is blocking 
traffic in main highways and major streets in Beirut.  He said that 
PM Siniora awarded all these infrastructure contacts, which cover 
Dbayyeh, Dora, Rawcheh and Adlieh areas, to a company owned by Jihad 
Arab, who is close to Siniora and the Hariri family, which does not 
have the resources to complete all the work on time.  This is why 
greater Beirut looks like a workshop under construction, making 
 
BEIRUT 00000538  002 OF 002 
 
 
traffic very busy in peak hours.  Bifani is currently on a 
three-month leave of absence, which he says is a prelude for 
resigning from the ministry. 
 
GOL BLAMED FOR SLOW PROGRESS ON INDUSTRY PLAN 
---------- 
 
¶6. (SBU) Industrialists' Association General Manager Saad Oueini 
told us April 14 that there has been no progress in implementing the 
plan designed by late Industry Minister Pierre Gemayel to address 
problems facing industry and to develop the industry sector.  The 
cabinet made a decision to adopt the "Industry for Lebanon's Youth 
2010" plan after the assassination of Gemayel in December 2006. 
However, implementation of this plan requires cabinet decisions, 
Oueini said.  He explained that the plan consists of three stages, 
of which the first stage is a 100-day emergency plan, and he pointed 
to GOL laxity in moving forward on the plan.  He said about two 
years ago the cabinet passed legislation for the protection of local 
production, but the cabinet passed the implementation decree for 
this law only ten days ago.  Oueini said the Association is working 
closely with the Acting Director General Georges Khoury at the 
Industry Ministry.  The Association does not have a good working 
relationship with Minister of Economy and Trade Haddad, whom they 
perceive as too strongly opposed to  government intervention in 
markets.  The 10-year plan is available on the Ministry of Industry 
website: www.industry.gov.lb 
 
KUWAITI INVESTMENTS IN LEBANON 
-------- 
 
¶7. (U) Kuwaiti investors continue to be interested in investing in 
Lebanon.  Kuwait food retailer Sultan Center Food Products has just 
acquired two large supermarket chains in Lebanon, Monoprix and 
Geant, for $97 million. 
 
CBL FOREIGN CURRENCY ASSETS CONTINUE TO GROW 
-------------- 
 
¶8. (U) The Central Bank of Lebanon (CBL) balance sheet for mid-April 
showed that foreign currency assets rose by $157.4 million, reaching 
$13.549 billion, up from $13.391 billion at the end of 2007.  This 
increase is mainly attributed to the rise in the deposits of the 
financial sector due to capital inflows, and CBL intervention in the 
local market purchasing excess dollar supply. 
 
SISON