FRENCH-SYRIAN ECONOMIC INITIATIVES STRUGGLE TO

C O N F I D E N T I A L DAMASCUS 000497

SIPDIS

STATE FOR NEA/ELA; NSC FOR ABRAMS/GAVITO

E.O. 12958: DECL: 07/10/2018
TAGS: EAIR ETRD PGOV PTER SY FR
SUBJECT: FRENCH-SYRIAN ECONOMIC INITIATIVES STRUGGLE TO
KEEP PACE WITH POLITICAL THAW

REF: DAMASCUS 438

Classified By: Charge d'Affaires Michael Corbin for reasons 1.4(b,d)

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Summary
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1. (C) As Bashar prepares to visit Paris on July 12-14,
French and Syrian officials are discussing potential economic
initiatives to flesh out the political agenda of a new phase
in bilateral relations. The French Embassy confirmed that
the GOF has invited a Syrian business delegation to Paris
later this month, but expressed frustration at the Syrian
head of delegation's unwillingness to delve into details.
One initiative under discussion is France's desire to
resuscitate Syria's EU Association Agreement, an idea that
prompts lukewarm Syrian reaction at best. For its part, the
SARG raised the sale of new Airbus aircraft to Syrian Air as
a high priority on its wish-list to the Elysee, although
French officials in Damascus assure Post that no such deal is
in the works. As Syria's economy continues to sputter,
Syria's business community will be looking for concrete deals
to emerge from French engagement. End summary.

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DPM Dardari to go to Paris
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2. (C) Head of the French Trade and Economic Mission to Syria
Philippe Galli (protect) confirmed that Deputy Prime Minister
(DPM) for Economic Affairs Abdallah Dardari had been offered
an invitation to visit France July 21-22 as a result of FM
Muallem's recent meetings in Paris, and as part of the road
map to be approved by Sarkozy and Asad next week. Galli
claimed that he was responsible for building Dardari's
schedule, and expressed frustration that Dardari's office had
so far been unwilling to even discuss ideas for the trip
until Dardari returns from Spain. Galli said that while it
was possible that Dardari would want to bring a delegation of
Syrian businessmen with him to France, he had received no
such request yet.

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Sarkozy likely to offer EU Association Agreement
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3. (C) Galli said that he fully expected President Sarkozy to
use France's Presidency of the EU to move Syria's accession
into the EU Association Agreement forward. Galli dismissed
the EU Association Agreement as an inexpensive political
carrot that Sarkozy could offer Asad. He claimed that the
agreement would have little practical impact on the Syrian
economy beyond increasing low-level "technical cooperation."
Our Syrian contacts traditionally have reacted negatively
towards any mention of the EU Association Agreement, but now
some are warming up to the idea. The problem remains,
however, that the Agreement's 2004 framework is out-of-date
and would have to be amended to reflect Syria's substantial
trade reforms over the past two years. (Note: A Turkish
diplomat told us that Turkey viewed Syrian acceptance into
the EU Association positively, in that it would strengthen
Syrian institutions and open the door for "legitimate"
Western businesses to enter )- which he claimed would be
better for Turkish business in Syria than competing in an
unregulated way with Russian and Chinese businesses. End
note.)

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French Ambassador Responsible for Airbus Rumor
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4. (C) Many Syrian business contacts are wrongly convinced
that Sarkozy will also soon offer new Airbus aircraft for
sale to Syrian Arab Airlines (SyrianAir). Galli told us that
the French Ambassador in Damascus was probably inadvertently
responsible for this rumor. Galli explained that DPM Dardari

had recently raised this issue with the French Ambassador,
who promised to look into it -- without understanding the
legal reasons that such a deal would be impossible. Galli, a
member of the French Foreign Commercial Service, said he was
sure the GOF would not give Airbus the green light to sell
new or secondhand aircraft to SyrianAir in clear violation of
U.S. sanctions.


5. (C) During our meeting with Galli, the diplomat telephoned
the local French representative of Airbus and confirmed that
that the rumor was bogus. Furthermore, the Airbus
representative claimed no knowledge of the recently reported
story that the Emir of Qatar had given President Asad an
Airbus for official travel. Galli said that as the Airbus
rep's office is located at the Damascus airport, he would
have certainly noticed any new Airbus aircraft being stored
there.

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French Trade Slow to Change Course
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6. (C) When asked if Sarkozy's new approach to Syria had
resulted in increased French commercial inquiries to his
office, Galli said that for now, French investors are
maintaining a wait-and-see approach towards Syria that would
likely not change until late 2009. Galli explained that
French trade with Syria had dropped by 40 percent in 2007 as
part of the continuing fallout of Chirac's isolation policy
dating from the Hariri assassination. He characterized
French investors as more cautious than their British and
German counterparts, and used a recent experience with
French-made train locomotives in Syria to justify their
caution. Galli said that the Syrian government is suing the
French manufacturer of these train locomotives because so
many of them have been rendered inoperable due to maintenance
problems. Galli claimed that the locomotives are high
quality, but require competent, regular preventive
maintenance that the Syrian operators failed to provide.

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Comment
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7. (C) The new French approach to Syria has yet to include an
economic component beyond the EU Association Agreement. On
the part of the SARG, there seems little organized effort to
match on the business side what is clearly a PR-focused
political push by Bashar (septel).
CORBIN