MGLE01: A BUSINESSMAN'S VIEW OF LEBANESE-IRANIAN

C O N F I D E N T I A L SECTION 01 OF 02 BEIRUT 000811

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 03/15/2016
TAGS: EFIN ECON ETRD EINV LE IR
SUBJECT: MGLE01: A BUSINESSMAN'S VIEW OF LEBANESE-IRANIAN
PRIVATE SECTOR ACTIVITY

Classified By: Charge d'Affaires Christopher Murray. Reason: Sections
1.4 (b) and (d).


1. (C) SUMMARY. On March 15, Econoff met with Mohamed
Maktabi, the owner of a chain of high-end Persian carpet
stores in Lebanon and the Gulf and a frequent traveler to
Tehran, to discuss Lebanese-Iranian commercial relations.
Maktabi told us he had noticed "no changes on the ground"
regarding recent private sector activity between Lebanon and
Iran. According to Maktabi, Lebanon's main imports from Iran
consist of carpets, pistachios, tobacco for water pipes,
marmalades and jams, and plastic plates and tableware. He
said trading with Iran was unpredictable and difficult as
rules and regulations frequently change. Trade shows based
in Tehran can change dates without notice. While Maktabi has
not seen an increased presence of Iranian businessmen in
Lebanon, he does acknowledge that there is a "hunger" in Iran
for modern imported products, and he has noticed an increased
Iranian presence in industrial trade with Turkey and
financial exchanges in Dubai. END SUMMARY.

LEBANESE IMPORTS CONSIST OF
CARPETS, FOODSTUFFS, AND PLASTIC PRODUCTS
--------------


2. (C) Maktabi told Econoff that Lebanon's primary imports
from Iran consisted of carpets, pistachios, tobacco for water
pipes, marmalades and jams, and plastic plates and tableware.
Iranian goods are common in supermarkets in the southern
suburbs of Beirut, and the largest contingent of Lebanese
visitors at Iranian trade fairs comes from these same
suburbs. Maktabi is a frequent flyer on the weekly Iran Air
flight between Beirut and Tehran, and he said he has not
noticed any changes in the make-up of the passengers on these
flights, with the same steady mix of carpet dealers,
religious pilgrims, and tourists.

TRADING WITH IRAN IS
UNPREDICTABLE AND DIFFICULT
--------------


3. (C) Maktabi goes to Iran to purchase high-end and
custom-designed Persian carpets. He said trading with Iran
can often be unpredictable and difficult as rules and
regulations change frequently. Many years ago, there was a
20 percent tax on the exports of Iranian carpets; this tax
was later reduced to seven percent. Maktabi just learned of
a new export promotion program in Iran that promises to offer
financial incentives to large exporters; he has asked his
agent in Tehran about details of this program, but the agent
has yet to see any refunded money. Maktabi told Econoff that
he was once interested in importing Iranian rice. He
inquired about how he could obtain a license and was later
told that he was unable to import the rice. He said that
Iranian caviar is produced solely for the export market
through an exclusive contract with a Swiss company known as
Caviar House.


4. (C) According to Maktabi, the dates of trade fairs in
Tehran frequently change and travel arrangements can be
difficult. He used the example of a recent international
carpet exhibition that was moved from downtown Tehran to an
exhibition hall in the suburbs because of municipality
concerns; he said the trade fair was moved back to the
original location at the last minute, causing numerous
logistical problems. Maktabi said international exhibitions
in Iran are often poorly run; by contrast, Pakistani carpet
exhibitions are much better run and well-attended because of
coordination among the vendors, the hotels, and the shipping
companies.

FINANCIAL TRANSACTIONS
GO THROUGH BANK SADERAT
--------------


5. (C) Maktabi said that all of his financial transactions
with Iranian companies went through Bank Saderat. He said
that his funds were wired from Lebanon to Switzerland before
arriving in Iran. He said most Lebanese businessmen who have
commercial relations with Iran deal with Bank Saderat, but he
also said that big exchange companies in Dubai were starting
to take the place of Iranian commercial banks in business
exchanges. Maktabi said that Dubai has increasingly

BEIRUT 00000811 002 OF 002


benefited from its strong economic ties and close proximity
to Iran.


6. (C) When Econoff asked Maktabi if his firm had seen
profits increase recently as a result of the petroleum boom
in the Gulf States, he said that profits were up, but not as
much as expected. He said that sales in his Saudi Arabia
outlet were only marginally higher. He said that he had
wondered why Gulf customers were not buying more carpets. He
was told that wealthy Arabs were still spending a large part
of their disposable income on the Gulf stock markets.

IRANIANS COULD OFFER CHEAP PETROLEUM
AND RAW MATERIALS TO LEBANON
--------------


7. (C) When Econoff asked Maktabi how Iran could increase
its commercial ties with Lebanon if it so desired, he said
that the Iranians could offer cheap petroleum and cheap raw
materials such as steel to the Lebanese, but he did not
foresee any significant increased private sector activity
between Iran and Lebanon. Maktabi said that perhaps there
has been some increased government to government cooperation
or possibly increased cooperation between Iranian leaders and
Hizballah leaders, in response to Econoff's question about
the uptick in visits of Iranian ministers to Beirut in recent
months. He added that he did not deal in "political issues,"
but in his area of expertise, commercial issues, he had not
noticed any new trends in recent months. He said he would
"feel it" if there were increased Iranian economic activity
in the southern suburbs of Beirut.

IRANIAN CONSUMERS
SEEK MODERN IMPORTS
--------------


8. (C) According to Maktabi, there is a strong "hunger" in
Iran for new ideas and modern imports. The desire for
consumer goods reminded him of Soviet Russia, although he
said the Iranian market was not as closed as the Soviet
system had been. He said Iranian manufacturing was not very
innovative, and Iranians were highly desirous of foreign
goods such as imported lighting and hardwood floors for their
houses. Maktabi has noticed increase industrial trade
between Iran and Turkey.


9. (C) Maktabi said that the December 2005 Iranian Trade
Fair at the Biel Center in Beirut was a "fiasco," due to the
fact that there were three Iranian trade fairs in Lebanon in
the last year. All had presented themselves as the
"official" Iranian trade fair for Lebanon, which added to the
confusion among exhibitors and local businessmen. Maktabi
said that only a "fraction" of the normal amount of
exhibitors showed up for the fair and that there was "nothing
new" to show, as vendors focused on carpets, plastic
products, and foodstuffs.

MURRAY