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Cablegate: Lebanon: Cabinet Rejects Contract for French Firm's

VZCZCXRO2920
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV RUEHSR
DE RUEHLB #1643/01 3221621
ZNR UUUUU ZZH
R 171621Z NOV 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 3591
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 001643

SENSITIVE

SIPDIS

STATE FOR NEA/ELA
STATE PASS USTR FRANCESCKI
STATE PASS USAID BEVER/LAUDATO/SCOTT
TREASURY FOR MNUGENT AND SBLEIWEISS
USDOC FOR 4520/ITA/MAC/ONE
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT

E.O. 12958: N/A
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: CABINET REJECTS CONTRACT FOR FRENCH FIRM'S
MANAGEMENT OF MOBILE OPERATOR (ECONOMIC WEEK IN REVIEW, NOVEMBER 10
- 16, 2008)

CONTENTS
--------

-- RENEWAL OF MOBILE COMPANIES' MANAGEMENT CONTRACT PUTS GOL'S WILL
TO PRIVATIZE IN 2009 IN DOUBT
-- CENTRAL BANK GOVERNOR CALLS FOR A SINGLE CURRENCY IN THE ARAB
REGION
-- ECONOMY MINISTRY UNPREPARED TO IMPLEMENT IPR TREATIES
-- PARTNERSHIP FOR LEBANON: BROADBAND SHOULD BE IMPLEMENTED SOON
-- EFG-HERMES AND BANK AUDI END MERGER NEGOTIATIONS
-- TELECOM MINISTRY LAUNCHES CALL CENTERS
-- MENA ICT CONFERENCE ON NOVEMBER 19-23 IN BEIRUT
-- LEBANON FALLS IN E-GOVERNMENT READINESS INDEX WORLDWIDE...
-- ... AND IMPROVES IN NATURAL RESOURCES MANAGEMENT INDEX WITHIN
MENA REGION

CABINET REJECTS CONTRACT FOR FRENCH FIRM'S MANAGEMENT OF MOBILE
OPERATOR; ORDERS TENDERS FOR MANAGEMENT CONTRACTS

--------------------

1. (U) (U) On November 15, the cabinet rejected Minister of
Telecommunications (MOT) Gebran Bassil's proposal to contract French
company Sofrecom (100 percent owned by France Telecom) to manage one
of the GOL-owned mobile companies until it is privatized later this
year. Bassil's proposal came in anticipation of the expiration of
the current contract at the end of November. Instead, the cabinet
tasked the MOT to issue a tender within two months for the
management of both GOL-owned mobile companies for one year,
renewable for an additional year. In the meantime, the cabinet
asked the MOT to manage the companies until the tender is awarded.


CENTRAL BANK GOVERNOR CALLS FOR A
SINGLE CURRENCY IN THE ARAB REGION
---------------------

2. (U) At the annual Arab Banks' conference, held this year under
the theme of "Investments for Stability," Central Bank Governor Riad
Salameh called for increased cooperation among Arab banks and
recommended a single currency for Arab countries. He said that Arab
banks will face competition in the future, and this should encourage
greater Arab banking cooperation and the adoption of a single
currency "so that growth and trade in the region will not remain
dependent on foreign currencies and of financing from banks that do
not have a durable interest in the region."

ECONOMY MINISTRY UNPREPARED TO
IMPLEMENT IPR TREATIES
--------------------

3. (SBU) During a meeting with the Ministry of Economy and Trade
(MOET)'s IPR Unit on November 12, head of the unit Salwa Faour told
EconOff that she was hopeful pending IPR draft legislation would be
passed by parliament in the coming months. Faour noted, however,
that the unit is unprepared to implement the Patent Cooperation
Treaty (PCT) and Madrid Protocol, both of which await parliamentary
ratification, due to lack of staff and proper training.

4. (SBU) The MOET will be organizing a seminar with WIPO on
industrial property and trademarks on November 25-26.

PARTNERSHIP FOR LEBANON: BROADBAND
SHOULD BE IMPLEMENTED SOON
----------

5. (SBU) On November 10, the Partnership for Lebanon presented its
two-year progress report and announced ten new initiatives for 2009.
These include the creation of community centers linked to the
internet in a number of towns, creating a national network linking
schools to the Ministry of Education, and develop the IT sector in
rural areas. Speakers also stressed the need to implement broadband
in Lebanon. On the sidelines, Telecom Regulatory Authority (TRA)
Chairman Kamal Shehadi told us TRA will be ready by the end of the
year to start broadband licensing. The Partnership for Lebanon is a
U.S. private sector initiative launched after the 2006 July war by
the heads of Cisco, Intel, Microsoft, Ghafari, and Occidental
Petroleum to help assist in reconstruction efforts and create

BEIRUT 00001643 002 OF 002


long-term growth.

EFG-HERMES AND BANK AUDI
END MERGER NEGOTIATIONS
--------------------

6. (U) Lebanese Bank Audi and regional investment bank EFG-Hermes
jointly announced the termination of merger negotiations, citing
current financial market conditions as the main reason. EFG-Hermes
holds a 28.6 percent stake in Bank Audi. The press also quoted a
2007 report by London-based Emerging Economies Research indicating
that an investment in Bank Audi would "barely generate any excess
economic added value" for EFG shareholders.

TELECOM MINISTRY
LAUNCHES CALL CENTERS
--------------------

7. (U) At a November 13 press conference, Minister of
Telecommunications Gebran Bassil announced the launch of call
centers in Lebanon. Bassil noted that applications for call centers
will be processed in 15-30 days at the most, and the centers could
employ up to 100 people. Bassil said the economic benefits of the
call centers, intended to attract investment, create jobs, and boost
growth, will be felt by the end of the first quarter of 2009.

MENA ICT CONFERENCE ON
NOVEMBER 19-23 IN BEIRUT
--------------------

8. (U) The Arab ICT Organization (IJMA3), in cooperation with the
Ministry of Telecommunications (MOT), the Professional Computer
Association (PCA), the Information Technology Association of America
(ITAA), and the World Information Technology and Services Alliance
(WITSA) will hold its first MENA ICT Week from November 19-23 in
Beirut. The event will feature ICT conferences, business matching
workshops, as well as the Levant's largest ICT trade fair and
marketplace exhibition, known as Termium.

LEBANON FALLS IN E-GOVERNMENT
READINESS INDEX WORLDWIDE...
--------------------

9. (U) According to the 2008 UN Electronic Government Readiness
Index, Lebanon ranked 74 out of 182 countries worldwide (compared to
71 in 2005) and eight out of 18 MENA countries (compared to 6 in
2005) included in the survey. The index bases its ranking on
website assessment, telecommunications infrastructure, and human
capital. At the same time, the index showed significant progress in
2003-2008 in utilization of e-government (i.e., services utilized as
a percentage of services available online), where Lebanon's
utilization rate rose from 22 percent in 2003 to 44 percent in 2008.


... AND IMPROVES IN NATURAL RESOURCES
MANAGEMENT INDEX WITHIN MENA REGION
--------------------

10. (U) The 2008 Natural Resources Management Index ranked Lebanon
57 out of 165 countries worldwide, down from 56 in the 2006 survey;
and five out of 15 MENA countries, up from seven from the 2006
survey, in terms of economic policies that promote the sustainable
management of natural resources. The index is intended to reflect
government investment of limited resources in ways that will
increase economic growth, reduce poverty, and improve natural
resource management.

SISON

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