UPDATE ON SYRIAN CIVIL AVIATION SECTOR

C O N F I D E N T I A L DAMASCUS 000496 SIPDIS DEPT FOR NEA/ELA, NEA/FOR, NEA/EX, EEB/ESC/TFS, L/EB; COMMERCE FOR BIS/SONDERMAN/CHRISTINO NSC FOR SHAPIRO/MCDERMOTT PARIS FOR MILLER E.O. 12958: DECL: 07/16/2019 TAGS: EAIR ETRD ETTC PREL PTER PGOV SY SUBJECT: UPDATE ON SYRIAN CIVIL AVIATION SECTOR REF: A. DAMASCUS 465 ¶B. DAMASCUS 429 ¶C. DAMASCUS 345 ¶D. DAMASCUS 295 ¶E. DAMASCUS 286 ¶F. DAMASCUS 279 ¶G. 08 DAMASCUS 661 ¶H. 08 DAMASCUS 438 Classified By: Charge d'Affaires Ray Maxwell for reasons 1.4(b,d) -------------- Summary -------------- ¶1. (C) A well-placed Embassy source claimed that Lufthansa Techniq has advised Syrian Air to sue the German company for USD 2 million in damages in a German court. According to the source, Lufthansa Techniq expects to lose the case, and will use the judgment as cover to re-export two Airbus A320 engines to Syria. The source also claimed that Syrian Air's four remaining operational A320s will all require C-check maintenance by the end of 2009 or be grounded. Post has recently been inundated with inquiries from Syrian and foreign businessmen who want to replicate the charter airline model established by Cham Wings Airline in 2008, which they incorrectly assume to be operating within the constraints of U.S. sanctions. End summary. -------------- Lufthansa Techniq Advises Syrian Air to Sue -------------- ¶2. (C) According to the editor of the semi-independent daily al-Watan, Wadah abd-Rabo (strictly protect),Lufthansa Techniq has advised Syrian Air that in order for Lufthansa to re-export two overhauled Airbus A320 engines to Syria, Syrian Air should sue the German aviation maintenance company in a German court for USD 2 million in damages. Lufthansa officials reportedly told Syrian Air that they believe Syrian Air will win the case, and the judgment will provide the German company with cover from U.S. sanctions enforcement actions that might result from re-exporting the two engines without a U.S. export license. ¶3. (C) Rabo also told us that all four of Syrian Air's operational Airbus A320s are due for "C-check" maintenance by the end of 2009. Syrian Air has thus far received no bidders for its tender to perform these services, Rabo said. Syrian Air officials are concerned that unless Airbus obtains licenses to perform these C-checks, the national air carrier's entire fleet of 16 aircraft will be grounded -- alongside one Orion Air BAE 146-300 (ref A). -------------- Kouchner Remarks on Airbus Licenses -------------- ¶4. (C) In a July 12 press conference with FM Muallim in Damascus, French FM Kouchner said he was optimistic the French government would ultimately succeed in persuading the U.S. government to lift sanctions against Syria and allow the sale of new Airbus aircraft to Syrian Airlines. For their part, the SARG has not yet leaked news of Airbus' receipt of an "Intent to Deny" notification from BIS regarding its export license application to sell eight aircraft to Syrian Air. -------------- Cham Wings Airlines "Must Be Legal" -------------- ¶5. (C) No new information has emerged regarding Syrian Pearl's plans to resolve its dilemma with Orion Air, or its search for alternative aircraft suppliers. Post has, however, been inundated with inquiries from both Syrian and foreign businessmen who want to replicate the "legal" model of Cham Wings Airline. As reported in ref H, Cham Wings is a Syria-based charter airline that began operating service from Damascus to Iraq and Sharm el-Sheikh in 2008. Cham Wings is known to operate at least one MD-80 or MD-83, that it reportedly leases from an Egyptian transport company called AMC, which acquired the plane from Air Jamaica in 2002. Air Jamaica allegedly acquired the aircraft in 1996 from its original owners, Great American Airways, who purchased the plane in 1989. According to sources, the plane's registration number is SU-BOZ, and serial number is 53192. Recent reports indicate that Cham Wings may have recently acquired another MD-80 series aircraft. The July 13 edition of Al Rai magazine featured an article on Cham Wings owner Issam Shammout and a half-page advertisement promoting Cham Wings service to Baghdad, Najaf, Istanbul, Antalya, Malmo (Sweden),and Brussels. ¶6. (C) Most Syrian and several foreign businessmen have incorrectly assumed Cham Wings must be legally operating in Syria or else the U.S. would have pursued enforcement action against it as happened with Syrian Pearl. The public's conclusion is that Syrian Pearl's problems stem from the E.O. 13460 designation of Rami Makhlouf, rather than from E.O. 13338's prohibition of exports containing greater than 10 percent content of U.S. origin. Sensing a rare opportunity to beat Makhlouf in a newly-liberalized sector of the Syrian economy, Syrian businessmen are actively courting European aviation companies to partner with them in similar charter aircraft ventures. -------------- Comment -------------- ¶7. (C) Public misperceptions about how U.S. economic sanctions affect the Syrian civil aviation sector continue to complicate our diplomatic efforts to engage the SARG. The upcoming Hajj season presents a lucrative opportunity for charter airlines to ferry some 20,000 Syrians to Saudi Arabia. While the Syrian media condemns the impact of U.S. sanctions on Syrian aviation safety, we can only imagine Makhlouf's anger at not being able to control a hugely profitable sector of the Syrian economy. If the report is accurate that Syrian Air's four remaining A320s will require C-checks by the end of 2009, Washington may need to consider the potential impact of the airline's complete demise -- and possible subsequent loss of service routes -- on our long-term strategy of re-engagement. MAXWELL