LEBANON: WA'AD -- EXAMPLE OF HIZBALLAH'S

C O N F I D E N T I A L SECTION 01 OF 02 BEIRUT 000262 SIPDIS DEPT FOR NEA/FO, NEA/ELA ALSO FOR IO/PDAS WARLICK P FOR DRUSSELL AND RRANGASWAMY USUN FOR WOLFF/GERMAIN/SCHEDLBAUER NSC FOR MCDERMOTT E.O. 12958: DECL: 01/25/2019 TAGS: PREL PGOV PTER PINR UNSC MARR MOPS LE SY SUBJECT: LEBANON: WA'AD -- EXAMPLE OF HIZBALLAH'S EFFECTIVENESS REF: 08 BEIRUT 472 Classified By: Charge d'Affairs a.i. William K. Grant for reasons 1.4 ( b) and (d). SUMMARY AND BACKGROUND -------------- ¶1. (C) The U.S. Government,s January 6 decision to designate Hizballah's Wa'ad construction company was met with muted reaction in Lebanon, likely because of the similar designation in 2007 of Hizballah's construction company Jihad el-Bina as well as the local media's preoccupation in early January with coverage of the fighting in Gaza. Hizballah established Wa'ad ("promise" in Arabic) in May 2007 to rebuild the southern Beirut Dahieh suburb following the July 2006 war between Hizballah and Israel. Hizballah's founding of a separate construction entity was widely viewed as a way for the group to win the hearts and minds of the predominantly Shia residents, some of whom were displeased that the group's kidnapping of two Israeli soldiers on July 12, 2006 had caused such destruction. The government's slowness at compensating property owners for war damage enabled Hizballah to take the lead in construction efforts. End summary and background. LOCAL ATTENTION ABSENT -------------- ¶2. (C) Few Lebanese press outlets highlighted the U.S. designation of Wa'ad on January 6, 2009, as they were focused on the fighting between Hamas and Israel in Gaza. Dr. Youssef El-Khalil, Director of Financial Operations Department at the Central Bank of Lebanon (CBL),in a conversation with Econstaff six days later, was unaware of the U.S. action but said he was not surprised given U.S. policy towards Hizballah. The USG previously designated Hizballah's construction arm Jihad al-Binaa in February 20, ¶2007. Two Shia journalists with Hizballah contacts also were unaware of the designation when contacted by Embassy staff. WA'AD FILLING A GAP -------------- ¶3. (C) After the 2006 war, the GOL pledged to pay a compensation of LL 80 million (about $53,000) to property owners whose residences were destroyed by Israeli bombing. After a beneficiary submits appropriate ownership documentation, the GOL's Higher Relief Council (HRC) issues a check in the name of the primary beneficiary; checks are then handed out to the beneficiary through the Fund for the Displaced, another GOL organ. Beneficiaries decide how they will spend the money, HRC SYG General Yehia Raad told Econstaff in January. ¶4. (C) Abbas Sabbagh, a journalist from moderate anti-Syrian An-Nahar, told us that about 81% of the beneficiaries in Beirut's southern suburbs cashed a first payment of LL 40 million ($26,500). Some hired Wa'ad to do the repair work. Typically, we are told, recipients gave Wa'ad LL 30 million (about $20,000) and were asked to keep for themselves LL 10 million ($6,500) as a "gift" from Hizballah SYG Nasrallah. Hizballah pledged to rebuild apartments exactly as they were in Beirut's southern suburbs prior to the July war and to cover any additional costs necessary to do so. Moreover, Hizballah is paying for the reconstruction of the "common areas" in buildings, such as the entrance, stairways, elevator space, parking and rooftop; according to Sabbagh, these represent about 20% of rebuilding costs and are not covered under the GOL compensation scheme. ¶5. (SBU) In early March, Wa'ad project General Manager Hassn Jishi told reporters that rebuilding 241 house in Beirut's southern suburbs would cost $400 milion. According to Jishi, GOL compensation to the buildings' residents totaled $180 million. Wa'ad will pay the remaining $220 million required to complete the project out of its own funds. BEIRUT 00000262 002 OF 002 GOL FINANCING SLOW, -------------- ¶6. (C) The slow pace of bureaucracy has also enabled Wa'ad to step in front of GOL reconstruction efforts in the south. The Lebanese Government distributed the first tranche of aid from the Stockholm Donors' Conference for reconstruction in October 2006 and says it paid out the second tranche in March ¶2008. However, we have heard from other contacts that the GOL in fact has not yet begun its second payment. The Prime Minister's reconstruction website indicates the GOL began in January 2009 to pay the second tranche of international funds. . ¶7. (C) Saudi Arabia donated $315 million for housing reconstruction in 222 selected villages all over Lebanon and 36 plots in the southern suburbs. It has not been fully paid out. There is a widespread rumor that Prime Minister Siniora may have spent some of the remaining funding on other projects and recent pressure from the Kingdom has restarted distribution. Parliament Speaker Nabih Berri told press outlets February 5 that the Saudi Ambassador confirmed Prime Minister Siniora would pay by the end of February the remaining amount of the Saudi aid dedicated to rebuilding homes destroyed by the July 2006 war. According to information from the Prime Minister's reconstruction website, $7.8 million of the previously pending $40 million was paid in a five-day period from January 31-February 5. MP Nasser Nasrallah, aligned with Berri, claimed that Riyadh was extremely dissatisfied with Siniora's handling of the Kingdom's grant and pushed the GOL to distribute the money quickly in the south. WA'AD TOOTS THEIR HORN -------------- ¶8. (C) Wa'ad pays for slick advertisements touting its accomplishments in the in-flight magazine of Lebanon flag carrier Middle East Airlines (MEA). MEA executives have told us that they cannot direct the separate firm that publishes the magazine to block such ads unless required by a court action acceptable under Lebanese law, or an order by the GOL. Informally they have admitted to us that MEA would not want to have a confrontation with Hizballah, since the party effectively controls the area around the airport and blocked access to it during the May 2008 violence. COMMENT -------------- ¶9. (C) Wa'ad's impact in areas damaged during the 2006 war is another example of Hizballah's skill at providing services more effectively than the government does in areas that suffered the damage during the war. It also demonstrates Hizballah's skillful media apparatus, which credits Hizballah for local infrastructure projects, even though much of the funding comes from the GOL. End Comment. GRANT