VZCZCXRO4128
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #0861/01 1610510
ZNR UUUUU ZZH
R 090510Z JUN 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 2214
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 000861 
 
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 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: LABOR CONFEDERATION IN HIZBALLAH'S GRIP (ECONOMIC 
WEEK IN REVIEW, JUNE 2 - 8, 2008) 
 
CONTENTS 
-------- 
 
-- GENERAL LABOR CONFEDERATION HAS BEEN TRANSFORMED INTO A POLITICAL 
TOOL, DISREGARDS LABOR DEMANDS 
-- MOBILE PRIVATIZATION AWAITS CABINET APPROVAL; FORMER MINISTER 
FAVORS LANDLINE PRIVATIZATION 
-- GOVERNMENT TURNS DOWN GASOLINE PRICE INCREASES; WHOLESALERS HALT 
DELIVERIES TO GAS STATIONS TO PROTEST 
-- MINISTRY OF ECONOMY AND TRADE SUSPENDS SUBSIDY FOR AGRICULTURE 
EXPORTS FOR ONE YEAR 
-- IPR STUDY TOUR PARTICIPANTS TO ORGANIZE CONFERENCE ON IPR IN 
JULY 
-- LEBANESE PRESIDENT CALLS FOR CREDIT FACILITIES FOR AGRICULTURE 
AND REGIONAL DEVELOPMENT 
-- GREENPEACE ORGANIZES PROTEST TO INCREASE ENVIRONMENTAL AWARENESS 
-- QATAR DONATES OVER SEVEN MILLION FOR RECONSTRUCTION IN SOUTH 
LEBANON 
 
GENERAL LABOR CONFEDERATION HAS BEEN TRANSFORMED 
INTO A POLITICAL TOOL, DISREGARDS LABOR DEMANDS 
-------------------- 
 
¶1. (SBU) According to a long-time employee at the General Labor 
Confederation (GLC), Hizballah has been exerting almost full control 
over the GLC for the last three years.  The GLC has totally ignored 
labor demands, and has been transformed into a political tool which 
Hizballah uses against the GOL to further its own interests.  In the 
meantime, a number of dissenting GLC member confederations have 
established their own group, known as a Salvation Committee, and 
have successfully negotiated for an increase in the minimum wage. 
The Salvation Committee is seriously considering officially breaking 
away from the GLC, but needs political backing.  This possible split 
in the GLC, the selection of a new Minister of Labor, and the 
election of a new GLC head will be key factors in deciding the 
future of labor politics in Lebanon.  (septel) 
 
MOBILE PRIVATIZATION AWAITS CABINET APPROVAL; 
FORMER MINISTER FAVORS LANDLINE PRIVATIZATION 
-------------------- 
 
¶2. (U) Telecommunications Regulatory Authority (TRA) Chairman Dr. 
Kamal Shehadi reiterated in an informal meeting with the economic 
press on June 3 that the TRA is ready to launch mobile privatization 
if there is a political decision to that effect, and hopes the new 
Cabinet will approve issuing two mobile licenses to private 
operators in addition to a third license for Liban Telecom.  Shehadi 
noted that the auction of the two mobile licenses can be completed 
in three months,  An-Nahar reported May 4.  In a response to a 
question regarding a fourth mobile license, he said that after 2010 
the TRA would have completely liberalized the mobile market and will 
look at new technology to license. 
 
¶3. (SBU) Former Finance Minister Georges Corm told us June 5 that he 
is against selling the cellular network now because the 
government-owned cellular service generate close to $1 billion in 
annual revenues for the Treasury (Shehadi, of the TRA, estimates the 
amount is closer to  $650 million annually).  He believes the GOL 
should first privatize the landlines along with a third mobile 
license to generate revenues.  But Corm said the GOL is "obsessed" 
with privatizing the mobile network and is not making any effort to 
transform Ogero, the public entity that operates and maintains the 
landlines, into a joint stock company to be known as Liban Telecom. 
 
