NO U.S. COMPONENT TO U.S. INTERNATIONAL INVESTMENT

C O N F I D E N T I A L DAMASCUS 000686

SIPDIS

DEPT FOR NEA/ELA, NEA/FO, NEA/EX, EEB/ESC/TFS, L/EB
COMMERCE FOR BIS/SONDERMAN/CHRISTINO
NSC FOR SHAPIRO/MCDERMOTT
TREASURY FOR HAJJAR/CURTIN
PARIS FOR NOBLES
LONDON FOR LORD

E.O. 12958: DECL: 09/16/2019
TAGS: EAID ECIN ECON EINV PGOV PREL SY
SUBJECT: NO U.S. COMPONENT TO U.S. INTERNATIONAL INVESTMENT
GROUP'S $40M SYRIAN PROJECT

REF: DAMASCUS 587

Classified By: Charge d'Affaires Chuck Hunter for reasons 1.4(b,d)

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Summary
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1. (C) As previously reported, the American International
Investment Group (AIIG) has targeted eastern Syria for $30-40
million in investments (ref A). AIIG (formally referred to
as the U.S. International Investment Group (USIIG)) plans to
launch five projects in the Industrial City of Dayr al-Zawr
to produce cosmetics, cleaning items, beverages, diapers,
razor blades, and lubricants, with an eye toward exporting
these consumer goods to Iraq and, eventually, Afghanistan.
There appears to be no actual U.S. element to this venture
except that AIIG's head, Abdulaziz Meslat, is a dual
American/Syrian citizen. The viability of this investment
scheme is questionable; Meslat recently disclosed that, based
on his initial experience in dealing with the "incompetence
and corruption" in Dayr al-Zawr, he is not optimistic these
projects will ever become a reality. End summary.

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American International Investment Group
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2. (SBU) As reported reftel, the Syrian Investment Agency
(SIA) held a press conference in Damascus on August 13 to
announce a proposed $40M investment in eastern Syria by the
U.S. International Investment Group (USIIG). (Note: The SIA
was recently established in the office of the Prime Minister
with the goal of attracting foreign investment to Syria. The
SIA is headed by General Director Dr. Ahmad Abdolaziz. The
agency was launched with assistance from the United Nations
Development Programme (UNDP). End Note.)


3. (SBU) The correct name of the "U.S. International
Investment Group" is, in fact, the "American International
Investment Group" (AIIG),headed by Syrian-American Abdulaziz
Meslat. Meslat previously chartered a company in Florida
under this name and, upon returning to Syria approximately 18
months ago, subsequently established a company in Damascus
under the same name. (Note: Meslat explained that the name
U.S. International Investment Group (USIIG),used by the
Syrian press in recent news articles, was a translation
error. End Note.) Meslat said his Syrian company is backed
by Iraqi investors who live in the region (Iraq, Jordan, and
Kuwait) and are members of Meslat's own Al Jabour (Bedouin)
tribe.

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Targeting Markets in Iraq and Afghanistan
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4. (C) The AIIG's initial investment plan is to launch five
projects in the eastern Syrian region of Dayr al-Zawr which
will produce items for the home (cosmetics, cleaning
supplies, etc.),beverages (beer, juice and energy drinks),
diapers, razor blades, and lubricants. These particular
items were selected with the belief that there was a large
regional market for such consumables and that they could
easily be produced and transported to Iraq (his investors'
eventual target market). Meslat said the ten-year tax
exemption offered by the SARG for investment in the
drought-stricken areas of eastern Syria was not part of their
initial investment strategy but was an "added bonus."


5. (C) According to Meslat, the group is targeting the
markets in Iraq and, secondarily, Afghanistan. Meslat hopes
to have plants up and running in eastern Syria, poised to
exploit the Iraqi market should the security situation there
improve. The group views Afghanistan as another potential
market, should the security situation there also improve.
AIIG plans a sixth investment project - an animal fodder

plant - in al-Hasakah on Meslat family-owned land. This
sixth project is not part of the Dayr al-Zawr agreement.

