VZCZCXRO0198
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV RUEHSR
DE RUEHLB #1686/01 3311153
ZNR UUUUU ZZH
R 261153Z NOV 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 3669
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 001686 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID BEVER/LAUDATO/SCOTT 
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:  FRANCE LOOSENS CONDITIONALITY ON SECOND TRANCHE 
OF BUDGET SUPPORT (ECONOMIC WEEK IN REVIEW, NOVEMBER 17 - 23, 2008) 
 
CONTENTS 
-------- 
 
-- FRANCE LOOSENS CONDITIONALITY ON SECOND TRANCHE OF BUDGETARY 
SUPPORT LOAN 
-- EPCA II: IMF APPROVES $37.6 MILLION LOAN FOR LEBANON 
-- FINANCE MINISTER SAYS TELECOM PRIVATIZATION NOT DELAYED; TRA 
WORRIED ABOUT FATE OF PRIVATIZATION 
-- STATE PROSECUTOR: NOT ENOUGH IPR CASES TO JUSTIFY SPECIALIZED 
COURTS 
-- NEW DECREE IMPROVES PHARMACEUTICAL REGISTRATION 
-- CONSUMER PROTECTION DIRECTORATE HIRES 100 NEW CONTROLLERS 
-- TEACHERS HOLD SIT-IN DEMANDING HIGHER PAY 
-- LEBANON FALLS IN EASE OF PAYING TAXES INDEX 
 
 
FRANCE LOOSENS CONDITIONALITY ON 
SECOND TRANCHE OF BUDGETARY SUPPORT LOAN 
------------- 
 
¶1. (SBU) On November 20, during French PM Frangois Fillon's visit to 
Beirut, France and Lebanon signed an amendment to the Paris III 
conditions for disbursement of French budgetary support.  Lebanon 
has already received a 150 million euro loan for budgetary support 
under Paris III.  The amendment stipulates that France will now 
disburse a second tranche of 125 million euros, previously 
conditioned on the complete privatization of mobile telecom 
companies, upon the issuance of tender documents for the 
privatization. 
 
EPCA II: IMF APPROVES 
$37.6 MILLION LOAN FOR LEBANON 
---------- 
 
¶2. (U) On November 19, the IMF Board approved a $37.6 million loan 
to the GOL under a new Emergency Post Conflict Assistance (EPCA II) 
program to encourage the implementation of Lebanon's reform program. 
Lebanon received a $76.7 million loan under its first EPCA in 2007. 
 
 
FINANCE MINISTER SAYS TELECOM PRIVATIZATION 
NOT DELAYED; TRA WORRIED ABOUT FATE OF PRIVATIZATION 
-------------------- 
 
¶3. (U) Local press reported November 18 on Finance Minister Mohammad 
Chatah's repudiation of reports that Prime Minister Siniora had told 
cabinet ministers that telecom privatization would not occur for two 
years.  Although the cabinet decided the GOL should sign a one-year 
management contract, renewable for a second year, for Lebanon's 
cellular companies, Chatah said the contract will be revocable if 
privatization goes through.  He stressed that the timing of 
privatization will depend primarily on the global economy and market 
conditions. 
 
¶4. (SBU) However, Telecom Regulatory Authority (TRA) Commissioner 
Dr. Imad Hoballah told us November 17 the cabinet's decision to 
award the one-year renewable management contract was a "big blow to 
mobile privatization," akin to putting privatization "on the shelf." 
 TRA will ask Telecom Minister Gebran Bassil for clarification of 
the terms of the management contract.  Hoballah also hopes PM 
Siniora himself will explain the press reports about cabinet 
statements regarding privatization. 
 
STATE PROSECUTOR: NOT ENOUGH IPR CASES 
CASES TO JUSTIFY SPECIALIZED COURTS 
-------------------- 
 
¶5. (SBU) On November 17, Econoffs met with the State Prosecutor of 
the Cassation Court, Said Mirza, to discuss ways to better enforce 
intellectual property in Lebanon.  Mirza thanked the USG for sending 
a large number of judges and prosecutors to U.S. Patent and 
Trademark Office IPR trainings.  He said that the small number of 
IPR cases in Lebanon does not justify having judges dedicated solely 
to IPR cases, nor having specialized IPR courts, although he said 
some judges should be specialized in IPR.  Mirza also said that in 
order to increase IPR awareness among judges, instruction on IPR at 
the Justice Institute could be widened and made mandatory throughout 
the three-year training each judge and prosecutor must complete. 
 
 
BEIRUT 00001686  002 OF 002 
 
 
NEW DECREE TO IMPROVE 
PHARMACEUTICAL REGISTRATION PROCESS 
---------- 
 
¶6. (SBU) On November 17, Econoffs met the Director General of the 
Ministry of Public Health (MOPH), Dr. Walid Ammar, for an overview 
of existing medical services provided by the MOPH, as well as to 
discuss allegations of registration of copycat drugs by the 
ministry.  Ammar admitted Minister Mohammad Khalifeh (an ally of 
Parliament Speaker Berri) sometimes moved certain registration 
applications to the front of the line based on political connections 
or the political affiliation of the importer.  Nonetheless, Ammar 
said the process of drug registration will be improved with newly 
signed Decree No. 571, which contains requirements on the treatment 
of undisclosed information in a registration application.  Though 
the decree leaves some room for interpretation of what is or is not 
undisclosed data, it theoretically would stop drugs with incomplete 
data, i.e., copycat drugs relying on publicly available data to file 
their applications. 
 
¶7. (SBU) Ammar complained that pharmaceutical companies force 
Lebanon to purchase drugs from more expensive manufacturers in the 
EU rather than from the U.S. or other less expensive producing 
countries, based on a system of zoning.  This has forced the MOPH to 
allow parallel imports to lower costs, Ammar said. 
 
CONSUMER PROTECTION DIRECTORATE 
HIRES 100 NEW CONTROLLERS 
-------------------- 
 
¶8. (U) On November 14, Byblos Bank Weekly Review reported the 
cabinet's approval of the expansion of the Consumer Protection 
Directorate (CPD) at the Ministry of Economy and Trade (MOET) by 
hiring 100 new controllers, joining the 40 already in the unit.  CPD 
controllers are also sometimes used by the IPR Unit at the MOET to 
investigate IPR violations. 
 
TEACHERS HOLD SIT-IN 
DEMANDING HIGHER PAY 
-------------------- 
 
¶9. (U) Teachers at private and public schools and the Lebanese 
University held a one-day strike on November 18 demanding increased 
wages, transportation allowances, a revision of the salary scale, 
and better reimbursement for medical services.  Approximately 
100,000 teachers attended the sit-in in front of Parliament, while 
representatives of the teachers syndicate met with Minister of 
Education Bahia Hariri to present their demands. 
 
LEBANON FALLS IN EASE 
OF PAYING TAXES INDEX 
-------------------- 
 
¶10. (U) According to the PricewaterhouseCoopers/World Bank 2009 
Index of Paying Taxes, Lebanon ranked 45 out of 181 countries 
worldwide and ten out of 19 MENA countries in terms of ease of 
paying taxes.  This constitutes a considerable drop from the 2008 
survey, where Lebanon ranked 33 worldwide, and seven among MENA 
countries.  The 2009 index showed that the corporate tax rate for a 
standard Lebanese business represents 12 percent of its commercial 
profits, while labor tax rate represents 24.1 percent of a 
business's profits. 
 
SISON