VZCZCXRO3940
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #1415/01 2731341
ZNR UUUUU ZZH
R 291341Z SEP 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 3183
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 001415 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR 
TREASURY FOR MNUGENT AND SBLEIWEISS 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: ENERGY MINISTER NOT EAGER FOR PRIVATIZATION, 
PERCEPTIONS OF CORRUPTION RISING (ECONOMIC WEEK IN REVIEW, SEPTEMBER 
22 - 28, 2008) 
 
CONTENTS 
-------- 
 
-- ENERGY MINISTER NOT EAGER FOR PRIVATIZATION, WORKING ON NEW 
TARIFF STRUCTURE 
-- LEBANON FALLS IN 2008 CORRUPTION PERCEPTION INDEX 
-- NATIONAL COMPAIGN FOR ENVIRONMENTAL PROTECTION LAUNCHED 
-- MOBILE PENETRATION RATE REACHES 33.1 PERCENT IN FIRST HALF 
OF 2008 
-- SAUDI ARABIA GIVES $44 MILLION TO SUPPORT PUBLIC SCHOOLS 
-- PUBLIC WORKS MINISTER ANNOUNCES TRANSPORT PROJECTS IN 
LEBANON-SYRIA BORDER REGION 
-- ITALY GIVES 5 MILLION EURO GRANT FOR NAHR EL BARID 
RECONSTRUCTION 
 
ENERGY MINISTER NOT EAGER FOR PRIVATIZATION 
WORKING ON NEW TARIFF STRUCTURE 
-------------------- 
 
¶1. (U) At a two-day workshop on electricity in parliament on 
September 15-16, Minister of Energy and Water Tabourian said that 
the best option to solve electricity problems would be continuing 
state ownership of the power sector, which is of "strategic 
importance," and corporatization of national utility Electricite du 
Liban (EDL), pushing it to operate as a private sector company. 
Tabourian does not want to include the private sector in current 
electricity reforms because he believes private companies will 
insist on earning huge profits when selling electricity to EDL. 
 
¶2. (SBU) In a September 26 meeting with AID Director and EconOff, 
Tabourian explained his progress on developing a new tariff 
structure, which would reduce GOL subsidies and rationalize 
consumption by charging higher rates to the biggest consumers of 
electricity.  While he had run into a few technical issues, he said, 
he would have a plan soon, and was working on building the political 
consensus to push the plan though.  Finance Minister Chatah told the 
Embassy he expects the new tariff structure to save the government 
more than $250 million a year. 
 
LEBANON FALLS IN 2008 
CORRUPTION PERCEPTION INDEX 
-------------------- 
 
¶3. (U) On September 23, the Lebanese Transparency Association (LTA) 
held a press conference, simultaneously with Transparency 
International's Headquarters in Berlin, to announce the results of 
the 2008 Corruption Perception Index (CPI).  According to the 
survey, Lebanon ranked 102 out of 180 countries, down from 99 in 
2007, and 11 out of 20 MENA countries, in terms of perception of 
corruption.  The index measures the perception of corruption 
estimated by public officials and politicians, and focuses on 
corruption in the public sector, defined as an abuse of official 
power for private interests. 
 
¶4. (SBU) LTA's co-executive director Khalil Gebara told us on 
September 25 that he has not received any feedback from the media or 
private and public sector following the announcement.  Gebara 
believed this was because the public was not surprised and expected 
such results, adding that people were disappointed nothing is being 
done to combat corruption. 
 
NATIONAL COMPAIGN FOR ENVIRONMENTAL 
PROTECTION LAUNCHED 
-------------------- 
 
¶5. (U) On September 22, Minister of Environment Antoine Karam, in 
collaboration with the UN Development Program (UNDP), launched the 
National Campaign for Environmental Protection to raise awareness on 
environmental issues.  The campaign will feature a series of 
billboard and television advertisements starring the current Miss 
Lebanon, highlighting ecological damage in the country and costs of 
environmental degradation.  UNDP resident representative Marta 
Ruedas announced that the Ministry of Environment, as the designated 
National Authority for the Clean Development Mechanism of the Kyoto 
Protocol, has granted UNDP permission to proceed with the Millennium 
Development Goals (MDGs) Carbon Facility, a mechanism for the 
development and commercialization of emission reduction projects. 
 
 
 
BEIRUT 00001415  002 OF 002 
 
 
MOBILE PENETRATION RATE REACHES 
33.1 PERCENT IN FIRST HALF OF 2008 
-------------------- 
 
¶6. (U) According to the Arab Advisors Group, Lebanon's two 
state-owned mobile operators added 81,266 new subscribers to their 
services in the first half of 2008, or a 6.7 percent increase from 
the end of 2007.  By the first half of 2008, the mobile penetration 
rate reached an estimated 33.1 percent.  This compares with an 86.6 
percent penetration rate in Jordan and 79 percent in Tunisia in the 
first half of 2008.  Because of high prices and poor service, the 
Lebanese mobile market is still below its true potential, the study 
noted, and stressed that liberalization should strongly enhance the 
market's growth and encourage competition. 
 
SAUDI ARABIA GIVES $44 MILLION 
TO SUPPORT PUBLIC SCHOOLS 
-------------------- 
 
¶7. (U) During a meeting with PM Siniora on September 20, Saudi 
Ambassador Khoja announced that Saudi Arabia would give Lebanon a 
$44 million grant to support public school students in Lebanon.  Out 
of the grant, $20 million would be allocated to cover tuition fees, 
$20 million for books for public school students from kindergarten 
through grade nine for the 2008-2009 academic year, and $4 million 
for the National Council for Supporting Public Schools.  Siniora 
noted that during each of the two previous academic years, Saudi 
Arabia had given Lebanon a $20 million grant for public school 
students. 
 
PUBLIC WORKS MINISTER ANNOUNCES TRANSPORT 
PROJECTS IN LEBANON-SYRIA BORDER REGION 
-------------------- 
 
¶8. (U) Press reported that Minister of Public Works and Transport 
Ghazi Aridi visited the northern areas of Akkar and Abboudieh near 
the Syrian border on September 25, where he discussed the 
rehabilitation of the Abboudieh road and of a train track linking 
Tripoli to the Syrian border.  These projects would allow easier 
access for Lebanese goods to Syria and Arab markets more generally. 
Aridi said that Lebanon had signed a contract with a Syrian company 
for the track rehabilitation, and that there were discussions with 
the Kuwaiti Fund to provide the $33 million in financing necessary 
to complete the projects. 
 
ITALY GIVES 5 MILLION EURO GRANT 
FOR NAHR EL BARID RECONSTRUCTION 
-------------------- 
 
¶9. (U) On September 23, President of the Council for Development and 
Reconstruction (CDR) Nabil Jisr signed an agreement with Italy for a 
five million Euro grant for the recovery and reconstruction of the 
Nahr el Barid camp and its surrounding areas.  According to the 
Italian Embassy in Beirut, this grant, pledged at the Vienna 
Conference in June, comes in addition to Italy's contribution 
already channeled through UNRWA and UNDP. 
 
GRANT