SARG NEGOTIATES FOR RUSSIAN AIRCRAFT AS PART OF

C O N F I D E N T I A L DAMASCUS 003186 SIPDIS SIPDIS NEA/ELA NSC FOR ABRAMS/DORAN/SINGH TREASURY FOR GLASER/LEBENSON E.O. 12958: DECL: 06/28/2016 TAGS: EAIR ECON EINV ETTC SY SUBJECT: SARG NEGOTIATES FOR RUSSIAN AIRCRAFT AS PART OF DUAL-TRACK EFFORT TO UPDATE FLEET REF: DAMASCUS 1811 Classified By: CDA Stephen Seche for reasons 1.4 b/d ¶1. (U) Syrian Minister of Transportation, Yarob Sulieman Bader, was in Moscow this past week negotiating with representatives from Ilyushin Finance and Voronezh Aircraft Construction Company on the purchase of seven new planes to update SyrianAir's fleet. Local, regional, and international press reported widely on the discussions surrounding the delivery of three Il-96 planes and four Tu-204 aircraft to Syria, as well as on an MOU signed between the two parties to build a regional technical maintenance hub in Syria to service Russian commercial aircraft. While initial press reports implied that negotiations on airplane procurement had been finalized, susequent articles this week indicated that TransMin Bader would continue to study the technical and financial aspects of the airplane purchase, and would potentially sign a contract with Ilyushin by the end of the year. 2, (C) Sources have suggested that SyrianAir has allocated approximately 500 million USD of funding to update its fleet. However, TransMin Bader has been reticent to sign an agreement with the Russians. According to Ali Za'tari, resident UNDP Representative, this can be attributed to TransMin Bader's desire to continue to pursue other options - namely potential "wet" and "dry" lease possibilities for Boeing and Airbus aircraft (reftel). Za'tari claims that the International Civil Aviation Organization (ICAO) technical team that visited Syria in April has sought support - specifically for dry lease options for SyrianAir - from the office of the U.S. ICAO Representative, and that the team is pursuing meetings in the near future with the Department of Commerce to discuss SyrianAir's prospects for obtaining aircraft export licenses. Many Syrians, including our contacts, have criticized the SARG's decision to purchase low-quality Russian planes, which resulted in the Russian Embassy in Damascus issuing a press statement on June 28 that its planes are safe and in many ways more technologically advanced that their Western counterparts (Note: Za'tari was skeptical of the confidence of the Russians toward their own planes, pointing out that the entire Russian fleet is comprised of Airbus aircraft. End note). ¶3. (C) Comment: Despite the heavily touted negotiations with Russia, it appears that the SARG continues to hedge its bets that ICAO negotiations over dry lease options for Boeing or Airbus aircraft will be successful. We have heard that SyrianAir now has only nine operable planes, and contacts have told us that by 2008 those nine will also likely be grounded. Nonetheless, contacts contend that the SARG is unwilling to forego the "national character" of its airline by accepting the leasing conditions under a wet lease option. However, as 2008 draws near, if SyrianAir hopes to continue with its operations, it will be forced to weigh sacrificing the airline's national identity for the sake of the safety of its passengers. SECHE