VZCZCXRO7865
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #1105/01 2101729
ZNR UUUUU ZZH
R 281729Z JUL 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 2596
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 001105 
 
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: TELECOM MININSTER SUPPORTS PRIVATIZATION, BROADBAND 
CONNECTIVITY; (ECONOMIC WEEK IN REVIEW, JULY 21 - 27, 2008) 
 
REF: BEIRUT 1086 
 
CONTENTS 
-------- 
 
-- TELECOM MINISTER SUPPORTS PRIVATIZATION, BROADBAND CONNECTIVITY 
AMONG HIS TOP PRIORITIES 
-- NATURAL GAS TO LEBANON COULD BE RAISED DURING THE PRESIDENT'S 
UPCOMING VISIT TO SYRIA 
-- SLEIMAN'S TRIP TO SYRIA WILL BE ESSENTIALLY DIPLOMATIC 
-- BOOZ ALLEN HAMILTON DELEGATION IN LEBANON TO FOLLOW UP ON WTO 
ACCESSION PROJECT 
-- IMF AWAITING GOL ON HOW TO PROCEED FOLLOWING THE END OF THE 
EMERGENCY POST-CONFLICT ASSISTANCE 
-- CONSUMER PRICE INDEX UP BY 4.47 PERCENT IN SECOND QUARTER 2008 
-- ASSETS OF LEBANESE RESIDENTS AND NON-RESIDENTS ESTIMATED AROUND 
$300 BILLION 
-- EIGHT LEBANESE BANKS AMONG TOP 1000 BANKS WORLDWIDE 
 
TELECOM MINISTER SUPPORTS PRIVATIZATION, 
BROADBAND CONNECTIVITY AMONG HIS TOP PRIORITIES 
-------------------- 
 
¶1. (SBU) During a meeting on July 24 between CDA Grant and Embassy 
Officers and Minister of Post and Telecommunications Gebran Bassil, 
the Minister indicated that he is a strong advocate of 
privatization, although he recognizes that it will not be easy. 
Meanwhile, Bassil noted that introducing broadband connectivity 
would be one of his top priorities, and plans to start a pilot 
project in a remote area in Lebanon.  Bassil also noted that he will 
get approval from PM Siniora and President Sleiman to unblock the 
West Bank and Gaza 970 area code, allowing Lebanese residents to 
make calls to that area (reftel). 
 
NATURAL GAS TO LEBANON COULD BE RAISED DURING THE PRESIDENT'S 
UPCOMING VISIT TO SYRIA 
-------------------- 
 
¶2. (SBU) Dr. Raymond Ghajar, Advisor at the Ministry of Energy and 
Water (MEW), told us July 24 that he will ask new MEW Minister Alain 
Tabourian to raise the issue of Syrian natural gas with President 
Sleiman and ask that it be added to Sleiman's agenda to be discussed 
during his forthcoming visit to Syria.  Syria will swap Lebanon's 
share of Egyptian natural gas with Syrian gas.  Egypt has started 
pumping natural gas to Syria, and Lebanon awaits its share.  The 
Treasury could save around $200 million annually if northern 
Lebanon's Beddaoui power plant starts operating on natural gas, 
Ghajar remarked. 
 
¶3. (SBU) Ghajar said that he will not recommend raising the MOU 
signed in the mid-nineties between Lebanon and Syria, whereby Syria 
would supply Lebanon with natural gas at much cheaper prices than 
today's rates.  He does not believe this MOU is valid as Syria has 
repeatedly said it does not have sufficient quantities of gas for 
exports.  Syria is currently supplying Lebanon with about 60 MGW of 
power during the night, which Ghajar deemed to be "fine, since Syria 
also suffers from power shortage," he remarked. 
 
SLEIMAN'S TRIP TO SYRIA WILL BE ESSENTIALLY DIPLOMATIC 
---------- 
 
¶4. (SBU) Head of the Directorate General of Economic Affairs at the 
Presidential Palace Dr. Elie Assaf told us July 25 that President 
Sleiman's visit to Syria will "essentially be diplomatic."  Assaf 
does not expect economic issues to be raised during this trip, as he 
would have been tasked to prepare for the talks.  In the meantime, 
Assaf is compiling files regarding the Brotherhood and Coordination 
Treaty and subsequent agreements.  Assaf said it is not clear yet 
when the President's visit will take place. 
 
