VZCZCXRO7501
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV RUEHSR
DE RUEHLB #0249/01 0620712
ZNR UUUUU ZZH
R 030712Z MAR 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 4341
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 03 BEIRUT 000249 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID BEVER/LAUDATO/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/CORREA 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON:  POSITIVE ATMOSPHERE AT WTO WORKING PARTY, BUT 
TOUGH QUESTIONS TO COME (ECONOMIC WEEK IN REVIEW, FEBRUARY 23 - 
MARCH 1, 2009) 
 
CONTENTS 
-------- 
 
-- POSITIVE ATMOSPHERE AT WTO WORKING PARTY, BUT TOUGH QUESTIONS TO 
COME 
-- LEBANON SIGNS MOU ON TRANSBOUNDARY WATER WITH ITALY... 
-- ... AND AN ELECTRICITY AGREEMENT WITH EGYPT 
-- PIRACY RELATED LOSSES REACH 31 MILLION IN 2008 
-- HIZBALLAH DELIVERS 200 HOUSING UNITS IN BEIRUT'S SOUTHERN 
SUBURBS 
-- INDUSTRY MINISTER VISITS IRAN TO DISCUSS ECONOMIC TIES 
-- PUBLIC DEBT REACHES $47 BILLION IN 2008 
-- INTEL PLANNING TO ESTABLISH IT RESEARCH CENTER IN BEIRUT 
 
 
POSITIVE ATMOSPHERE AT WTO WORKING PARTY 
BUT TOUGH QUESTIONS TO COME 
-------------------- 
 
¶1. (SBU) On March 1, Zouha Sakr, head of the MEPI-funded WTO 
accession project at the Ministry of Economy and Trade (MOET), told 
EconOff Lebanon's February 27 working party meeting in Geneva had 
gone reasonably well, considering Lebanon had little new information 
to report.  She described the comments from the EU representative at 
the meeting as "surprisingly positive," though she assessed that all 
the working party participants were merely trying to put a positive 
spin on what little Lebanon had accomplished.  She expected the MOET 
would receive a large number of difficult questions as follow-up to 
the meeting, and described Lebanon's bilateral negotiations last 
week as "tough." 
 
¶2. (SBU) On February 26, Michael Miller, head of the Economic and 
Political Department at the EU Commission Delegation in Beirut, 
expressed frustration at the lack of reform undertaken by the 
Lebanese authorities in general and on trade in particular.  He said 
EU External Relations Commissioner Benita Ferrero-Waldner had spoken 
bluntly to the Lebanese leadership about European disappointment 
during her February 17 visit to Beirut.  Miller expected little 
progress at the working party, and said he expected EU officials to 
be tough with Lebanon in bilateral discussions. 
 
¶3. (SBU) On a more positive note, on February 24, Fouad Fleifel, 
Acting Director General at the MOET, told EconOff and visiting 
Foreign Agricultural Service Attach Julio Maldonado that Minister 
of Economy and Trade Mohammad Safadi had been active in pushing for 
passage of WTO-related legislation, and hoped to see laws on 
international trade, intellectual property rights, and food safety 
pass in the March parliamentary session.  Ali Hamdan, advisor to 
Parliament Speaker Berri, confirmed to EconOff on February 27 that 
the laws were on the parliamentary agenda. 
 
LEBANON SIGNS MOU ON TRANSBOUNDARY 
WATER WITH ITALY... 
---------------------- 
 
¶4. (U) On February 24, Minister of Energy and Water Alain Tabourian 
and Italian Ambassador Gabriel Checchia signed a Memorandum of 
Understanding (MOU) to install measurement devices to monitor 
transboundary water courses of the Wazzani, Hasbani, and Orontes 
rivers, as well as to train technical staff at the ministry on using 
this equipment.  This MOU aims to help Lebanon better manage its 
transboundary water resources given climate change in the 
Mediterranean region, Tabourian said publicly. 
 
¶5. (SBU) Meanwhile, Tabourian said the problem of water shortage can 
only be solved by implementing the 2000-2009 plan for dams.  To 
date, only one dam, the Shabrouh dam (in Kesrwan), has been built, 
due to lack of funding.  Tabourian requested an additional $30 
million over the $50 million already included in the 2009 budget law 
draft in order to complete dam construction in 2009, Ministry of 
Energy and Water (MEW) director general Fadi Comair told us. 
 
... AND AN ELECTRICITY 
AGREEMENT WITH EGYPT 
-------------------- 
 
¶6. (SBU) On February 21, Minister of Energy and Water Alain 
Tabourian and Egyptian counterpart Hassan Younis signed an agreement 
 
BEIRUT 00000249  002 OF 003 
 
 
whereby Egypt will sell Lebanon between 150 and 450 megawatts of 
electricity through the power grid passing through Jordan and Syria 
starting next month.  This will enable national power utility 
Electricite du Liban (EDL) to supply all Lebanese regions with an 
additional two hours of electricity daily, Tabourian announced. 
Most areas in Lebanon, except the capital Beirut, currently suffer 
from eight to 12 hours of power cuts daily.  Tabourian's senior 
advisor Ibrahim Menassah declined to provide details about the price 
Egypt will charge Lebanon, but said, "The deal was the best 
available."  Given Lebanon's desperate electricity needs, EDL 
Chairman Kamal Hayek told us that he was "satisfied" with the deal. 
Since mid-2008, Tabourian and Hayek have been trying to get Egypt to 
sell Lebanon electricity at a "reasonable" price, i.e. closer to the 
subsidized rates Egypt provides domestically and to other countries 
in the region. 
 
