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Cablegate: Lebanon: Labor Confederation in Hizballah's Grip (Economic

VZCZCXRO4128
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #0861/01 1610510
ZNR UUUUU ZZH
R 090510Z JUN 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 2214
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 000861

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

E.O. 12958: N/A
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: LABOR CONFEDERATION IN HIZBALLAH'S GRIP (ECONOMIC
WEEK IN REVIEW, JUNE 2 - 8, 2008)

CONTENTS
--------

-- GENERAL LABOR CONFEDERATION HAS BEEN TRANSFORMED INTO A POLITICAL
TOOL, DISREGARDS LABOR DEMANDS
-- MOBILE PRIVATIZATION AWAITS CABINET APPROVAL; FORMER MINISTER
FAVORS LANDLINE PRIVATIZATION
-- GOVERNMENT TURNS DOWN GASOLINE PRICE INCREASES; WHOLESALERS HALT
DELIVERIES TO GAS STATIONS TO PROTEST
-- MINISTRY OF ECONOMY AND TRADE SUSPENDS SUBSIDY FOR AGRICULTURE
EXPORTS FOR ONE YEAR
-- IPR STUDY TOUR PARTICIPANTS TO ORGANIZE CONFERENCE ON IPR IN
JULY
-- LEBANESE PRESIDENT CALLS FOR CREDIT FACILITIES FOR AGRICULTURE
AND REGIONAL DEVELOPMENT
-- GREENPEACE ORGANIZES PROTEST TO INCREASE ENVIRONMENTAL AWARENESS
-- QATAR DONATES OVER SEVEN MILLION FOR RECONSTRUCTION IN SOUTH
LEBANON

GENERAL LABOR CONFEDERATION HAS BEEN TRANSFORMED
INTO A POLITICAL TOOL, DISREGARDS LABOR DEMANDS
--------------------

1. (SBU) According to a long-time employee at the General Labor
Confederation (GLC), Hizballah has been exerting almost full control
over the GLC for the last three years. The GLC has totally ignored
labor demands, and has been transformed into a political tool which
Hizballah uses against the GOL to further its own interests. In the
meantime, a number of dissenting GLC member confederations have
established their own group, known as a Salvation Committee, and
have successfully negotiated for an increase in the minimum wage.
The Salvation Committee is seriously considering officially breaking
away from the GLC, but needs political backing. This possible split
in the GLC, the selection of a new Minister of Labor, and the
election of a new GLC head will be key factors in deciding the
future of labor politics in Lebanon. (septel)

MOBILE PRIVATIZATION AWAITS CABINET APPROVAL;
FORMER MINISTER FAVORS LANDLINE PRIVATIZATION
--------------------

2. (U) Telecommunications Regulatory Authority (TRA) Chairman Dr.
Kamal Shehadi reiterated in an informal meeting with the economic
press on June 3 that the TRA is ready to launch mobile privatization
if there is a political decision to that effect, and hopes the new
Cabinet will approve issuing two mobile licenses to private
operators in addition to a third license for Liban Telecom. Shehadi
noted that the auction of the two mobile licenses can be completed
in three months, An-Nahar reported May 4. In a response to a
question regarding a fourth mobile license, he said that after 2010
the TRA would have completely liberalized the mobile market and will
look at new technology to license.

3. (SBU) Former Finance Minister Georges Corm told us June 5 that he
is against selling the cellular network now because the
government-owned cellular service generate close to $1 billion in
annual revenues for the Treasury (Shehadi, of the TRA, estimates the
amount is closer to $650 million annually). He believes the GOL
should first privatize the landlines along with a third mobile
license to generate revenues. But Corm said the GOL is "obsessed"
with privatizing the mobile network and is not making any effort to
transform Ogero, the public entity that operates and maintains the
landlines, into a joint stock company to be known as Liban Telecom.


