VZCZCXRO7623
RR RUEHBC RUEHDH RUEHKUK RUEHROV
DE RUEHLB #0075/01 0260443
ZNR UUUUU ZZH
R 260443Z JAN 10
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 6408
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 000075 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ECIN EFIN PGOV LE
SUBJECT: LEBANESE DISCUSS ENTREPRENEURSHIP AT AMBASSADOR'S 
ROUNDTABLE (ECONOMIC WEEK IN REVIEW, DECEMBER 28 2009 - JANUARY 24, 
2010) 
 
CONTENTS 
-------- 
 
-- LEBANESE DISCUSS ENTREPRENEURSHIP AT AMBASSADOR'S ROUNDTABLE 
-- TRIPOLI BUSINESS INCUBATOR EXPANDING ACTIVITY 
-- HARIRI SIGNS TOURISM, ECONOMIC AGREEMENTS WITH TURKEY 
-- PM'S ECONOMIC ADVISOR UPBEAT ABOUT 2010 PROSPECTS 
-- LEBANON IMPROVES IN 2010 ECONOMIC FREEDOM INDEX 
-- LEBANON AND CHINA SIGN GRANT AGREEMENTS WORTH $6.6 MILLION 
-- IT SECTOR EXPECTED TO REACH OVER $270 MILLION IN 2010 
-- TELECOMS MINISTRY TRANSFERS OVER ONE BILLION DOLLARS TO TREASURY 
 
LEBANESE DISCUSS ENTREPRENEURSHIP 
AT AMBASSADOR'S ROUNDTABLE 
--------------------------------- 
 
¶1. (SBU) Ambassador Sison held a roundtable discussion January 14 on 
ways to encourage the culture of entrepreneurship in Lebanon with 19 
leaders from the private sector and civil society.  In a lively 
discussion, participants noted the need for political and security 
stability; greater publicity for successful Lebanese entrepreneurs; 
instilling entrepreneurial values via the educational system; and 
encouraging accountability, transparency, and tax incentives for 
start-ups.  Out of the 19 participants, seven will participate in 
the Presidential Entrepreneurship Summit hosted by President Obama 
in Washington, DC, in April 2010. 
 
TRIPOLI BUSINESS INCUBATOR 
EXPANDING ACTIVITY WITH EU GRANTS 
--------------------------------- 
 
¶2. (SBU) The director of the Business Incubator at Tripoli (BIAT), 
Fawaz Hamidi, told us he is expecting a grant of about 800,000 euros 
from the EU to support BIAT's projects to support entrepreneurship. 
With these funds, he hopes to open an industrial space and an 
innovation center at the Tripoli Chamber of Commerce, Industry and 
Agriculture.  BIAT also wants to provide space for small 
manufacturing facilities in the food and pharmaceutical cosmetics 
sectors.  BIAT has already used a 700,000-euro EU grant to encourage 
start-ups. 
 
¶3. (SBU) Hamidi also said the president of the union of three 
municipalities in northern Lebanon (Tripoli, Mina, and Baddawi) and 
the Mayor of Tripoli are working with the World Bank on a city 
development strategy (CDS), which he expected would be completed 
within five months.  Hamidi, who is the economic expert on this 
project, told us the Tripoli Special Economic Zone (a project for 
which USAID is funding a feasibility study) could be one strategic 
project under the CDS. 
 
HARIRI SIGNS TOURISM, ECONOMIC 
AGREEMENTS WITH TURKEY 
------------------------------ 
 
¶4. (SBU) During PM Hariri's three-day visit to Turkey from January 
10-12, Hariri discussed the possibility of Turkey supplying excess 
electricity to Lebanon through an agreement with Syria, Hariri 
economic advisor Hazar Caracalla told us.  The Turkish side promised 
to study the matter, she added. 
 
¶5. (SBU) The PM's visit to Turkey led to the signing of a tourism 
and economic agreement, abolishing the need for visas between both 
countries.  This will benefit the Lebanese, as press reports 
estimate that about 600,000 Lebanese travel to Turkey annually. 
Lebanon and Turkey also signed agreements in the fields of security 
and health and ratified three MOUs on maritime rights, agriculture, 
and forest protection.  Caracalla noted she expected a new round of 
negotiations for an FTA with Turkey to take place in March 2010. 
 