 
PETROLEUM IMPORTING COMPANIES 
SUSPEND GAS DELIVERY, 
ASK GOL TO INCREASE PRICES 
-------------------------- 
 
¶4. (SBU) Petroleum importing companies did not deliver gasoline to 
gas stations starting June 6, following caretaker Energy Minister 
Safadi's decision on June 4 not to increase the retail price of 
gasoline for the coming week.  (Note: The Ministry fixes the price 
of oil derivatives on a weekly basis.  End note.)  President of the 
Association of Petroleum Importing Companies Bahij Abu Hamzeh told 
us June 5 that maintaining previous price means a direct loss of $45 
per ton to petroleum importing companies.  The Association has asked 
Safadi to either increase prices or implement subsidies, Abu Hamzeh 
said.  Although he personally does not favor subsidies, companies 
 
BEIRUT 00000861  002 OF 002 
 
 
cannot sustain the losses, he argued, adding that petroleum 
companies will not deliver gas to stations until Safadi responds. 
Abu Hamzeh does not expect an immediate gasoline crisis, noting that 
stations have sufficient quantities for at least one week. 
 
MINISTRY OF ECONOMY AND TRADE SUSPENDS 
SUBSIDY FOR AGRICULTURE EXPORTS FOR ONE YEAR 
-------------------- 
 
¶5. (SBU) The Ministry of Economy and Trade (MOET) suspended the 
Investment Development Authority of Lebanon (IDAL)'s Export Plus 
program for a one year period.  Under that program, in place for the 
last seven years, the transport of certain agricultural goods was 
subsidized based on quantity and export destination.  The MOET 
stated that subsidies are no longer needed following the worldwide 
increase in food prices.  An advisor to the Minister of Economy and 
Trade also told us that some farmers were importing goods from 
Syria, where these goods are cheaper due to the relatively low price 
of production, and exporting them from Lebanon, while benefiting 
from Export Plus. 
 
IPR STUDY TOUR PARTICIPANTS TO 
ORGANIZE CONFERENCE IN JULY 
-------------------- 
 
¶6. (SBU) On June 4, Econ staff met with Judges Georges Okais and 
Henry Khoury following their participation in the USPTO/MEPI Study 
Tour held in the U.S. April 14-25, 2008.  The judges expressed their 
great satisfaction with the entire program, in which they were able 
to learn about the US court system, as well as improve their 
knowledge of IPR issues.  However, they commented on their 
perception that Lebanon in general and its laws in particular are 
not well understood in the U.S.  The judges informed us that they 
will be holding a one-day conference at the Beirut Bar Association 
on July 2, focusing on the importance of enforcing IPR from a legal 
and economic perspective, to be attended by around 200 judges and 
lawyers.  Embassy staff will attend. 
 
LEBANESE PRESIDENT CALLS FOR CREDIT FACILITIES 
FOR AGRICULTURE AND REGIONAL DEVELOPMENT 
-------------------- 
 
¶7. (U) In a meeting with a delegation from the Association of Banks 
in Lebanon (ABL) on June 2, President Michel Sleiman called on banks 
to provide credit facilities to help the agriculture sector and 
develop under-privileged regions.  Sleiman stressed the need for 
full cooperation between the state and the ABL on reform issues, and 
thanked the ABL for its financial contribution to the Lebanese Army 
during the conflict in Nahr el-Barid in 2007. 
 
GREENPEACE ORGANIZES PROTEST 
TO INCREASE ENVIRONMENTAL AWARENESS 
-------------------- 
 
¶8. (U) On the occasion of World Environment Day on June 5, members 
of Greenpeace in Lebanon organized a peaceful protest in front of 
Sidon's seaside landfill, calling for the establishment of marine 
reserves, closing all coastal dumps, and raising awareness to save 
the Mediterranean Sea from further environmental damage. 
 
QATAR DONATES $7.5 MILLION 
FOR RECONSTRUCTION IN SOUTH LEBANON 
-------------------- 
 
¶9. (U) On May 4, the local press reported that the Qatar Authority 
for Charitable Activities donated $7.5 million for the rebuilding of 
Bint Jbeil in South Lebanon.  Qatar has reportedly funded the 
reconstruction of almost half the houses that were destroyed in 
South Lebanon during the 2006 July war. 
 
SISON