LEBANON: SCENESETTER FOR PRESIDENTIAL DELEGATION

UNCLAS SECTION 01 OF 04 BEIRUT 003071

SIPDIS

SIPDIS

NSC FOR ABRAMS/DORAN/MARCHESE/HARDING

E.O. 12958: N/A
TAGS: IS LE PGOV PREL PTER SY
SUBJECT: LEBANON: SCENESETTER FOR PRESIDENTIAL DELEGATION


INTRODUCTION
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1. (SBU) The recent conflict between Israel and the
terrorist organization Hizballah that transpired from July 12
to August 14 was, according to Lebanon Prime Minister Fouad
Siniora, the most destructive in Lebanon's history. Although
casualty figures did not approach the 1983 Grapes of Wrath
campaign nor the 1975-1990 sectarian civil war, the
suddenness of this war's onset and the widespread destruction
of numerous villages and civilian infrastructure,
particularly in south Lebanon and in the southern suburbs of
Beirut, has shaken the political and social fabric of the
country.


2. (SBU) That said, the war may also have created some
political space for democracy and reform where little existed
before. Despite its initial claims of a "divine victory" and
heavy condemnation of Israel's war fighting tactics,
Hizballah itself has recently been subjected to unprecedented
criticism from elements in the Sunni, Christian, and Druze
communities. Even some moderate figures in the usually
monolithic Shia community in Lebanon are quietly asking
whether the human and material cost of the violent conflict
was worth it.


3. (SBU) Pro-reform leader PM Fouad Siniora came out of the
conflict with widespread admiration for his statesmanship and
national (vice confessional) leadership qualities. His
adroit political balancing act during the war and its
immediate aftermath has given Siniora greatly increased
credibility and a much broader power base. But these
advantages are counter-balanced by a wounded, yet still
lethal, Hizballah adroitly led by Hassan Nasrallah, and an
increasingly critical opponent in the person of former
General Michel Aoun, both of whom are now persistently
demanding that Siniora's Government resign. Moreover, the
GOL is perceived -- accurately -- to have been slow off the
mark compared to Hizballah in responding to the
reconstruction needs of the country.


4. (SBU) In summary, the Lebanese ship of state enjoys the
critical advantage of having a dedicated, competent,
pro-reform Prime Minister, but it is sailing through perilous
waters. The regressive Syrian regime rarely misses a chance
to threaten the fragile Lebanese government and is deeply
involved, along with its strategic ally Iran, in attempts to
destabilize the country. Hizballah, with its two ministers,
makes even the simplest decision in the Council of Ministers
extremely difficult and time consuming. Much depends on the
success of the just-beginning post-conflict reconstruction
effort. If the Siniora Government is perceived as an honest,
competent provider of services for all of the country's
sectarian communities, it will help solidify democratic and
market-oriented institutions. But if Syria, Hizballah, and
dissatisfied parties such as Michel Aoun's Free Patriotic
Movement, obstruct and even hijack the reconstruction
process, Lebanon will be in for difficult times.

BRIEF REVIEW OF DEVELOPMENTS
LEADING UP TO THE CONFLICT
--------------


5. (SBU) The destabilizing presence of the armed terrorist
organization Hizballah in Lebanon was a situation that the
international community and reform elements in Lebanon found
intolerable. In September 2004, the UN Security Council
passed UNSCR 1559, whose objective was the re-establishment
of a sovereign Lebanese state and a disarmed Hizballah. This
effort to regain Lebanon's independence was answered with
violence by those elements that wished to preserve the status
quo.


6. (SBU) The brutal assassination of former Prime Minister
Rafiq Hariri and 22 others on February 14, 2005, brought the
Lebanese people to the streets demanding an end to violence
and foreign interference in Lebanon's internal affairs. Two
months later, Syria withdrew its military forces from Lebanon
ending almost thirty years of occupation. The international
community expressed its solidarity with the people of Lebanon
with the passage of UNSCR 1595 which authorized an
international investigation into Mr. Hariri's murder. The
U.S. supported the efforts of the UN and the Lebanese
government to create a tribunal, per UNSCR 1644, with
international elements to bring to justice those responsible

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for this heinous crime.


7. (SBU) In July 2005, after democratic parliamentary
elections (that, while marred by the use of an old
Syrian-drafted election law, were considered by the EU and UN
to have been credible),a pro-reform government took office
under the leadership of Prime Minster Siniora. In an effort
to create political consensus, the Siniora government
included two ministers allied with Hizballah (one of which is
actually a Hizballah member, a first in Lebanon's history).
That decision has had lasting repercussions, as the Hizballah
ministers, along with their Amal allies, have made it
difficult to institute political and economic reform, not to
mention the effective implementation of UNSCR 1559.


8. (SBU) Despite these difficulties, Lebanon was settling
in to a highly anticipated season of stability and economic
recovery when the Hizballah-initiated hostilities broke out
on July 12. Growth in GDP, flat for the previous two years,
was expected to exceed six percent, based on returns in the
first half of the year.

34 DIFFICULT DAYS
--------------


9. (SBU) Politically, the conflict was an extremely
difficult test for the still fragile pro-reform Siniora
government. To maintain national unity, Prime Minister
Siniora was forced to regularly express at least nominal
support of the "resistance" even though he was well aware
that Hizballah was operating according to Syrian and Iranian
dictates, and would probably work to bring down his
Government if it could.


10. (SBU) During the last ten days of the conflict, Prime
Minister Siniora conducted an almost non-stop series of
negotiations that resulted in the adoption of UNSCR 1701 on
August 11, 2006. Prime Minister Siniora was able to win
concessions for Lebanon, particularly on the issues of IDF
withdrawal and LAF deployment, but now he has to deliver on
several very difficult commitments.

