Airbus-Syria Deal To Skirt U.S. Sanctions

Official Tells CBS News European Manufacturer To Supply State Carrier With 50 Jets

(CBS)  This story was written by CBS News' George Baghdadi in Damascus and CBSNews.com's Tucker Reals in London.

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European manufacturer Airbus is set to sign a multi-billion dollar deal with Syria's state carrier that would see the U.S.-sanctioned country take possession of 50 new passenger jets in the next 20 years, a senior Syrian official tells CBS News.

The Bush administration slapped Syria with unilateral economic sanctions four years ago for its alleged support of militants in Iraq and its moves to destabilize the Western-backed government in neighboring Lebanon.

But, in a direct challenge to the sanctions, a Syrian government official tells CBS News' George Baghdadi that Syrian Air will "lease two single-aisle Airbus A320s, which offer 107 to 185 seats, before the end of 2008 and another four planes in 2009 to include twin-aisle A330, A340 and A350 models."

"A big Airbus delegation is coming on September 18 to sign the contracts. We will take delivery of the first 14 Airbus airliners from 2010 to 2018 and a further 36 by 2028," said the official, who spoke to CBS on condition of anonymity as he was not authorized to discuss the deal. He said bank loans would finance the transaction.

The official would not reveal the full details of the contract with Airbus, but leasing passenger jets from a third party appeared to be how the Syrians and the European manufacturer intended to skirt the sanctions, at least for the first round of aircraft deliveries.

"Now it seems that they may have found a way to do it, or they think they've found a way to do it," David Kaminski-Morrow, Deputy Editor at Air Transport Intelligence, told CBSNews.com. He said the Syrians have been trying to renew their small and aging fleet with Airbus planes for years.

"There's nothing to stop Airbus selling aircraft to a non-sanctioned company. Once they own the aircraft, they can sell them to whoever they want to do business with," said Kaminski-Morrow.

An Airbus official in Europe told CBSNews.com that U.S. investors currently hold approximately 10 percent of the 814,028,673 outstanding shares in EADS, Airbus' parent company. The U.S. government owns no stake in EADS. The Airbus official dismissed the reported deal with Damascus as "rumor and speculation".

A U.S. diplomat based in Damascus said bluntly that they could not see "any potentiality" that the contract would come to fruition, insisting the sanctions would stop any such endeavor, regardless of how Syrian Air came to take possession of the aircraft - by direct purchase or lease.

Negotiations over the aircraft acquisition were on the agenda in Paris last month during a visit by Syrian deputy prime minister for economic affairs Abdullah al Dardari, just a week after the presidents of the two countries met for the first time in the French capital. The governments of France and Germany are the two largest EADS shareholders.

French President Nicolas Sarkozy said publicly during a visit to Damascus earlier in September that he had discussed with his Syrian counterpart Bashar al-Assad an Airbus agreement, though he gave no further details.

Sarkozy's visit was a reward for Assad's recent display of flexibility; he agreed in August to establish diplomatic ties with Lebanon, a longstanding demand of the Lebanese and the West, and he has embarked on indirect peace talks with Israel.

"The deal between Syrian Arab Airlines and Airbus is almost done. There are no obstacles standing in the way," Dardari told reporters after a ceremony concluding a series of bilateral business contracts between Syria and French oil giant Total last week.

"I don't think the U.S. has managed to dampen foreign direct investment, nor have they succeeded in stopping economic reforms and liberalization. Sanctions have failed, especially when they are unilateral," he added.

For Syria, which is seeking to renew its image on the world stage after years of isolation by the West, a deal to renew its sanctions-hit fleet would be a diplomatic triumph.

Syrian Air, set up in 1946, has only five operating Airbus A320s, one aging Boeing 747 and two planes for local flights. The state carrier employs more than 5,000 people.

[petljanje]

I think we need to find solutions for both, Israelis and Palestinians. We should also watch our own interest in the world regardless what Israel likes or not. We should NOT fight a war unless it is in self defensive.

[petljanje]

People like you are reason for this senseless war.
Probably u did not send ur son to serve this country. Its easy to cheer for the war and sit on the side, while others die. U need to understand people have different kind of view and they are not terrorists if they are not thinkin'' the way u think.
Get some job. Looks like u have lots of time to waist online coward.

