Identifier
Created
Classification
Origin
08BEIRUT1345
2008-09-15 10:38:00
CONFIDENTIAL
Embassy Beirut
Cable title:  

LEBANON: MINISTRY OF ECONOMY AND TRADE DISCUSSES

Tags:  PGOV PREL ECON EFIN ETRD KPAL QA LE 
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PP RUEHAG RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHLB #1345/01 2591038
ZNY CCCCC ZZH
P 151038Z SEP 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC PRIORITY 3026
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNDT/USMISSION USUN NEW YORK 2900
RUEHNO/USMISSION USNATO 3117
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RHEHAAA/NSC WASHDC
C O N F I D E N T I A L SECTION 01 OF 03 BEIRUT 001345 

SIPDIS

DEPT FOR NEA/FO, NEA/ELA
ALSO FOR IO ACTING A/S HOOK AND PDAS WARLICK
USUN FOR KHALILZAD/WOLFF/SCHEDLBAUER
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT
COMMERCE FOR ITA SAMS AND WIEGLER
STATE PASS TO USTR SONIA FRANCESKI
ALSO PASS TO USAID LAUDATO/BEVER/SCOTT

E.O. 12958: DECL: 09/12/2018
TAGS: PGOV PREL ECON EFIN ETRD KPAL QA LE
SUBJECT: LEBANON: MINISTRY OF ECONOMY AND TRADE DISCUSSES
SITUATION IN TRIPOLI, ECONOMIC POLICY

REF: BEIRUT 1337

Classified By: Ambassador Michele J. Sison for reasons 1.4
(b) and (d).

SUMMARY
-------

C O N F I D E N T I A L SECTION 01 OF 03 BEIRUT 001345

SIPDIS

DEPT FOR NEA/FO, NEA/ELA
ALSO FOR IO ACTING A/S HOOK AND PDAS WARLICK
USUN FOR KHALILZAD/WOLFF/SCHEDLBAUER
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT
COMMERCE FOR ITA SAMS AND WIEGLER
STATE PASS TO USTR SONIA FRANCESKI
ALSO PASS TO USAID LAUDATO/BEVER/SCOTT

E.O. 12958: DECL: 09/12/2018
TAGS: PGOV PREL ECON EFIN ETRD KPAL QA LE
SUBJECT: LEBANON: MINISTRY OF ECONOMY AND TRADE DISCUSSES
SITUATION IN TRIPOLI, ECONOMIC POLICY

REF: BEIRUT 1337

Classified By: Ambassador Michele J. Sison for reasons 1.4
(b) and (d).

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


1. (C) In a meeting with the Ambassador, Ministry of Economy
and Trade Mohammad Safadi praised majority leader Saad
Hariri's role in the reconciliation among opposing groups in
Tripoli, but said their weapons will remain. He worried that
the Beddawi Palestinian refugee camp outside Tripoli is
becoming a new hub of extremism. He said the launch of the
National Dialogue is a good idea, and that Hizballah's arms
should be the first item on the agenda. He believed the 2009
parliamentary elections might be delayed to ensure that
preparations are complete and there are sufficient election
workers to cover the country.


2. (C) The Ambassador thanked Safadi for his support and
upcoming participation in the Made in America trade fair in
October. The Minister talked about the September 9 cabinet
approval of public and private sector wage increases and
labor's response. He defended his decision to reinstate
limits on profit margins in the trade sector, but said
WTO-related legislation was on track in the parliament. He
said the GOL hoped the Qataris might provide support and
investment to the Lebanese economy, and he indicated that
President Sleiman might lead a delegation to the Arab League
economic summit to be held in Kuwait in January 2009. End
summary.

RECONCILIATION IN TRIPOLI,
BUT THEY STILL HAVE WEAPONS
--------------


3. (C) The Ambassador, accompanied by EconOff, called on
Minister of Economy and Trade Mohammad Safadi in his ministry
office September 11. Safadi, a Sunni and native of Tripoli,

said that the reconciliation among Sunni and Alawite groups
around Tripoli was a very good development, and that Saad
Hariri had played an important role. The Ambassador said she
worried that despite the political reconciliation, the groups
still had their weapons. "Yes," said Safadi, "and the
weapons will stay there for the time being." Nonetheless, he
said, as long as the political situation remained stable,
there was very little concern that the groups would use those
weapons. Safadi worried more about the mercenaries who had
been hired to fight for one side or the other, and would pick
up their arms for anyone at any moment.


4. (C) Safadi said that those who had provided weapons to
the Salafists in Tripoli had made a grave mistake, and that
the idea of using Sunni extremists to fight Hizballah was
dangerous. He also contended that the Salafists had made a
mistake in wanting weapons. He said he had met with some of
the Salafist leaders and tried to convince them: "As long as
you are just selling an idea," he reportedly told them, "the
constitution protects you, and you can say what you like.
But once you start carrying a gun, you are a terrorist, and
the head of a terrorist will eventually be cut off. For your
own safety, get rid of your weapons." Unfortunately they
were not convinced, he said. Safadi added that the political
leadership needed to persuade all parties not to provide
funding to these groups anymore. (Note: Several Embassy
contacts have claimed that Safadi was in fact one of those
funding weapons for Salafist groups. End note.)


