LEBANON: TELECOM MINISTRY COMMITTED TO LIBERALIZATION AND

UNCLAS SECTION 01 OF 02 BEIRUT 000451

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STATE FOR NEA/ELA AND EEB/IFD/ODF
STATE PASS USTR FRANCESCKI
STATE PASS USAID NANDY/SCOTT
TREASURY FOR PARODI/BLEIWEISS/AHERN
USDOC FOR 4520/ITA/MAC/ONE
NSC FOR SHAPIRO/MCDERMOTT

E.O. 12958: N/A
TAGS: ECON EFIN ECPS PGOV KIPR KCORR LE
SUBJECT: LEBANON: TELECOM MINISTRY COMMITTED TO LIBERALIZATION AND
PRIVATIZATION (ECONOMIC WEEK IN REVIEW, APRIL 13 - 19, 2009)

CONTENTS
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-- TELECOM MINISTER: LIBERALIZATION AND PRIVATIZATION IS OUR POLICY
FOR THE SECTOR
-- DRAFT LAW ON ACCESS TO INFORMATION RELEASED
-- POLICE INAUGURATES ENHANCED CYBERCRIME AND INTELLECTUAL PROPERTY
UNIT
-- EIU EXPECTS 2.4% GROWTH IN 2009, 3.3% IN 2010


TELECOM MINISTER: LIBERALIZATION AND
PRIVATIZATION IS OUR POLICY FOR THE SECTOR
--------------


1. (U) On April 15, Minister of Telecommunications Gebran Bassil
inaugurated the two-day 9th Arab Telecom & Internet Forum in Beirut
with the participation of Telecom Ministers from Syria, Jordan,
Kuwait, and Saudi Arabia. Bassil said Lebanon has a clear policy
for the telecom sector, consisting of liberalization and
privatization. He added that Lebanon wants to give local companies
priority in developing the sector, as other Arab countries have
done. According to Bassil, the Ministry of Telecommunications (MOT)
plans to set up publically-controlled Liban Telecom (which will
control fixed lines and a third cellular license) as a first step,
and will allow equity participation for cooperatives and pension
funds, in addition to selling some shares on the local market. He
also pointed out the need to develop the fixed line network, to
cover all of Lebanon with fiber optic cable. Bassil noted that the
MOT hopes to launch a media city in Lebanon in coordination with
Arabsat, with incentives for investors.


2. (SBU) Although MOT has made progress in addressing issues such as
low cellular penetration, a lack of services, and high prices,
Bassil acknowledged there is still more to be done. He blamed the
government for not issuing broadband licenses and for delays in the
administrative and legislative framework. The MOT is currently
adding 800,000 new cellular lines, to increase the cellular
penetration rate from 33% in mid-summer 2008 to 57% by mid-May 2009,
and plans to add another 1.2 million lines at a later stage.
Although the ministry has lowered calling costs, they remain high
compared to neighboring countries such as Jordan, said Bassil,
adding that he hopes to be able to reduce costs further in the
second half of 2009. (Comment: Bassil, who is running for a
parliamentary seat on the list of opposition leader Michel Aoun,
intimated throughout his remarks that he would like to stay on as
Telecom Minster upon the formation of a new government after the
elections. His criticisms of government inaction on broadband and
other matters should be seen in the context of the election
campaign. End comment.)

DRAFT LAW ON ACCESS TO
INFORMATION IS RELEASED
--------------


3. (SBU) On April 14, the National Network for the Right of Access
to Information announced the release of a draft law on public access
to information. Members of the network (including MPs, ministries,
and NGOs, in collaboration with the American Bar Association's Rule
of Law Initiative in Lebanon) hope the law will help increase
government transparency and decrease corruption. Interior Minister
Ziad Baroud estimated that the GOL would have saved approximately
$1.5 billion annually in losses from corruption, had the law been
proposed and adopted before. However, MP Yassine Jaber (close to
Parliament speaker Berri) told us that chances of the law being
passed anytime soon are minimal, and blamed the parliamentary
majority for not attending sessions and thus preventing a quorum.
The network is currently working on drafting another law on
whistleblower protection.

POLICE INAUGURATES ENHANCED CYBERCRIME
AND INTELLECTUAL PROPERTY UNIT
--------------


4. (U) On April 15, the Internal Security Forces (ISF - police)
inaugurated the ISF's enhanced cybercrime and intellectual property
unit, in the presence of DCM Grant. The Department of State's
Bureau of International Narcotics and Law Enforcement (INL) funded

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the unit through a $143,000 grant to local NGO Lebanese Intellectual
Property Association (LIPA). LIPA provided technical assistance,
equipment, software and training, in addition to creating an
interactive website and drafting new legislation relating to
cybercrime. Part of the project focused on raising public awareness
about the ISF's important work through promotional materials, and
setting up a hotline allowing citizens to contact the ISF directly
about intellectual property and cybercrimes.

EIU EXPECTS 2.4% GROWTH
IN 2009, 3.3% IN 2010
--------------


5. (U) According to the latest Economist Intelligence Unit (EIU)
report, contraction in regional demand for Lebanese goods and
services, as well as political uncertainty due to the upcoming
parliamentary elections, will cause real GDP growth in Lebanon to
fall to 2.4% in 2009. The global economic crisis will also affect
growth in Lebanon's key tourism, real estate, construction, and
financial sectors. However, the EIU expected growth to rise to 3.3%
in 2010, with a slow revival in regional growth boosting investment
and tourism. Meanwhile, consumer price inflation is expected to
decline to 4% in 2009, and 3.5% in 2010. Last month, Central Bank
Governor Riad Salameh projected economic growth of around 4% in 2009
and inflation under 4%.

SISON