LEBANON: MINISTER OF ECONOMY ON ELECTIONS; WTO

C O N F I D E N T I A L SECTION 01 OF 03 BEIRUT 001138

SIPDIS

DEPT FOR NEA/FO, NEA/ELA;
ALSO FOR EEB-RDEMARCELLUS
P FOR HMUSTAPHA AND RRANGASWAMY
USUN FOR KHALILZAD/WOLFF/KUMAR
NSC FOR ABRAMS/SINGH/YERGER/GAVITO

E.O. 12958: DECL: 08/03/2018
TAGS: PREL PGOV PTER PINR UNSC ECON EAID EIND ETRD
SUBJECT: LEBANON: MINISTER OF ECONOMY ON ELECTIONS; WTO
ACCESSION

REF: BEIRUT 1104

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

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


1. (C) In an August 4 courtesy call by Charge, Lebanese
Minister of Economy and Trade Mohammad Safadi shared his
assessment of the GOL's ministerial statement as "the best
possible outcome" and that the National Dialogue should be
the next focal point for political decisions. Safadi, a
Sunni member of the March 14 coalition, added that the 2009
parliamentary elections will be crucial and the majority
March 14 coalition "should not take anything for granted",
including the Sunni vote. He reported that the need for
March 14 senior leaders to communicate better to others in
the coaltion, including himself, was a theme of a "clear the
air" meeting that March 14 held the day before. Safadi says
he cannot blame the Lebanese Armed Forces (LAF) for their
initial reticence to intervene in recent clashes in his home
city of Tripoli.


2. (C) On Lebanon's bid to join the WTO, an aide to Safadi
confirmed that the discussions and technical changes to
Lebanese law were on track. However, Safadi was concerned
that the GOL needs to further develop a "phase-out" plan for
non-competitive industries, rather than shut them down
abruptly, before any agreement is signed. Finally, Safadi
predicted that the "time is too short" to tackle any serious
problems in the government before the next elections, but the
extent of any work completed depends upon the individual
ministers and their ministries. End summary.

NOW THE HARD PART:
THE NATIONAL DIALOGUE
--------------


3. (C) In an August 4 courtesy call, Minister of Economy and
Trade Mohammad Safadi, accompanied by his advisor Antoine
Constantine and another ministry aide, told Charge Grant,
accompanied by poloff, that the text of the ministerial
statement agreed August 1 was "the best possible outcome."
Echoing the sentiments of other majority March 14 members,
Safadi believes the ministerial statement can be interpreted
in many ways, but said March 14 was happy with it. Safadi
expects the cabinet and the parliament will pass the
ministerial statement in the coming days.


4. (C) The toughest issues to resolve -- the idea of
"resistance" and Hizballah's arms -- will now be taken up
during the National Dialogue to be led by President Sleiman.
Safadi said he advised Sleiman's aides that the National
Dialogue focus on the National Defense Strategy first, before
becoming bogged down in other economic or social issues. In
his view, the immediate concern of Lebanese citizens is the
status of Hizballah. Safadi believes that the National
Dialogue will begin soon after President Sleiman concludes
his visit to Damascus.

MARCH 14 AND THE 2009 ELECTIONS
--------------


5. (C) Safadi is a March 14 holdover from the previous
cabinet, where he had the Public Works and Transportation
portfolio. He is a Sunni from Tripoli who heads a
five-member bloc of MPs. While part of March 14, he
maintains his independence from other March 14 Sunni leaders
Saad Hariri and PM Fouad Siniora. Asked whether the mood of
the ministers was better or worse now in the post-Doha Accord
period, Safadi said only that "everyone is focused on the
(2009) elections" and that it "will not be an easy ride." He
called the March 14 meeting of the day before an "opening
stage" to improved March 14 unity. According to him, much
self-criticism was expressed, as well as concerns about the
lack of communication and coordination among March 14
members. All parties, he said, called for more meetings,
more regularly, to keep March 14 on the same message.

BEIRUT 00001138 002 OF 003




6. (C) Safadi assessed that March 14 needs to approach the
2009 parliamentary elections as one "uniting election for
March 14," rather than as an election focused n specific
districts. Addressing the conventionl wisdom that the
Christian areas will be competitive and Muslim areas will
not, he said March 14 cannot take anything for granted,
including in the Sunni areas.


7. (C) The concept of "the rule of the majority" has been
corrupted by recent events, Safadi said, referring the
difficulties the March 14 majority had in exercising its
power. He believes the 2009 elections will provide a clear
demarcation between the two sides (i.e. majority vs.
minority). Furthermore, March 14 needs to be prepared to
make unified decisions for the election. Safadi further
commented that the opposition would have no trouble keeping
the influence of the majority if it were to win the
elections.

TRIPOLI: THE SITUATION IS
MORE SERIOUS THAN IT APPEARS
--------------


8. (C) Safadi, discussing his native Tripoli, cautioned that
the intermittent fighting between local Shia and Alawite
groups there was more serious than it appears. He believes
the purpose behind the incidents was to embarrass Syria and
draw it into the conflict, in addition to exposing supporters
of Salafi ideology in Tripoli. Although the situation is
currently under control, maintaining the peace will require
continued engagement from the Lebanese Armed Forces (LAF) and
the Internal Security Forces (ISF),in his view.


9. (C) Safadi says he does not blame the LAF for not
intervening sooner in the conflict, as the LAF must have
"very clear instructions" before they act, but says that it
was important to the people of Tripoli that the LAF acted to
avert "intense suffering" (reftel). He thought any perceived
reluctance by the LAF might be related to the negative
experience of earlier this year, when the LAF intervened in a
dispute in Beirut between Shia and Christian groups, and
seven Shia were killed, apparently by LAF fire. Safadi also
credits Tripoli Mufti Sheikh Malek Shaar for successfully
mediating between the factions.

LEBANON AND THE WTO
--------------


10. (C) Safadi relied on his aide to update Charge on the
GOL's progress in meeting its WTO accession targets. She
informed us that the GOL submitted its sixth round of
questions and answers to the WTO secretariat at the end of
May, but had not heard a response. Additionally, the GOL had
requested a working session occur in October, but it is
unclear whether the GOL will have sufficient time to prepare
for it. The Ministry of Economy and Trade, according to
Safadi's aide, in cooperation with USAID, is preparing to
offer education and training sessions to Members of
Parliament (MPs) so that they better understand the technical
aspects of the proposed laws that meet WTO guidelines, before
voting on them.


11. (C) She commented that the GOL had made significant
progress on its multilateral track negotiations, but problems
remained in the bilateral track, particularly in the
industrial and agricultural sectors. The GOL is awaiting a
shortened, revised list of key products whose tariff rate
would be zero because the number of products on the initial
list would generate an unsustainable revenue loss for the
GOL, according to the ministry.


12. (C) Safadi was most concerned about the creation of a
"phase-out" plan for non-competitive industries and said that
the GOL, to date, "had failed" in this area and more work
needs to be done. Safadi did not believe that there would be
instinctive resistance to Lebanon joining the WTO on the part
of MPs; rather, he believes, the MPs would follow the
opinions of their business and agricultural constituents.

BEIRUT 00001138 003 OF 003



MAJOR PROBLEMS WILL HAVE TO WAIT
--------------


13. (C) Safadi assessed the time between the start of this
new government and the 2009 elections is "too short" to
expect any significant progress on major issues in Lebanon.
Safadi believes that however much will be accomplished is
directly related to the individual ministers and which
ministries they head. Without hubris, Safadi said "I am a
working guy, so I will work", but he was not sure about some
of the other ministers.
GRANT