LEBANON: TELECOM MINISTER PUSHES PRIVATIZATION,

C O N F I D E N T I A L SECTION 01 OF 03 BEIRUT 001086

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E.O. 12958: DECL: 07/23/2018
TAGS: PREL PGOV ECON ECPS EINV UNSC LE SY
SUBJECT: LEBANON: TELECOM MINISTER PUSHES PRIVATIZATION,
DAMPENS EXPECTATIONS ON MINISTERIAL STATEMENT

Classified By: Charge d'Affaires a.i. William K. Grant for reasons 1.4
(b) and (d).

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


1. (C) In a July 24 courtesy call by Charge Grant, newly
appointed Minister of Telecommunications Gebran Bassil said
that the GOL has been slow in its privatization of the mobile
telecommunications market, but reaffirmed his belief that
privatization in the sector is necessary. Bassil also
requested the involvement of a U.S. company(-ies) to begin a
pilot project in Lebanon to explain and promote the benefits
of broadband technology to the "Lebanese people and the
government." Bassil also informed Charge that Lebanon had
sent letters of protest to the ITU and the UN protesting
Israel's use of international telecom networks to send
messages to Lebanese citizens.


2. (C) Turning to politics, Bassil, Free Patriotic Movement
(FPM) leader Michel Aoun's top advisor and son-in-law, was
quick to remind us that he is "a politician, not a telecom
man." In his view, the momentum for completing the new
cabinet's ministerial statement soon has diminished. Two
remaining contentious issues are Lebanese missing or detained
in Syria and how to address the issue of weapons outside of
the Palestinian camps (i.e., in the hands of the PFLP-GC.
Bassil, like many others, is focused on the 2009
parliamentary elections and believes a winning strategy for
his party is to argue that it will keep the Christians from
being marginalized. Bassil surpised us with his knowledge
and evident interest in his new portfolio. On politics, he
was forthcoming in his assessments, but spoke ambiguously
about plans for the upcoming elections. End summary.

HOW TO GO ABOUT PRIVATIZATION?
--------------


3. (C) Newly appointed Telecommunications Minister Gebran
Bassil received Charge Grant, accompanied by Poloff and
Senior LES Commercial Specialist, on July 24. When asked
about his ministry's plans to continue with its privatization
plans, Bassil did not hesitate to delineate what he called
"some of the hardest issues," including the goals of the
parties involved, how to replace the 42 percent of government
revenues that would be lost through privatization, and
ensuring that Liban Telecom, the government-owned operator,
has a fair chance to compete in a privatized market.
However, Bassil was also quick to point out that he believed
privatization of the sector would be good for Lebanon and
that he supported moving forward with the plans. He also
mentioned that there are other sectors and industries in
Lebanon that need to privatize, but the telecommunications
sector is the most prepared.


4. (C) Bassil indicated that the Hizballah and Amal factions
have some doubts about privatization, although they are also
part of the same opposition bloc as the FPM and his nominal
allies. Bassil stated that the government plans to continue
with the privatization, which he claimed is not a political
issue.

WHERE ARE THE U.S. COMPANIES?
--------------


5. (C) Despite being personally convinced that privatization
of the telecommunications market is necessary, Bassil
admitted that there also needs to be a campaign to educate,
and advertise, the benefits of privatization and new
technologies, such as broadband, to the Lebanese people and
the government. Bassil expressed concern that no American
companies had expressed interest in Lebanon's previously
issued tender offers to privatize. (Background Note: The
sale of two mobile licenses and underlying assets had been
tendered in November 2007, but no American companies
participated. The auction and subsequent offers were
scheduled for May 21, 2008, but were deferred by Bassil's
predecessor and Prime Minister Siniora until a new government
was in place. End Note.) Charge assured Bassil that once
the tender process reopens, we would promote the tenders with

BEIRUT 00001086 002 OF 003


the American business community.


6. (C) Additionally, Bassil requested the assistance of an
American company(-ies) to work with his ministry to develop a
pilot project to promote broadband in Lebanon. He
specifically would like to see some project established in a
remote region that is also economically beneficial as a way
to educate and advertise to the Lebanese public. Charge and
Commercial LES informed Bassil about the annual "Made in
America" commercial fair that will take place in Beirut
October 9-11, and said that this forum could be used to
promote such an idea if there is an agreement between a
company and the ministry by that time to establish a pilot
project.

