VZCZCXRO4182
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHDH RUEHIK RUEHKUK RUEHLZ RUEHROV
RUEHSL RUEHSR
DE RUEHLB #0918/01 2291202
ZNR UUUUU ZZH
R 171202Z AUG 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 5540
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 000918 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/ELA AND EEB/IFD/ODF 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID LAUDATO/NANDY/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/AHERN 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR SHAPIRO/MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: BEXP ECON EFIN EINV ETRD KIPR PGOV LE SOCI
SUBJECT: LEBANON: FINANCE MINISTER SAYS BUDGET TRANSPARENCY IS A TOP 
PRIORITY (ECONOMIC WEEK IN REVIEW, AUGUST 10 - 16, 2009) 
 
REF: A. BEIRUT 899 
 ¶B. STATE 81177 
 
CONTENTS 
-------- 
 
-- FINANCE MINISTRY DEFENDS GOL ON BUDGET TRANSPARENCY 
-- STATISTICAL MASTER PLAN STILL PENDING IN CABINET 
-- SOFTWARE INDUSTRY SAYS JUDICIARY BIGGEST OBSTACLE TO IP 
PROTECTION 
-- SALES OF U.S. CARS DOWN IN FIRST QUARTER 2009, NEW MODELS BETTER 
MEET LOCAL DEMAND 
-- COMMERCIAL SERVICE REPORTS THREE SUCCESS STORIES 
 
FINANCE MINISTRY DEFENDS GOL 
ON BUDGET TRANSPARENCY 
-------------------- 
 
¶1. (SBU) The Ambassador delivered Ref B demarche encouraging central 
government budget transparency to caretaker Finance Minister 
Mohammad Chatah on August 7.  Chatah declared that budget 
transparency was one of his ministry's top priorities, as evidenced 
by its commitment to a $4 million World Bank assistance program to 
improve Lebanon's budget process.  He stressed that the ministry had 
worked hard in recent years to bring more spending into the budget, 
and he looked forward to a new IMF/World Bank assessment of the 
Lebanese budgetary process, which he hoped would show improvement 
from the last report done in 2004. 
 
¶2. (SBU) Meanwhile, Rola Azour, Head of the Economic Unit at the 
Ministry of Finance (MOF), told us in a separate meeting August 12 
that the MOF releases detailed monthly reports on spending and 
revenues on its website in order to make up for the lack of a 
comprehensible budget law.  She argued that in order for the budget 
to become more transparent, a huge change in existing legislation 
would be required, including the 1963 Public Accounting Law and the 
Procurement Law, and added that it would be important to improve the 
ministry's relations with parliament, helping MPs understand the 
budget.  Contradicting his colleague, the head of the UNDP Program 
at the MOF, Chris de Clerq, offered no excuses for the GOL budget 
process, saying it is not acceptable for Lebanon  to "patch over 
problems" with the budget.  He declared that the GOL could make 
rapid progress on budget reform if there were the political will to 
do so. 
 
STATISTICAL MASTER PLAN 
STILL PENDING IN CABINET 
-------------------- 
 
¶3. (SBU) On August 13, the director of the Central Administration of 
Statistics (CAS), Dr. Maral Totalian, told EconOff and Econ staff 
that the Statistical Master Plan (SMP), a five-year plan for CAS, 
designed with the assistance of the World Bank, is still pending 
cabinet approval.  Totalian worries that the plan, which aims at 
giving CAS greater administrative flexibility and widening and 
institutionalizing its role as the GOL's central body for 
statistics, will become outdated by the time it is adopted.  CAS 
reports directly to the PM office, and although caretaker PM Siniora 
has repeatedly expressed support for CAS, Totalian does not 
understand why the SMP has not received the political backing it 
needs to pass in cabinet. 
 
¶4. (SBU) CAS conducts a variety of surveys, including on buildings 
and dwellings, household living conditions, and a monthly consumer 
price index, and is awaiting the PM's approval to begin surveys on 
foreign direct investment and Lebanon's labor force.  Bureaucratic 
obstacles have prevented its taking on a more central role in 
producing Lebanon's statistics, and many contacts believe political 
interests, who fear the numbers an independent CAS might produce, 
keep those obstacles in place.  Totalian welcomed the idea of 
receiving technical assistance from the U.S. Census Bureau and U.S. 
Bureau of Labor Statistics to improve the quality of CAS's work. 
 
 
SOFTWARE INDUSTRY SAYS JUDICIARY 
BIGGEST OBSTACLE TO IP PROTECTION 
-------------------- 
 
¶5. (SBU) In a meeting on August 14, prominent intellectual property 
 
BEIRUT 00000918  002 OF 002 
 
 
(IP) lawyer Walid Nasser, Microsoft Country Manager Leila Serhan, 
and Business Software Alliance (BSA) representative in Lebanon Aly 
Harakeh expressed concern over proposed amendments to Lebanon's 
copyright law, which is still pending in parliament.  Nasser said 
that some of the amendments relating to peer-to-peer exchange and 
copies of computer programs in educational institutions weakened 
copyright protection for the software industry.  EconOff noted that 
Nasser's critiques of the law echoed comments from USTR sent to 
post.  Ultimately, added Nasser, the judiciary -- with its late 
court decisions, mild penalties for infringers, and lack of 
awareness of the importance of IP -- remains the main obstacle to 
better IP protection.  Harakeh noted that USG programs for judges 
have had a positive impact, but much more is needed to better 
protect right holders. 
 
SALES OF U.S. CARS DOWN IN FIRST QUARTER 2009, 
NEW MODELS BETTER MEET LOCAL DEMAND 
-------------------- 
 
¶6. (SBU) According to the two biggest authorized dealers of American 
cars in Lebanon, T.Gargour & Fils (for Chrysler, Jeep, and Dodge) 
and Impex Trading (Cadillac, Chevrolet, and Hummer), sales of U.S. 
cars have decreased 15-20% in the first half of 2009.  The drop in 
sales was attributed to GM's filing for Chapter 11 bankruptcy in the 
United States in June 2008.  According to the Lebanese dealers, 
customers were initially worried about after sale-service and the 
potential closure of U.S. firms, however, sales have slowly picked 
up in recent months. 
 
¶7. (SBU) Both dealers believed U.S. automakers' restructuring 
efforts and new product focus on leaner, fuel-efficient cars should 
better meet the demands of the Lebanese market, where smaller, more 
stylish, and more economical cars are popular. The dealers admitted 
that the image of American cars as large, gas-guzzling and of low 
resale value had hurt sales in recent years, but they said Dodge and 
Chevrolet's new lines of more economical cars have been very popular 
in the Lebanese market.  Currently, the market share of American 
cars is 7%, compared to 26% for European cars. 
 
U.S. COMMERCIAL SERVICE REPORTS 
THREE SUCCESS STORIES 
-------------------- 
 
¶8. (U) Post's Commercial Service (CS) reported three success stories 
for the period between February-June 2009. In February, CS connected 
U.S. apparel firm Bejeweled to a major Lebanese clothing importer 
resulting in new signed contracts worth over $30,000.  During the 
same period, CS efforts facilitated the signing of an agreement 
between General Electric (GE) and Lebanese firm Consulting & 
Solution Provides (CSP), which will allow GE to increase its market 
share in Lebanon's safety and security sector.  In June, and as 
result of CS's advocacy efforts, the cabinet issued a decree 
allowing Motorola to register its office in Lebanon, removing it 
from Lebanon's Arab League boycott list. 
 
SISON