[petljanje]

Pigs? Yea, they r pigs terorist? on their own land? hahahaha More and more people in the world can see thrut. ISRAEL IS MANUFACTURED COUNTRY--ILLEGAL
Couse of the all problems in the mid east

[juwboy]

petljanje said:

"Tear down this (sic) walls, like they said to the Germans."

Israel`s wall is there to keep feral, animalistic, criminal, pig-brained, terrorist thugs OUT.

The East Germans`/Soviets` wall was there to keep its own law-abiding citizens IN.

The situations are not comparable.

[petljanje]

Teach Hezbollah to fly? No, they do need it for their own people. This nation is under sanctions for last 20 years. I wonder if anybody can say to Israel: Tear down this walls, like they said to the Germans.

[guadalcanal3]

Hmmm...I wonder what Syria proposes to do with all of these "airliners"?...Teach Hezbollah and ''various'' militants how to fly them?...Where?...Into what?

[erpcat]

is this the same airbus that mccain supported to build usaf tankers? smells like charlie black & rich davis to me...........

[ajayvee]

Posted by closethippy1: I wonder if Israel can keep behaving like the animals they are now that their sugar daddy, the US, is in the hospital on life support system?

Ever think what would happen if we ever elected a President who would not catamite to Israel? Interesting thought!

[closethippy1]

I wonder if Israel would be tempted to destroy the planes one by one as they arrive in Damascus? Why not? Who''''s gonna say "boo" to Israel?
Posted by ajayvee at 07:18 PM : Sep 15, 2008

I wonder if Israel can keep behaving like the animals they are now that their sugar daddy, the US, is in the hospital on life support system?

[ajayvee]

I wonder if Israel would be tempted to destroy the planes one by one as they arrive in Damascus? Why not? Who''s gonna say "boo" to Israel?

[closethippy1]

Now that deregulation has brought nothing but disaster to the US economy, now that it won''t be as easy as before to make money in the US, more and more people will make their investments in other countries.
This in turn will make the US less relevant in the world, its threat of sanctions will mean nothing, and whatever issues the US has with others they''ll be simply ignored.
People are too busy making money elsewhere to listen to a country that now has nothing to offer to them.
Finally, they can deal with each other without having to worry about what the US will do.

[cdfoxtrot3]

Eight years ago, our diplomatic relations were strong enough, that we could have prevented this through diplomacy, negotiation, and a non-hypocritical foreign policy.



Ahhh, the good old days.

Posted by hungry1968

Yup. And if Bush gets his third term, imagine how Palin would handle something like this? Probably start a trade war with Europe and drag us all into depression land.

[cdfoxtrot3]

Hey Airbus - contract w/ US Air Force or Syria; one or the other, not both. Make up your mind in a hurry.

Posted by yongamerica at 11:58 AM : Sep 15, 2008

Don''t you believe in freedom and the free market? I thought that''s what your heros in "Eye-Rack" were supposedly fighting for?

[hungry1968]

Eight years ago, our diplomatic relations were strong enough, that we could have prevented this through diplomacy, negotiation, and a non-hypocritical foreign policy.



Ahhh, the good old days.

[yongamerica]

This announcement will result in congress calling an emergency session to pass a bill that makes it illegal for a company with business ties with a designated terrorist nation to be eligible to bid on state and federal government contracts.

[yongamerica]

Hey Airbus - contract w/ US Air Force or Syria; one or the other, not both. Make up your mind in a hurry.

[yongamerica]

I wonder how this decision of airbus will affect its US Air Force bid on refueling tankers.

I cannot understand why the European Union has not acted in solidarity with US sanctions against Syria. Considering Syria''s involvement in international terrorism this deal is mad crazy.

[republic1776]

"We can always count on our European colleagues...unless there''''s money to be made"

Well, (Euorpean Nations) have to pay for the "free" health care.
What else would you expect from liberal Nations.
By the way there taxes are on 52% in European nations.

[zhynaryll]

Are these the same yokels who were trying to weasel their way into our aerospace-defense establishment with the tanker deal? I say keep them out entirely the next round!! With friends like these, who needs enemies???

[cbs_tom]

We can always count on our European colleagues...unless there''s money to be made.