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### Viewing cable 08DAMASCUS142, REACTIONS TO MAKHLUF DESIGNATION

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08DAMASCUS142 | 2008-02-26 16:33 | 2011-07-21 00:00 | SECRET | Embassy Damascus

Appears in these articles:
http://www.al-akhbar.com/node/16545
http://www.al-akhbar.com/node/16461
http://www.al-akhbar.com/node/16545
http://www.al-akhbar.com/node/16546
http://www.al-akhbar.com/node/16605
http://www.al-akhbar.com/node/16606
http://www.al-akhbar.com/node/16703
http://www.al-akhbar.com/node/16793
http://www.al-akhbar.com/node/16794
http://www.al-akhbar.com/node/16636
http://www.al-akhbar.com/node/16635
http://www.al-akhbar.com/node/17148
http://www.al-akhbar.com/node/17149
http://www.al-akhbar.com/node/17150
http://www.al-akhbar.com/node/17152
http://www.al-akhbar.com/node/17155
http://www.al-akhbar.com/node/17156
http://www.al-akhbar.com/node/17157
http://www.al-akhbar.com/node/17158
http://www.al-akhbar.com/node/17159
http://www.al-akhbar.com/node/17160
http://www.al-akhbar.com/node/17161
http://www.al-akhbar.com/node/17163
http://www.al-akhbar.com/node/17164
http://www.al-akhbar.com/node/17165
http://www.al-akhbar.com/node/17166
http://www.al-akhbar.com/node/17167
http://www.al-akhbar.com/node/17169
http://www.al-akhbar.com/node/17170
http://www.al-akhbar.com/node/17171
http://www.al-akhbar.com/node/16723
http://www.al-akhbar.com/node/16635
http://www.al-akhbar.com/node/16636
http://www.al-akhbar.com/node/16637
http://www.al-akhbar.com/node/16638
http://www.al-akhbar.com/node/16639
http://www.al-akhbar.com/node/16640
http://www.al-akhbar.com/node/16641
http://www.al-akhbar.com/node/16642
http://www.al-akhbar.com/node/16643
http://www.al-akhbar.com/node/16644
http://www.al-akhbar.com/node/16645

`

    VZCZCXRO7538
    PP RUEHDE
    DE RUEHDM #0142/01 0571633
    ZNY SSSSS ZZH
    P 261633Z FEB 08
    FM AMEMBASSY DAMASCUS
    TO RUEHC/SECSTATE WASHDC PRIORITY 4668
    INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 1388
    RUEHAM/AMEMBASSY AMMAN PRIORITY 7234
    RUEHAK/AMEMBASSY ANKARA PRIORITY 5471
    RUEHGB/AMEMBASSY BAGHDAD PRIORITY 0771
    RUEHLB/AMEMBASSY BEIRUT PRIORITY 4861
    RUEHRL/AMEMBASSY BERLIN PRIORITY 0123
    RUEHSW/AMEMBASSY BERN PRIORITY 0069
    RUEHEG/AMEMBASSY CAIRO PRIORITY 3555
    RUEHLO/AMEMBASSY LONDON PRIORITY 0381
    RUEHFR/AMEMBASSY PARIS PRIORITY 0409
    RUEHRH/AMEMBASSY RIYADH PRIORITY 7942
    RUEHRO/AMEMBASSY ROME PRIORITY 0903
    RUEHTV/AMEMBASSY TEL AVIV PRIORITY 2099
    RUEHDE/AMCONSUL DUBAI PRIORITY 0165
    RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
    RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
    RHEFDIA/DIA WASHDC PRIORITY
    RUEAIIA/CIA WASHDC PRIORITY
    RHEHNSC/NSC WASHDC PRIORITY
    RHMFISS/HQ USCENTCOM MACDILL AFB FL PRIORITY

` `

    S E C R E T SECTION 01 OF 04 DAMASCUS 000142

    SIPDIS

    SIPDIS

    STATE FOR NEA/ELA, EEB/TFS;
    TREASURY FOR TFI/GLASER;
    NSC FOR ABRAMS/SINGH/GAVITO

    E.O. 12958: DECL: 02/25/2028
    TAGS: ECON EFIN EINV KCOR PGOV SY LE
    SUBJECT: REACTIONS TO MAKHLUF DESIGNATION

    REF: A. DAMASCUS 126
         ¶B. DAMASCUS 70
         ¶C. DAMASCUS 54

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

    ¶1. (S) Summary:  The February 22 designation of Rami Makhluf
    pursuant to E.O. 13460 generated considerable discussion, but
    Syrian media coverage has been minimal.  Makhluf's defiant
    announcement on BBC Arabic radio that the designation was
    tantamount to a medal of honor was as close to an official
    reaction as we have seen.  Human rights contacts
    overwhelmingly supported the action.  A few Syrian websites
    reporting the designation generated comments that generally
    denounced corruption and favored the action, but roughly 30
    percent of the postings had positive things to say about
    Makhluf.  Business and other reactions were mixed, with some
    saying the timing of the designation could not have been
    better, while others suggested the USG action was a desperate
    political act that failed to achieve anything signficant.
    We nonetheless detected uncertainty about what the
    designation could mean for Rami's partners and his
    foreign-based assets.  End Summary

    ----------------------------------------
    MAKHLUF REACTS WITH BRAVADO ON BBC RADIO
    ----------------------------------------

    ¶2. (SBU) The February 22 designation of Rami Makhluf hit
    Damascus on the eve of the Syrian weekend and thus generated
    little initial media reaction.  Two days after Washington's
    announcement, Rami took to the airwaves of BBC Arabic Radio
    to respond, calling the designation "a medal we hang on our
    chest" as part of a "political ploy aimed at undermining
    important (Syrian) individuals."  He added, "They accuse us
    of corruption, while we are among the group that is working
    to invest the most in Syria."  Discounting the impact of the
    designation, Makhluf claimed that he had no assets in the
    U.S.  "Only a fool would invest in America, " he said. "We
    were expecting such a decision to be issued over a year ago,
    but they were late."  Although FM Muallem responded publicly
    when the E.O. was first announced on February 13, there thus
    far has been no official SARG reaction to the Makhluf
    designation.

