LEBANON: FINANCE MINISTER SAYS BUDGET TRANSPARENCY IS A TOP

UNCLAS SECTION 01 OF 02 BEIRUT 000918 SIPDIS SENSITIVE STATE FOR NEA/ELA AND EEB/IFD/ODF STATE PASS USTR FRANCESCKI STATE PASS USAID LAUDATO/NANDY/SCOTT TREASURY FOR PARODI/BLEIWEISS/AHERN USDOC FOR 4520/ITA/MAC/ONE NSC FOR SHAPIRO/MCDERMOTT 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 BEIRUT 00000918 002 OF 002 (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