VZCZCXRO3305
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHLB #0538/01 1121137
ZNR UUUUU ZZH
R 211137Z APR 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 1582
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
UNCLAS SECTION 01 OF 02 BEIRUT 000538
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/ELA
STATE PASS USTR
TREASURY FOR MNUGENT AND SBLEIWEISS
USDOC FOR 4520/ITA/MAC/ONE
NSC FOR ABRAMS/SINGH/YERGER/DEMOPOLOUS
DEPT FOR EU MEMBER STATES COLLECTIVE
E.O. 12958: N/A
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: INTELLECTUAL PROPERTY GROUP ASKS USTR TO UPGRADE
LEBANON TO WATCH LIST; SOCIAL UNREST ON THE RISE (ECONOMIC WEEK IN
REVIEW, APRIL 14 - 20, 2008)
CONTENTS
--------
-- INTELLECTUAL PROPERTY GROUP RECOMMENDS UPGRADE TO WATCH LIST
-- SOCIAL UNREST ON THE RISE
-- CALLS TO LIFT CUSTOMS TAX ON BASIC FOOD
-- GOL ACCUSED OF FAVORITISM IN CONTRACT AWARD
-- GOL BLAMED FOR SLOW PROGRESS ON INDUSTRY PLAN
-- KUWAITI INVESTMENTS IN LEBANON
-- CBL FOREIGN CURRENCY ASSETS CONTINUE TO GROW
INTELLECTUAL PROPERTY GROUP RECOMMENDS
UPGRADE TO WATCH LIST
----------
1. (U) The International Intellectual Property Alliance (IIPA) asked
The United States Trade Representative (USTR) to upgrade Lebanon
from the Priority Watch List to the Watch List. The IIPA attributed
its recommendation to the fact that anti-piracy efforts by the
Lebanese authorities have shown signs of success, while increased
cooperation continues despite difficult political and security
concerns. The IIPA represents more than 1,300 American companies
that produce and distribute copyright-protected materials throughout
the world. This request is part of IIPA's recommendations to the
USG for the annual "Special 301" Review of copyright piracy and
market access problems in 51 countries.
SOCIAL UNREST ON THE RISE
----------
2. (U) The Federation of bakery syndicates threatened on April 16 to
stop producing Arabic bread as of April 23 because of a shortage in
the quantity of subsidized flour. The President of the Federation
told moderate anti-Syrian An-Nahar that "no bakery will stop
production before Economy and Trade Minister Haddad returns to
Lebanon, and then we'll see." Haddad has repeatedly denied that
there is a shortage of subsidized flour for the production of Arabic
bread. (Note: Haddad, who attended the World Bank/IMF Spring
meetings in Washington, D.C., is expected back in Beirut this week.
End note.)
3. (U) The General Labor Confederation's (GLC) executive council has
called for a syndicate gathering on April 23 to approve the action
plan leading to a strike on May 7. The council also has decided to
hold a rally on May 1, Labor Day in Lebanon, on the theme: "May 1,
2008: Day for defending decent living," the GLC announced on April
16. The GLC insists that the GOL raise the minimum monthly salary
from $200 to $640, and called on the GOL to adopt measures to help
improve citizens' purchasing power. At the same time, presidents of
economic organizations insist on having a rational dialogue with the
GLC in order to reach an acceptable increase in the minimum wage
while keeping inflation contained, they said following a meeting
with PM Siniora and Finance Minister Azour on April 16.
CALLS TO LIFT CUSTOMS TAX ON BASIC FOOD
--------
4. (U) President of the Syndicate of Agro-industries Arslan Sinno
(also American Lebanese Chamber of Commerce VP) called on the GOL to
remove the five percent customs tax on basic food products,
particularly rice and sugar, in a note sent to the Prime Minister
and to the Ministers of Economy and of Finance. This measure will
reduce inflationary pressure without seriously affecting the
Treasury, Sinno said, explaining that Lebanon has commercial
agreements lifting tarrifs over time with most of the exporting
countries.
GOL ACCUSED OF FAVORITISM IN CONTRACT AWARD
---------------
5. (SBU) Alain Bifani, Director General of the Ministry of Finance,
complained to us about the infrastructure work that is blocking
traffic in main highways and major streets in Beirut. He said that
PM Siniora awarded all these infrastructure contacts, which cover
Dbayyeh, Dora, Rawcheh and Adlieh areas, to a company owned by Jihad
Arab, who is close to Siniora and the Hariri family, which does not
have the resources to complete all the work on time. This is why
greater Beirut looks like a workshop under construction, making
BEIRUT 00000538 002 OF 002
traffic very busy in peak hours. Bifani is currently on a
three-month leave of absence, which he says is a prelude for
resigning from the ministry.
GOL BLAMED FOR SLOW PROGRESS ON INDUSTRY PLAN
----------
6. (SBU) Industrialists' Association General Manager Saad Oueini
told us April 14 that there has been no progress in implementing the
plan designed by late Industry Minister Pierre Gemayel to address
problems facing industry and to develop the industry sector. The
cabinet made a decision to adopt the "Industry for Lebanon's Youth
2010" plan after the assassination of Gemayel in December 2006.
However, implementation of this plan requires cabinet decisions,
Oueini said. He explained that the plan consists of three stages,
of which the first stage is a 100-day emergency plan, and he pointed
to GOL laxity in moving forward on the plan. He said about two
years ago the cabinet passed legislation for the protection of local
production, but the cabinet passed the implementation decree for
this law only ten days ago. Oueini said the Association is working
closely with the Acting Director General Georges Khoury at the
Industry Ministry. The Association does not have a good working
relationship with Minister of Economy and Trade Haddad, whom they
perceive as too strongly opposed to government intervention in
markets. The 10-year plan is available on the Ministry of Industry
website: www.industry.gov.lb
KUWAITI INVESTMENTS IN LEBANON
--------
7. (U) Kuwaiti investors continue to be interested in investing in
Lebanon. Kuwait food retailer Sultan Center Food Products has just
acquired two large supermarket chains in Lebanon, Monoprix and
Geant, for $97 million.
CBL FOREIGN CURRENCY ASSETS CONTINUE TO GROW
--------------
8. (U) The Central Bank of Lebanon (CBL) balance sheet for mid-April
showed that foreign currency assets rose by $157.4 million, reaching
$13.549 billion, up from $13.391 billion at the end of 2007. This
increase is mainly attributed to the rise in the deposits of the
financial sector due to capital inflows, and CBL intervention in the
local market purchasing excess dollar supply.
SISON