LEBANON: FINANCE MINISTER SAYS BUDGET TRANSPARENCY IS A TOP

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E.O. 12958: N/A
TAGS: BEXP ECON EFIN EINV ETRD KIPR PGOV LE SOCI
SUBJECT: LEBANON: FINANCE MINISTER SAYS BUDGET TRANSPARENCY IS A TOP
PRIORITY (ECONOMIC WEEK IN REVIEW, AUGUST 10 - 16, 2009)

REF: A. BEIRUT 899

B. STATE 81177

CONTENTS
--------------

-- FINANCE MINISTRY DEFENDS GOL ON BUDGET TRANSPARENCY
-- STATISTICAL MASTER PLAN STILL PENDING IN CABINET
-- SOFTWARE INDUSTRY SAYS JUDICIARY BIGGEST OBSTACLE TO IP
PROTECTION
-- SALES OF U.S. CARS DOWN IN FIRST QUARTER 2009, NEW MODELS BETTER
MEET LOCAL DEMAND
-- COMMERCIAL SERVICE REPORTS THREE SUCCESS STORIES

FINANCE MINISTRY DEFENDS GOL
ON BUDGET TRANSPARENCY
--------------


1. (SBU) The Ambassador delivered Ref B demarche encouraging central
government budget transparency to caretaker Finance Minister
Mohammad Chatah on August 7. Chatah declared that budget
transparency was one of his ministry's top priorities, as evidenced
by its commitment to a $4 million World Bank assistance program to
improve Lebanon's budget process. He stressed that the ministry had
worked hard in recent years to bring more spending into the budget,
and he looked forward to a new IMF/World Bank assessment of the
Lebanese budgetary process, which he hoped would show improvement
from the last report done in 2004.


2. (SBU) Meanwhile, Rola Azour, Head of the Economic Unit at the
Ministry of Finance (MOF),told us in a separate meeting August 12
that the MOF releases detailed monthly reports on spending and
revenues on its website in order to make up for the lack of a
comprehensible budget law. She argued that in order for the budget
to become more transparent, a huge change in existing legislation
would be required, including the 1963 Public Accounting Law and the
Procurement Law, and added that it would be important to improve the
ministry's relations with parliament, helping MPs understand the
budget. Contradicting his colleague, the head of the UNDP Program
at the MOF, Chris de Clerq, offered no excuses for the GOL budget
process, saying it is not acceptable for Lebanon to "patch over
problems" with the budget. He declared that the GOL could make
rapid progress on budget reform if there were the political will to
do so.

STATISTICAL MASTER PLAN
STILL PENDING IN CABINET
--------------


3. (SBU) On August 13, the director of the Central Administration of
Statistics (CAS),Dr. Maral Totalian, told EconOff and Econ staff
that the Statistical Master Plan (SMP),a five-year plan for CAS,
designed with the assistance of the World Bank, is still pending
cabinet approval. Totalian worries that the plan, which aims at
giving CAS greater administrative flexibility and widening and
institutionalizing its role as the GOL's central body for
statistics, will become outdated by the time it is adopted. CAS
reports directly to the PM office, and although caretaker PM Siniora
has repeatedly expressed support for CAS, Totalian does not
understand why the SMP has not received the political backing it
needs to pass in cabinet.


4. (SBU) CAS conducts a variety of surveys, including on buildings
and dwellings, household living conditions, and a monthly consumer
price index, and is awaiting the PM's approval to begin surveys on
foreign direct investment and Lebanon's labor force. Bureaucratic
obstacles have prevented its taking on a more central role in
producing Lebanon's statistics, and many contacts believe political
interests, who fear the numbers an independent CAS might produce,
keep those obstacles in place. Totalian welcomed the idea of
receiving technical assistance from the U.S. Census Bureau and U.S.
Bureau of Labor Statistics to improve the quality of CAS's work.


SOFTWARE INDUSTRY SAYS JUDICIARY
BIGGEST OBSTACLE TO IP PROTECTION
--------------


5. (SBU) In a meeting on August 14, prominent intellectual property

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(IP) lawyer Walid Nasser, Microsoft Country Manager Leila Serhan,
and Business Software Alliance (BSA) representative in Lebanon Aly
Harakeh expressed concern over proposed amendments to Lebanon's
copyright law, which is still pending in parliament. Nasser said
that some of the amendments relating to peer-to-peer exchange and
copies of computer programs in educational institutions weakened
copyright protection for the software industry. EconOff noted that
Nasser's critiques of the law echoed comments from USTR sent to
post. Ultimately, added Nasser, the judiciary -- with its late
court decisions, mild penalties for infringers, and lack of
awareness of the importance of IP -- remains the main obstacle to
better IP protection. Harakeh noted that USG programs for judges
have had a positive impact, but much more is needed to better
protect right holders.

SALES OF U.S. CARS DOWN IN FIRST QUARTER 2009,
NEW MODELS BETTER MEET LOCAL DEMAND
--------------


6. (SBU) According to the two biggest authorized dealers of American
cars in Lebanon, T.Gargour & Fils (for Chrysler, Jeep, and Dodge)
and Impex Trading (Cadillac, Chevrolet, and Hummer),sales of U.S.
cars have decreased 15-20% in the first half of 2009. The drop in
sales was attributed to GM's filing for Chapter 11 bankruptcy in the
United States in June 2008. According to the Lebanese dealers,
customers were initially worried about after sale-service and the
potential closure of U.S. firms, however, sales have slowly picked
up in recent months.


7. (SBU) Both dealers believed U.S. automakers' restructuring
efforts and new product focus on leaner, fuel-efficient cars should
better meet the demands of the Lebanese market, where smaller, more
stylish, and more economical cars are popular. The dealers admitted
that the image of American cars as large, gas-guzzling and of low
resale value had hurt sales in recent years, but they said Dodge and
Chevrolet's new lines of more economical cars have been very popular
in the Lebanese market. Currently, the market share of American
cars is 7%, compared to 26% for European cars.

U.S. COMMERCIAL SERVICE REPORTS
THREE SUCCESS STORIES
--------------


8. (U) Post's Commercial Service (CS) reported three success stories
for the period between February-June 2009. In February, CS connected
U.S. apparel firm Bejeweled to a major Lebanese clothing importer
resulting in new signed contracts worth over $30,000. During the
same period, CS efforts facilitated the signing of an agreement
between General Electric (GE) and Lebanese firm Consulting &
Solution Provides (CSP),which will allow GE to increase its market
share in Lebanon's safety and security sector. In June, and as
result of CS's advocacy efforts, the cabinet issued a decree
allowing Motorola to register its office in Lebanon, removing it
from Lebanon's Arab League boycott list.

SISON