LEBANON: TELECOM MINISTER PUSHES PRIVATIZATION,

C O N F I D E N T I A L SECTION 01 OF 03 BEIRUT 001086 SIPDIS DEPT FOR NEA/FO, NEA/ELA ALSO FOR IO A/S SILVERBERG AND PDAS WARLICK P FOR HERRO MUSTAPHA USUN FOR KHALILZAD/WOLFF/KUMAR NSC FOR ABRAMS/SINGH/YERGER/GAVITO 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 BEIRUT 00001086 003 OF 003 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