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Industrial City Offers a Good Deal
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6. (C) The August 13th SIA ceremony inaugurated an agreement
between Meslat and Kaser Osman, president of the Industrial
City in Dayr al-Zawr. The agreement stipulated the lease of
two 30,000-square-meter tracts in the Industrial City. Osman
subsequently informed Meslat the SARG's offer of ten years of
tax-free investment could be extended up to 15 years based on
the success of the projects. Osman also told Meslat that, as
a result of the positive exposure provided by the August 13
press conference, he was subsequently approached by a
European company interested in establishing a plant in Dayr
al-Zawr. Meslat described Osman as "a real visionary" who
was working hard to attract new investments to Dayr al-Zawr
and make the Industrial City a success.

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Five Factories in Dayr al-Zawr
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7. (C) Meslat plans to contract locally to build five
factories in Dayr al-Zawr and to equip them with machinery
from China and/or Germany. He divulged his real desire was
to purchase U.S. machinery for the factories, but he realized
this would not be possible under current U.S. economic
sanctions. Raw materials would be procured in Syria to the
maximum extent possible, and other items would be purchased
abroad and shipped to Dayr al-Zawr via road or rail links
from Turkey and the Syrian coast. Water for the production
processes would be taken from the Euphrates River via a
purpose-built canal connecting the river and the Industrial
City. Meslat said AIIG would focus on the production of
quality products with lower transportation costs as the means
to take market share away from inferior Chinese products
being sold in Syria and Iraq.

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Corruption's an Issue
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8. (C) Meslat privately admitted he was pessimistic on the
outcome of the Dayr al-Zawr projects. He needs to contract
with local companies to establish the five factories, and his
initial experience in dealing with their "incompetence and
corruption" made him question if these projects would ever be
realized, he said. (Note: Meslat noted Osman, whom he holds
in high regard, was "not a part of the problem." End note.)


9. (C) Meslat said he had also encountered corruption within
the SIA. According to Meslat, in a recent meeting with SIA's
General Director, Dr. Abdolaziz asked him for 500,000 SYP
($12,000). When Meslat asked him what the money was for,
Abdolaziz replied that it was needed to cover "costs"
incurred by SIA related to this project. Meslat demurred,
saying SAI "costs" were not programmed into AIIG's budget,
and that there were no additional funds available.

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Meslat Subject to Travel Ban
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10. (C) Meslat told us he was imprisoned by the SARG for
seven days upon his return to Syria in early 2008. He said
he was told by SARG officials his detainment was due to his
having met with Israeli nationals outside of Syria - a charge
to which Meslat readily admitted. Upon his release from
prison, a travel ban was placed on Meslat to prohibit him
from leaving Syria. The travel ban is still in effect,
according to Meslat.

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Comment
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11. (C) The involvement of both Syrian and Iraqi Al Jabour
tribesmen in this project highlights how Al Jabour and other
regional tribes view the areas of eastern Syria and western
Iraq in terms of tribal lands rather than international
borders. The investors plan to exploit tribal associations
in search of profits, regardless of Damascus/Baghdad
relations. Although the investment project has been heralded
by the SIA, Meslat's philosophy may make others in the regime
uneasy and has probably contributed to his travel ban.


12. (C) Although named the American International Investment
Group, AIIG's investors are Iraqis living in the region. The
factories are to be built by local firms and equipped with
Chinese or German machinery. Meslat fully understands the
limitations imposed on him by the current U.S. economic
sanctions and appears to be doing everything possible to
avoid violating them. There appears to be no actual U.S.
element to this project other than Meslat's dual
American/Syrian nationality. Still, to the extent AIIG's
initiative serves to create or reinforce public perceptions
of U.S.-Syrian re-engagement, it may yet serve a useful
purpose.
HUNTER