5. (C) The Ambassador asked Safadi if the destruction around
Nahr al-Barid camp, which affect Lebanese communities as
well, continued to impact the region around Tripoli. Safadi
said he worried that the crowded Beddawi refugee camp, where
many of the displaced from Nahr al-Barid had fled, was now
being used by Sunni extremist groups as a base.

NATIONAL DIALOGUE AND THE ELECTIONS

BEIRUT 00001345 002 OF 003


--------------


6. (C) Safadi said President Sleiman made a good move in
deciding to launch the National Dialogue on September 16 with
the same participation as at the Doha Conference. He said
Sleiman had actually wanted to include more parties in the
Dialogue, but had decided to launch with 14 participants and
let them decide whether or not to expand participation. When
asked how he felt about the Dialogue agenda being expanded to
include economic issues, Safadi said there was one issue that
should be the first to be discussed: Hizballah's weapons.
After that is settled, he said, "we can talk about whatever
they want."


7. (C) The Minister said that the timetable for the
parliamentary elections would depend to a certain extent on
progress in the National Dialogue. However, even if the
National Dialogue goes perfectly, he said, there is a
possibility the elections might be delayed a month or two, in
order to ensure that all the necessary preparations are made
and that there are sufficient election workers for all the
polling stations. He said the elections should be done in
one day, if at all possible, to minimize manipulation or
chances for violence. Despite the logistical challenges, he
said, "we have to do it in one day."

MADE IN AMERICA
--------------


8. (SBU) The Ambassador thanked Minister Safadi for
approving the U.S. Commercial Service's Made in America trade
fair, to take place October 9-11 in Beirut. The Minister
indicated that he would participate in the ribbon-cutting
ceremony for the event, at which more than 260 companies will
exhibit. (Note: This will be the first Made in America
since 2005. Safadi appears eager to support U.S.-linked
events; he was a keynote speaker September 12 at the
Lebanese-American Renaissance Partnership Conference. End
note.)

HIGHER WAGES TOUGH ON THE BUDGET
--------------


9. (SBU) Safadi, commenting on the September 9 unanimous
cabinet approval of a series of wage increases for Lebanese
workers, said the wage increase was modest, but that it was
all the government could afford, something he had tried to
explain to the labor leaders. "We are both correct," he said
he told them, "What you say you deserve, you deserve, but
what we say we can afford, is what we can afford." He noted
that the indirect taxation measures the cabinet had included
in the wage increase package would at least partially offset
the cost of the wage increase. (Note: Finance Minister
Chatah's description of these measures is included in reftel.
End note.)

"ANTI-FREE TRADE MEASURE"
--------------


10. (C) Minister Safadi brought up "my anti-free trade
measure" -- his recent reinstatement of a previously
abolished decree setting maximum profit margins for companies
in the trade sector. He said that he disagreed with the
concept of the decree, which is a step back on the road to
WTO accession, but that he had to bring it back because "free
competition does not exist in Lebanon." He claimed that he
had seen signs of price collusion in the consumer goods
market, and was forced to bring back the "sword" he could use
to stop it. He said he called all the industrial leaders in
the country before he took the measure, telling them that as
long as they restrained themselves, he would not apply it.
"I do not want to use it, but it is there if I need to," he
said.


11. (SBU) Nonetheless, said the Minister, other laws before
parliament that will be needed for WTO accession should be
voted on in the coming weeks and months. He said he did not

BEIRUT 00001345 003 OF 003


anticipate any political opposition to them, though he did
worry that parliament is currently acting very slowly, so it
might take a while for parliament to get to them.

"WHATEVER YOU HELP US WITH, WE ARE THANKFUL"
--------------


12. (C) When asked about potential trade deals with
Lebanon's neighbors, Safadi answered that President Sleiman's
trip to Qatar had resulted in a few ideas for Qatari
investment and assistance in Lebanon. He said Sleiman had
discussed a possible joint Qatari-Lebanese development
project in which the Lebanese government would provide land
and the Qataris would provide investment money. Safadi said
the Qataris also indicated they would increase their deposit
at the Lebanese central bank. "We had a big shopping list,"
said Safadi, "and we told them, 'Whatever you help us with,
we are thankful.'"


13. (SBU) Safadi also noted that there had been a positive
economic outcome from the recent Arab League Summit in Egypt:
the Arab Economic Summit to take place in Kuwait in January.
Referring to it as an "Arab Davos," Safadi said he would
certainly attend, and that there was a good possibility that
President Sleiman would lead the Lebanese delegation.

SISON