PETROLEUM IMPORTING COMPANIES
SUSPEND GAS DELIVERY,
ASK GOL TO INCREASE PRICES
--------------------------

4. (SBU) Petroleum importing companies did not deliver gasoline to
gas stations starting June 6, following caretaker Energy Minister
Safadi's decision on June 4 not to increase the retail price of
gasoline for the coming week. (Note: The Ministry fixes the price
of oil derivatives on a weekly basis. End note.) President of the
Association of Petroleum Importing Companies Bahij Abu Hamzeh told
us June 5 that maintaining previous price means a direct loss of $45
per ton to petroleum importing companies. The Association has asked
Safadi to either increase prices or implement subsidies, Abu Hamzeh
said. Although he personally does not favor subsidies, companies

BEIRUT 00000861 002 OF 002


cannot sustain the losses, he argued, adding that petroleum
companies will not deliver gas to stations until Safadi responds.
Abu Hamzeh does not expect an immediate gasoline crisis, noting that
stations have sufficient quantities for at least one week.

MINISTRY OF ECONOMY AND TRADE SUSPENDS
SUBSIDY FOR AGRICULTURE EXPORTS FOR ONE YEAR
--------------------

5. (SBU) The Ministry of Economy and Trade (MOET) suspended the
Investment Development Authority of Lebanon (IDAL)'s Export Plus
program for a one year period. Under that program, in place for the
last seven years, the transport of certain agricultural goods was
subsidized based on quantity and export destination. The MOET
stated that subsidies are no longer needed following the worldwide
increase in food prices. An advisor to the Minister of Economy and
Trade also told us that some farmers were importing goods from
Syria, where these goods are cheaper due to the relatively low price
of production, and exporting them from Lebanon, while benefiting
from Export Plus.

IPR STUDY TOUR PARTICIPANTS TO
ORGANIZE CONFERENCE IN JULY
--------------------

6. (SBU) On June 4, Econ staff met with Judges Georges Okais and
Henry Khoury following their participation in the USPTO/MEPI Study
Tour held in the U.S. April 14-25, 2008. The judges expressed their
great satisfaction with the entire program, in which they were able
to learn about the US court system, as well as improve their
knowledge of IPR issues. However, they commented on their
perception that Lebanon in general and its laws in particular are
not well understood in the U.S. The judges informed us that they
will be holding a one-day conference at the Beirut Bar Association
on July 2, focusing on the importance of enforcing IPR from a legal
and economic perspective, to be attended by around 200 judges and
lawyers. Embassy staff will attend.

LEBANESE PRESIDENT CALLS FOR CREDIT FACILITIES
FOR AGRICULTURE AND REGIONAL DEVELOPMENT
--------------------

7. (U) In a meeting with a delegation from the Association of Banks
in Lebanon (ABL) on June 2, President Michel Sleiman called on banks
to provide credit facilities to help the agriculture sector and
develop under-privileged regions. Sleiman stressed the need for
full cooperation between the state and the ABL on reform issues, and
thanked the ABL for its financial contribution to the Lebanese Army
during the conflict in Nahr el-Barid in 2007.

GREENPEACE ORGANIZES PROTEST
TO INCREASE ENVIRONMENTAL AWARENESS
--------------------

8. (U) On the occasion of World Environment Day on June 5, members
of Greenpeace in Lebanon organized a peaceful protest in front of
Sidon's seaside landfill, calling for the establishment of marine
reserves, closing all coastal dumps, and raising awareness to save
the Mediterranean Sea from further environmental damage.

QATAR DONATES $7.5 MILLION
FOR RECONSTRUCTION IN SOUTH LEBANON
--------------------

9. (U) On May 4, the local press reported that the Qatar Authority
for Charitable Activities donated $7.5 million for the rebuilding of
Bint Jbeil in South Lebanon. Qatar has reportedly funded the
reconstruction of almost half the houses that were destroyed in
South Lebanon during the 2006 July war.

SISON

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