MGLE01: ECONOMY AND TRADE MINISTER DISCUSSES GOL

C O N F I D E N T I A L SECTION 01 OF 02 BEIRUT 000414

SIPDIS

SIPDIS

STATE PASS USTR,
NSC FOR ABRAMS/DORAN/WERNER/SINGH

E.O. 12958: DECL: 02/13/2016
TAGS: ECON EINV EFIN KIPR LE
SUBJECT: MGLE01: ECONOMY AND TRADE MINISTER DISCUSSES GOL
IPR EFFORTS AND ECONOMIC REFORM

REF: STATE 14937

Classified By: Ambassador Jeffrey Feltman for Reasons 1.4 (b) and (d).


1. (C) Summary: On February 10, the Ambassador and Econoff
called on Minister of Economy and Trade (MOET) Sami Haddad to
discuss GOL efforts to improve the intellectual property
rights (IPR) climate in Lebanon and encourage the GOL to
prepare a submission of recent IPR efforts and future plans
for the "Special 301" review process (Reftel). Haddad
presented the Ambassador with a draft "IPR action plan" that
includes recent efforts and future plans of the GOL on IPR
issues, particularly regarding pharmaceuticals and cable
piracy. During his discussion of GOL IPR efforts, Haddad
asked the Ambassador if the USG could help the GOL with the
implementation of a new draft law regarding cable piracy.
Haddad told the Ambassador that the GOL had completed 90 to
95 percent of the economic reform agenda but that Minister of
Energy and Water (MEW) Mohammad Fneish (Hizballah) and Labor
Minister Trad Hamadeh (allied with Hizballah) were causing
difficulties with moving forward on reform. Haddad also told
the Ambassador that although he and Finance Minister Jihad
Azour were in favor of the GOL adopting a formal IMF program,
Central Bank Governor Riad Salameh was against a formal
program. (Salameh later denied this to the Ambassador.) End
Summary.

GOL HAS IPR ACTION PLAN
--------------


2. (C) Haddad told the Ambassador that the GOL was busy
preparing an "IPR action plan" to be submitted to the USG by
February 13 to be included for "Special 301" review. (Note:
The Embassy received a draft plan on February 10 and the
final version on February 13. The GOL submission was sent
via e-mail to Washington on February 13. End Note.) New
initiatives by the GOL include: drafting new provisions of
the copyright law for the electronic environment, amending
Article 25 of the copyright law for TRIPS compatibility,
applying six years of data exclusivity for pharmaceuticals
and agricultural chemical products as provided for under the
Lebanon-EFTA (European Free Trade Association) Agreement,
deleting Article 47 of the patent law on confidential data,
finalizing a draft law on industrial designs, and proposing a
draft law on geographical indicators.

GOL WANTS HELP WITH CABLE PIRATES
--------------


3. (C) The IPR action plan also contains enforcement
initiatives for both cable piracy and the pharmaceutical
industry. Actions for the cable industry include working in
parallel on the legislative and enforcement tracks by
enacting the necessary regulatory framework while also
re-launching negotiations between the cable operators and
content providers.QQ,o of the GOL were serious on combating the cable
piracy problem. New actions on the pharmaceutical front
include the application of six years of data exclusivity for
pharmaceuticals. Embassy contacts in the pharmaceutical
industry have told Econoff that they are encouraged by the
offer of six years of data exclusivity, but they would like
to have no new registrations considered during the "interim
period" after the legislation is proposed and before it comes
into effect.

HADDAD FRUSTRATED WITH PACE OF
GOL DECISION MAKING
--------------


4. (C) Haddad told the Ambassador that he was frustrated at
the inability of the GOL to implement important economic
decisions. He said that "time has no value" in the public
sector and he felt the GOL was "constipated" in its decision
making. Haddad said that he had found very few Ministers who
would listen to his plea to "free" the price of bread. He
also said that he was frustrated with the GOL's inability to
name a Secretary General of the Privatization Committee

BEIRUT 00000414 002 OF 002


despite the presence of three good candidates who were
short-listed for the job. He agreed with the Ambassador that
the lack of a Director General in his own ministry was also
impeding economic work by the GOL.

REFORM AGENDA NEARLY COMPLETE
--------------


5. (C) Haddad stated that, "we have completed 90 to 95
percent of the economic plan" that will be presented before a
future donors' conference. When the Ambassador asked Haddad
who the "we" referred to, Haddad said that the MOET, the
Ministry of Finance, the Central Bank, the Prime Minister,
and members of the Prime Minister's inner Cabinet had nearly
finalized the GOL's economic agenda. Haddad said the next
step would be to present the economic agenda in front of the
full Cabinet in late February before showcasing the document
in front of the Bankers Association, the Industrialists
Association, and other economic and civil society
stakeholders.

FNEISH AND HAMADEH PROBLEMATIC
--------------


6. (C) According to Haddad, two of the most problematic
ministers in the current Cabinet are Minister of Electricity
and Water Fneish and Minister of Labor Hamadeh. Haddad
stated that neither Fneish nor Hamadeh had given any credible
contributions to the GOL's economic reform agenda regarding
power and social security issues. (Note: Fneish and Hamadeh
are two of the five Shia ministers in the Cabinet who, until
recently, were boycotting Cabinet meetings. End Note.)
Haddad said that Hamadeh was currently trying to undermine
the solvency of the social security system inside the Cabinet
by proposing to extend social security and health benefits to
new groups. Haddad told the Ambassador that he had
personally angered Hamadeh at an earlier Cabinet meeting by
"tearing" and "throwing" a page of Hamadeh's Power Point
presentation on social security in front of other Cabinet
members.

HADDAD AND AZOUR PRO-IMF,
SALAMEH AGAINST A FORMAL PROGRAM
--------------


7. (C) Haddad told the Ambassador that he sometimes comes
across as "undiplomatic" in Cabinet meetings because of his
strong views in favor of a formal IMF program. Haddad agreed
with the Ambassador that it was important for the GOL to
adopt a formal IMF program because it would bring financial
discipline, credibility from the donors, and the likelihood
of higher amounts of funding. Haddad said he and Finance
Minister Azour were the leading advocates in the Cabinet for
a formal IMF program, while Central Bank Governor Salameh
opposed a formal program. When the Ambassador asked Haddad
why Salameh would be against a formal IMF program, Haddad
said Salameh may not have liked IMF criticism of the Central
Bank's handling of Middle East Airlines and the Casino du
Liban. He also speculated that Salameh may have political
ambitions and would like to be seen as the champion of the
banking sector. (Comment: The Ambassador went from the
Haddad meeting to a lunch with Governor Salameh. In
discussing the possibility of an IMF program, Salameh said
that he was not opposed. While Salameh is probably the least
enthusiastic of major GOL officials on this question, he
seems to be softening up on the idea of an IMF program. End
comment.)
FELTMAN