POST-CONFLICT SITUATION IN LEBANON
--------------


11. (SBU) Although the immediate humanitarian relief effort
went off surprisingly well due to an unprecedented outpouring
of international aid and a well-established network of
domestic aid agencies, the arguably more important
reconstruction effort is encountering serious obstacles.


12. (SBU) The primary challenge is executing the selection,
prioritization, and coordination of reconstruction projects
in the midst of Lebanon's unique confessional system, where
each sectarian community carefully monitors what the other
communities are receiving. But it would be difficult to
argue that the country's Shia community, located in Beirut's
southern suburbs, in the cities and villages south of the
Litani River, and in largely Hizballah-controlled areas of
the Biqa Valley, did not suffer the greatest losses in the
conflict -- both in lives and material destruction. Several
Shia villages in south Lebanon, such as Bint Jbeil, Maroun al
Ras, and Khaim, were essentially leveled in the difficult
fighting of early August.


13. (SBU) Second, the various Ministries do not have a
particularly stellar record of providing services anywhere
in the country. Despite its many demographic and geographic
advantages, Lebanon still suffers from sub par infrastructure
-- the road system is in poor shape, the electrical system is
archaic and insufficient for the country's needs,
telecommunications is expensive and inefficient, and the
public school system operates close to systemic failure. For
these reasons, it is incumbent that Prime Minister Siniora
and his Council of Ministers place renewed emphasis on
achieving major structural reforms to win back the confidence
of the Lebanese people.


14. (SBU) Yet, despite these imposing challenges, there are
promising developments. Before the July-August conflict
began, the Lebanese economy was poised to grow rapidly.
Additionally, the Government and the private sector were
finally beginning to discuss privatization and fiscal reform.
Perhaps, most importantly, foreign capital investment was
also beginning to pick up, although it was heavily

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concentrated in the real estate and tourism sectors. These
factors, plus the uncanny resilience inherent in Lebanon's
economy (and its people),make this country a place of
considerable opportunity.

RECONSTRUCTION
--------------


15. (SBU) The recent success of the Stockholm Conference
for Lebanon's Early Recovery, during which more than USD 900
million was pledged by the international community to address
Lebanon's immediate needs and begin the transition from
emergency to reconstruction efforts, was a promising start.
For its part, the United States pledged approximately USD 230
million, as well as offered a comprehensive economic
assistance package, which if implemented, will help Lebanon's
economy develop in a more efficient and transparent manner.


16. (SBU) Among the USG entities being energized for this
effort are: US Agency for International Development,
Overseas Private Investment Corporation, Department of
Defense's Office of Defense Cooperation, Department of
Treasury, Department of Agriculture's "Food for Progress"
program, as well as the Department of State's Bureau of
Political and Military Affairs, Bureau of Democracy, Human
Rights and Labor, Bureau of Population Refugees and
Migration, and Bureau of Near East Affairs.


17. (SBU) Prime Minster Siniora's practical approach to
reconstruction, particularly concerning international
donations of assistance, is to allow donating countries and
agencies to "adopt" projects and carry them through from
design to completion. This approach, though creative, still
requires the Government's guidance and prioritization.
Embassy Beirut, as well as our allied diplomatic missions, is
attempting to assist the Office of the Prime Minister in this
reconstruction effort, but it remains to be seen how things
will ultimately turn out.

CHALLENGES
--------------


18. (SBU) Besides reconstruction and economic recovery,
Siniora's government has two other major challenges. First,
Lebanon has obligations under UNSCR 1701 to secure its
borders and fight arms smuggling. UNIFIL's enhanced mandate
and numbers in south Lebanon, along with the historic
Lebanese Armed Forces deployment to the south (authorized by
Siniora's cabinet),should restrict the maneuverability of
Hizballah forces there. But, while there has been some
interdiction of weapons shipments since the cessation of
hostilities, the jury is still out as to whether the steps
Lebanon is taking at its seaports, airport and land borders
are sufficient to prevent the resupply of Hizballah. Lebanon
has asked for assistance from Germany and the UN, but we hope
Lebanon will ask for more help in this area.


19. (SBU) Second, the GOL will at some point have to deal
with the essence of the problem that brought war upon Lebanon
in July: the existence inside the state of a militia that is
not publicly accountable. No state can tolerate the presence
of a group more heavily armed than the state itself. UN
Security Council Resolutions 1559 and 1701, inter alia,
called for the disarmament of all armed groups in Lebanon
that are not under control of the state. PM Siniora has won
cabinet approval for his policy that the state must enjoy a
monopoly on arms, and the international community stands
ready to support a Lebanese-led process that leads to
Hizballah's disarmament. But we expect to see greater GOL
efforts to achieve this goal.

SUMMARY
--------------


20. (SBU) At present, the pro-reform government of Prime
Minister Siniora is our best hope for the gradual development
of a stable, democratic, and prosperous Lebanon. If the
Prime Minster and his pro-reform allies are successful,
Lebanon could provide a dynamic model for those regional
states seeking to redress the damage caused by decades of
static, autocratic rule and who wish to transition to modern,
market-oriented societies.


21. (SBU) The U.S. and the international community, through
a series of UN Security Council resolutions, have sought to

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provide Lebanon protection from regional states, specifically
Iran and Syria, which clearly wish to use it as a pawn for
their hegemonic ambitions. Reliable, generous, long-term
support is needed by this developing democracy. It will take
time, but if Iranian and Syrian ambitions can be thwarted in
Lebanon, the resulting advantageous influences in the region
will be undeniably significant.
FELTMAN