OBJECTIONS TO ISRAEL'S
USE OF TELECOM NETWORKS
--------------


7. (C) Bassil also informed the Charge that his Ministry
formally objected to what he clamed was Israel's use of
international telecommunications gateways to send recorded
voice messages to Lebanese citizens threatening action
against Lebanon. Israel reportedly sent messages to Lebanese
telephone users earlier this year threatening retaliation if
Hizballah took further actions against it. According to
Bassil, this is the third time Israel has employed this
tactic. To register the complaint, the Lebanese Ministry of
Telecommunications sent letters of protest to the
International Telecommunications Union (ITU) and the United
Nations directly, calling Israel's actions a breach of UNSC

1701.


8. (C) Bassil said he raised with PM Siniora on July 23 the
possibility of using a new telecommunications country code
whereby Lebanese will be able to place calls directly to the
West Bank and Gaza Strip without being routed through Israeli
telecommunications networks, as is currently the case.
Bassil planned to raise this issue with President Sleiman
later the same day.

BASSIL'S VIEWS ON THE
MINISTERIAL STATEMENT...
--------------


9. (C) Turning to politics, Bassil immediately asserted that
he "is a politician, not a telecom man." When asked about
his prediction of when the final statement would be issued,
Bassil, a member of the ministerial statement drafting
committee, said only that he did not think the final
statement would be released soon. The committee is scheduled
to begin discussions about economic issues today, and Bassil
could not predict how long that would take. Bassil also
opined that several of the members of the drafting committee
were "not in a hurry anymore" to complete the statement, as
President Sleiman has announced that he has delayed his trip
to Damascus, previously scheduled for July 26.


10. (C) Bassil stated that some of the contentious issues in
the ministerial statement have already been resolved, such as
Lebanon's relations with Syria. However, in his view, two
important disagreements remain: first, how to address the
issue of missing or detained Lebanese citizens in Syria and
second, disagreements over the wording regarding the
suppliers of weapons outside of the Palestinian refugee
camps, e.g., the PFLP-GC. Bassil also suggested that FPM
favors language in the statement that either names specific
Arab countries supplying weapons to the Palestinians, not
just outside the camps, but inside as well. Or, that the
statement not mention any names at all.

...AND ON RELATIONS WITH SYRIA
--------------


11. (C) Bassil expressed his opinion that Lebanon "needs
Syria" as a neighbor. However, he would not speculate on
what role Syria would or could play in Lebanon in the future,
except to say that this is a question the Lebanese must
answer for themselves. In Bassil's view, Syria is a foreign
power and will take as much, or as little, power as it is

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given. There are some members in the government, according
to Bassil, who are "rushing toward Syria" without considering
the outcome.

...AND ON THE 2009 ELECTIONS
--------------


12. (C) Like many in Lebanese political circles, Bassil and
FPM are also focusing on the 2009 parliamentary elections.
Although Bassil would not predict the outcome of the
elections, he did affirm his belief that a winning strategy
for the FPM is to argue that FPM does not marginalize
Christians. Bassil claimed that March 14 does not understand
the mentality of Christian voters and will not win votes just
by "giving them money." Although, he said, Christian voters
will take the money, it is more important for the voters to
feel represented.

COMMENT
--------------


13. (C) Bassil appeared well briefed and prepared to discuss
the technical issues of his portfolio. If he is serious
about his plans to move forward with mobile telecom
privatization and his desire to see American companies
participate, there may be new commercial opportunities in
Lebanon for U.S. companies. Our Commercial staff will take
the necessary measures to follow-up with Bassil's advisors
and locally-based American companies to explore potential
avenues of cooperation.


14. (C) Bassil's comments on the release of the ministerial
statement track with what we have heard from others.
Jockeying for favorable outcomes in the 2009 parliamentary
elections is clearly underway by FPM and other parties,
however, they are not yet discussing their strategies in
detail. End comment.
GRANT