BOOZ ALLEN HAMILTON DELEGATION IN LEBANON 
TO FOLLOW UP ON WTO ACCESSION PROJECT 
-------------------- 
 
¶5. (SBU) On July 22, a delegation from Booz Allen Hamilton (BAH) met 
with Minister of Economy and Trade Mohammad Safadi as well as 
Embassy Officers to discuss progress of the BAH/WTO Accession 
project, based at the Ministry of Economy and Trade (MOET) and 
currently funded by MEPI.  In the coming months, BAH will be working 
on preparing a study on the impact of WTO accession in Lebanon and a 
 
BEIRUT 00001105  002 OF 002 
 
 
communication strategy to increase public awareness and highlight 
the benefits of accession.  During the meeting at the MOET, Minister 
Safadi expressed his personal belief that Lebanon must join the WTO, 
although he admitted that accession "would not be easy." 
 
IMF AWAITING GOL ON HOW TO PROCEED FOLLOWING THE END OF THE 
EMERGENCY POST-CONFLICT ASSISTANCE 
-------------------- 
 
¶6. (SBU) IMF Resident Representative Ed Gardner told us on July 24 
that the IMF "is waiting for the new government to approach the IMF" 
regarding future developments following the expiration of the 
Emergency Post-Conflict Assistance (EPCA) program at the end of 
¶2007.  The new government has to decide if it wants a new EPCA 
program or just a review of macroeconomic, fiscal, and monetary 
indicators, he said.  An IMF mission was in Beirut last May to 
discuss and negotiate with former Finance Minister Azour and Central 
Bank Governor Salameh on monitorable actions, as well as monetary 
and fiscal targets for 2008, but had to leave following the May 
clashes. 
 
CONSUMER PRICE INDEX UP BY 4.47 
PERCENT IN SECOND QUARTER 2008 
-------------------- 
 
¶7. (U) According to the Consumer Lebanon (CL) association, the 
consumer price index rose by 4.47 percent in the second quarter of 
¶2008.  CL noted that had it not been for the slight decrease in the 
prices of fruits and vegetables during the last two weeks of the 
second quarter, the consumer price index would have risen by more 
than ten percent. 
 
ASSETS OF LEBANESE RESIDENTS AND 
NON-RESIDENTS ESTIMATED AROUND $300 BILLION 
-------------------- 
 
¶8. (U) On July 19, Central Bank of Lebanon (CBL) Governor Riad 
Salameh noted that the assets of Lebanese residents and 
non-residents are estimated at around $300 billion, while the 
balance sheet of Lebanese commercial banks locally and abroad amount 
to $110 billion.  Salameh noted that capitalization of the Beirut 
Stock Exchange (BSE) rose from $13 billion at end-2007 to around $16 
billion at end-May 2008.  Meanwhile, he noted that the prices of 
real estate rose between 30 to 40 percent.  Salameh also stated that 
imported inflation reduced Lebanon's purchasing power by 15 percent 
and that the only way to improve purchasing power and reduce the 
brain drain was through the implementation of structural reforms. 
 
 
EIGHT LEBANESE BANKS AMONG 
TOP 1000 BANKS WORLDWIDE 
-------------------- 
 
¶9. (U) Eight Lebanese banks were included in The Banker magazine's 
2008 annual survey of the world's top 1000 commercial banks.  The 
banks and their respective rankings worldwide are: Bank Audi Saradar 
(336), BLOM Bank (397), Byblos Bank (545), Fransabank (723), Banque 
Libano-Francaise (728), BankMed (765), Bank of Beirut (772), and 
Credit Libanais (957) which was included in the survey for the first 
time.  At the same time, Bank Audi Saradar ranked 25 among Arab 
banks.  The Banker's ranking is based o the latest available 
figures of Tier I capital of banks. 
 
GRANT