 
PM'S ECONOMIC ADVISOR UPBEAT 
ABOUT 2010 PROSPECTS 
---------------------------- 
 
¶6. (SBU) Caracalla was upbeat about the Lebanese economy and said 
2010 appeared promising at all levels.  She attributed her optimism 
to the current political and security stability, as well as positive 
macroeconomic indicators in 2009.  She stressed the PM was committed 
to implementing the ministerial statement by placing the 
environment, energy efficiency, and technology development high on 
his agenda.  Hariri was keen to raise these priorities in all his 
visits abroad, she said.  Caracalla added the GOL needed to increase 
capital spending on infrastructure to sustain growth, and noted that 
the finance minister would resort to additional revenue measures 
and/or approach donor countries in order to maintain fiscal 
stability.  Caracalla said the PM was keen to act quickly on his 
 
BEIRUT 00000075  002 OF 002 
 
 
economic priorities because, based on previous experience, harmony 
in the cabinet did not usually last long. 
 
LEBANON IMPROVES IN 2010 
ECONOMIC FREEDOM INDEX 
------------------------ 
 
¶7. (U) Lebanon ranked 89 out of 179 countries worldwide and 9 out of 
17 MENA countries in the 2010 Heritage Foundation Index of Economic 
Freedom.  This constituted an improvement of 6 places worldwide, 
while it remained unchanged in the region compared to 2009.  Lebanon 
was considered 59.5% free, compared to 58.1% last year.  Lebanon's 
ranking was attributed to improvements in investment freedom, 
financial freedom, and trade freedom, while its noted strengths 
remained in the trade (with a low-weighted average tariff rate), 
fiscal (with a low overall tax burden), monetary and financial 
freedom categories.  The index evaluates ten broad factors of 
economic freedom: business, trade, fiscal, monetary, investment, 
financial, labor, as well as government size, property rights and 
freedom from corruption. 
 
LEBANON AND CHINA SIGN GRANT 
AGREEMENTS WORTH $6.6 MILLION 
----------------------------- 
 
¶8. (SBU) President of the Council for Development and Reconstruction 
(CDR), Nabil Jisr, and the Chinese ambassador to Lebanon signed two 
grant agreements for economic and technical assistance of totaling 
approximately $6.6 million on January 14. CDR Director of Funding 
Dr. Wafa Charafeddine told us the use of the grants would be 
determined later.  She believed the grants would be used to supply 
Chinese-made equipment to public entities, similar to previous 
grants.  Last year, China donated solar heaters to residences 
damaged in south Lebanon, while in 2008 it provided equipment to 
Ogero, the publicly owned telephone company, she said. 
 
IT SECTOR EXPECTED TO 
EXCEED $270 MILLION IN 2010 
--------------------------- 
 
¶9. (U) The information technology (IT) sector in Lebanon is expected 
to reach $276 million in 2010, up 5.7% from 2009, according to 
Business Monitor International (BMI).  The report noted a number of 
developments in the sector in 2009, including GOL plans for partial 
privatization in the sector and the computerization of the public 
healthcare system.  However, the country failed to reach its true 
potential in the sector because of important challenges that 
remained, such as political, economic, and security stability, in 
addition to proper infrastructure.  BMI noted that SMEs, which 
account for most of the 700,000 businesses in Lebanon, could play an 
important role in the sector, although it singled out lack of access 
to finance as a major barrier for business.  In its ministerial 
statement, the GOL committed to developing the IT sector and 
providing broadband services for the entire country. 
 
TELECOMS MINISTRY TRANSFERS 
OVER ONE BILLION DOLLARS TO TREASURY 
------------------------------------ 
 
¶10. (U) The Ministry of Post and Telecommunications (MPT) announced 
the transfer of over $1.2 billion to the state treasury for 2009, 
$23 million more than in 2008.  Transfers from the telecom sector 
are among the largest sources of revenue to the treasury, along with 
revenues from value-added tax (VAT), income tax and excise tax. 
 
SISON