PIRACY RELATED LOSSES 
REACH $31 MILLION IN 2008 
-------------------- 
 
¶7. (U) According to the International Intellectual Property Alliance 
(IIPA), piracy-related losses in Lebanese copyright-based industries 
reached $31 million in 2008, up from $26.8 million in 2007.  Total 
losses in 2008 accounted for 4.6% of total losses in the MENA 
region.  Although the IIPA recognized Lebanon's efforts to improve 
copyright protection, particularly relating to illegal cable 
providers, copyright infringements remained a "significant hurdle" 
to doing business for record companies, motion picture firms, and 
other copyright-based industries.  Meanwhile, on February 24, the 
Internal Security Forces' (ISF- police) Cyber Crime and IP Bureau 
destroyed 100,000 pirated CDs/DVDs confiscated across Lebanon. 
 
 
HIZBALLAH DELIVERS 200 HOUSING UNITS 
IN BEIRUT'S SOUTHERN SUBURBS 
-------------------- 
 
¶8. (SBU) On February 26, Hizballah's Wa'ad ("promise") institution 
turned over eleven rebuilt residential buildings, comprising 200 
apartments, to their owners in Beirut's southern suburbs (the 
Hizballah stronghold of Dahieh), Abbas Sabbagh, journalist for 
moderate anti-Syrian An-Nahar told us.  Wa'ad, which Hizballah 
established in May 2007 to rebuild residences in Dahieh following 
the July 2006 war and which is on Treasury's list of organizations 
supporting Hizballah, is supposed to complete the project by June 
2009, said Sabbagh, who has close contacts in Hizballah, but he 
believes that only 70 percent of the work will be completed by then. 
 Wa'ad had previously handed over ten residential buildings to their 
owners, eight in Dahieh and two in Tyre, he said.  Hizballah's Al 
Manar television commented on February 25 that this "proves the 
ability of the resistance to score victory through construction 
regardless of the obstacles or the challenges." 
 
INDUSTRY MINISTER VISITS IRAN 
TO DISCUSS ECONOMIC TIES 
-------------------- 
 
¶9. (SBU) On February 25, Minister of Industry Ghazi Zoayter returned 
from a four-day official visit to Tehran following an invitation 
from Iranian counterpart Ali-Akbar Mehrabian to promote bilateral 
economic and industrial ties.  Zoayter, a member of the opposition 
Amal party, was accompanied by a delegation of senior staff from the 
ministry, the presidents of the Tripoli, Sidon, and Zahle Chambers 
of Commerce, Industry and Agriculture, and other businessmen. 
Zoayter publicly said the joint Lebanese-Iranian economic committee 
will meet in March in Beirut to revive previous agreements and sign 
new ones.  President of the Sidon Chamber of Commerce, Industry and 
Agriculture Mohammad Zaatari told us talks were general in nature, 
and no specific projects were discussed.  The purpose of the visit 
was to lay the groundwork for Lebanese and Iranian businessmen to 
cooperate on future economic projects, he said. 
 
PUBLIC DEBT REACHES 
47 BILLION IN 2008 
-------------------- 
 
¶10. (U) According to the Ministry of Finance (MOF), gross public 
debt reached $47 billion at end-December 2008, or an 11.9% increase 
 
BEIRUT 00000249  003 OF 003 
 
 
from end-December 2007.  As a percentage of GDP, public debt stood 
at 164%, down from 175% in 2007.  Foreign debt decreased slightly by 
0.4%, to $21.140 billion, while domestic debt increased by 24.3 
percent, reaching $25.875 billion in 2008. 
 
INTEL PLANNING TO ESTABLISH 
IT RESEARCH CENTER IN BEIRUT 
-------------------- 
 
¶11. (SBU) On February 26, Intel Regional Manager Toufic Arabi and 
Country Manager Alexandre Loucas told EconOff that they are 
preparing for the March 10 launch of their pilot project with the 
Ministry of Education to give 560 laptops to nine schools across 
Lebanon.  Meanwhile, Intel is also working on setting up an IT 
research center in Beirut, to be based at the American University in 
Beirut (AUB) in collaboration with the Lebanese University (LU), 
which would be part of a network linking Egypt's Nile University IT 
research center and Saudi Arabia's King Abdullah University of 
Science and Technology (KAUST).  Intel's chief technology officer 
Justin Rattiner is expected to visit Beirut in the second half of 
April for this project. 
 
GRANT