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Viewing cable 06BEIRUT1086, MGLE01: SPECIAL CABINET SESSION DISCUSSES

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Reference ID Created Released Classification Origin
06BEIRUT1086 2006-04-06 15:34 2011-08-24 16:30 UNCLASSIFIED Embassy Beirut
VZCZCXYZ0006
PP RUEHWEB

DE RUEHLB #1086 0961534
ZNR UUUUU ZZH
P 061534Z APR 06
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC PRIORITY 2944
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RHEHNSC/NSC WASHDC
UNCLAS BEIRUT 001086 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USTR 
TREASURY FOR MSHWARZMAN 
USDOC FOR 4250/ITA/MAC/OME 
NSC FOR ABRAMS/DORAN/WERNER/SINGH 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EFIN LE
SUBJECT: MGLE01:  SPECIAL CABINET SESSION DISCUSSES 
ECONOMIC REFORM AGENDA 
 
 
1.  Summary:  The GOL's economic reform agenda was presented 
before the full Cabinet for the first time during a special 
session on April 5.  President Lahoud chaired the session 
where both Finance Minister Azour and Economy Minister Haddad 
made Power Point presentations outlining the GOL's reform 
agenda.  The session was notably calm in contrast to the 
acrimony present at the Cabinet session on March 30.  Prime 
Minister Siniora stated that the special Cabinet session was 
the first in a series of meetings for economic stakeholders 
and Cabinet members that would discuss elements of the GOL's 
economic reform agenda "one by one."  The GOL has scheduled a 
special Cabinet session for April 11 to discuss the social 
security fund; another special session later that week may 
take up electricity reform.  PM Siniora said he would soon 
engage labor unions on economic reform.  Information Minister 
Aridi told the press after the meeting that the reform agenda 
would be discussed during weekly special sessions until a 
consensus is reached among Lebanon's political and economic 
leaders.  Four ministers out of the 24-member cabinet were 
absent:  Minister of Defense Murr (abroad for medical 
treatment), Minister of Transportation Safadi, Minister of 
Justice Rizk (abroad), and Minister of Tourism Sarkis 
(boycotting because of Lahoud's presence).  End Summary. 
 
2.  Finance Minister Jihad Azour introduced the program as a 
"passport for the Beirut I conference" that would allow the 
Lebanese economy to "stand on its feet again."  According to 
Azour, the program has four parts:  achieving economic growth 
of at least five percent, providing a social safety net, 
dealing with the economic problems burdening the citizens, 
and revenue measures including taxes.  While responding to 
criticism over the possibility of higher taxes, Azour 
defended the need to reduce the deficit through lower public 
expenditures and increased revenues.  He told the Cabinet 
members that tax increases would be subject to discussion, 
saying that if the chronic problems and corruption facing the 
power company Electricite du Liban were dealt with, Lebanon 
would not need to raise future taxes.  PM Siniora also told 
Cabinet members that the current plan was "subject to 
alteration," as he responded to criticism over tax increases. 
 Azour emphasized the need to have "consensus over the reform 
program" from all political leaders. 
 
3.  President Lahoud entered the meeting calmly and shook 
hands with all the ministers who were present, including 
Interior Minister Fatfat, who visibly sparred with President 
Lahoud at the March 30 Cabinet session.  He stated that the 
current reform document has "more titles than details" at 
this point.  He told the press that he would support any 
economic reform program that "guarantees" the best interests 
of Lebanon.  He also told press sources that he was concerned 
about criticism of the program and would listen to all 
ministers' points of view with "an open mind." 
 
4.  Three Shia ministers were vocally skeptical of the 
program presentation.  Health Minister Khalifeh described the 
reform document as "very vague" and said "the only thing 
clear in this program is the tax increases."  Khalifeh also 
expressed concern over the lack of a tangible safety net in 
the program.  Labor Minister Trad Hamadeh told the press he 
had concerns that the philosophy of the program was based on 
liberal, Western economic textbooks.  Energy Minister (and 
Hizballah member) Mohamd Fneish said the program contained 
both "positive and negative aspects." 
 
5.  COMMENT.  The fact that the Cabinet is now discussing the 
economic reform agenda in a calm manner is a positive 
development, and the marketing of the reform agenda should 
become more pronounced as economic issues are increasingly 
becoming part of the national debate.  The Prime Minister and 
his economic team need to continue to press the virtues of 
fiscal responsibility, even though the proposed tax increases 
are widely unpopular with the public, members of the business 
community, and several Cabinet members.  END COMMENT. 
FELTMAN