    --------------------------------------------- --
    SERENDIPITOUS TIMING AMPLIFIES IMPACT ON REGIME
    --------------------------------------------- --

    ¶3. (S)  Coming just a week after the assassination of Imad
    Mughniyeh, and during a period of rising tensions with Saudi
    Arabia and the West, the timing of the Makhluf designation
    amplified its impact on the regime.  Contacts report that
    Syrian Military Intelligence (SMI) and General Intelligence
    Directorate (GID) officials are currently engaged in an
    internecine struggle to blame each other for the breach of
    security that resulted in Mughniyeh's death.  In recent days,
    the Saudi-sponsored Sharq al-Awsat published scathing
    articles suggesting that Syria is not worthy of hosting the
    upcoming Arab summit.  Additionally, President Mubarak has
    publicly linked Syrian policy in Lebanon to Egypt's
    participation in the Arab League summit, and Syrians are
    increasingly concerned about the direction Lebanon is
    heading.  Thus, in the conspiracy-fueled streets of Damascus,
    our sources indicated that the Makhluf designation seemed to
    be a well-timed ratcheting-up of pressure on the regime.

    --------------------------------------------
    EDUCATED SYRIANS AND CIVIL SOCIETY CELEBRATE
    --------------------------------------------

    ¶4. (S) The designation resonated on the Syrian "street" among
    middle class followers of international media, many of whom
    quietly celebrated Makhluf's public humiliation as a
    long-overdue comeuppance.  The website "Syrianews" covered
    Makhluf's response on BBC, and approximately 70 percent of
    readers' comments to the article were anti-Makhluf.  "As for
    Santa Claus Makhluf who is showering us with his deeds,"
    wrote one, "could he explain to us where did he bring his
    first millions from?"  Another commented, "Did Rami invest in
    any project which would support scientific research, develop
    the country, or do such projects that do not yield profits in
    the billions?" Still another opined, "Does anybody dare
    criticize the economic genius Professor Rami?"  The human
    rights community was also very supportive, but expressed to
    Poloff their desire to see additional designations in the
    near future.  Upon hearing the news at a meeting with Post's
    TDY Press Attache, a well-known, Dubai-based Syrian Ba'ath
    Party dissident shouted and kissed the officer's cheek.

    -------------------------------------
    SOME BUSINESSMEN EXPRESS APPREHENSION
    -------------------------------------

    ¶5. (S) Reaction from Embassy business contacts tended to fall
    into one of two categories, depending on the contact's
    relationship with the regime.  Apolitical businessmen
    reported that the designation had sent shockwaves through
    Rami's business partners who were now waiting nervously for
    any additional shoes to drop.  Most were concerned about
    their potential liability due to their business relationship
    with Makhluf, especially those with assets in the U.S. and
    Europe.  One contact predicted that if this designation was
    quickly followed by others, or even rumors of additional
    ones, Rami's foreign and local partners would completely
    divest out of self-preservation and absorb whatever regime
    criticism resulted.

    ¶6. (S) Ihansan Sanker, a businessman with Asad family
    contacts who successfully resisted Rami's efforts to crowd
    him out of a Mercedes dealership, argued any corruption
    sanctions that did not include Rami would be meaningless.  He
    predicted before the designation that most Syrians were fully
    aware of Rami's corruption and would secretly applaud it.
    Some regime insiders would attempt to portray the designation
    as a personal matter between the Bush administration and the
    Asad family.  While Rami had been expecting the sanction for
    some time, it was nonetheless important for the U.S. to send
    a strong signal.  Sanker did not think that sanctioning Rami
    alone would have much of an effect on Syria's regional or
    domestic policies.  More designations and tough
    implementation would be needed to convince the regime the
    U.S. was serious.

    ¶7. (S) A reporter for an independent trade website said he
    wasn't sure the details of the designation were well
    understood by Syrian businessman and the average Syrian in
    the street.  How would the designation affect foreign
    investment prospects, for example?   Most Syrian elites
    assumed that the absence of Rami's assets in the U.S. would
    make this a moot case.  If there were ripple effects on
    Rami's business partners, then that might cause people to pay
    closer attention.

    ¶8. (S)  Khalid Oweiss, a Reuters correspondent working on his
    own piece regarding Makhluf, passed along that he and other
    journalists had interviewed a former American employee of
    Rami's empire who had detailed knowledge of Rami's holdings.
    That source said the designation created many questions that
    had to be answered before one could assess the impact.  Would
    all of Rami's partners be sanctionable?  Did Rami have to own
    a majority share in a company before Americans and others
    were liable?  How would the designation affect ongoing
    negotiations regarding the sale of Rami's share of Syriatel's
    cell concession?  Oweiss personally supported the designation
    and reported that his contacts said that it was overdue.  He
    believed more designations were desirable, arguing, "One a
    week for the next three months would pressure the Syrians and
    force them to capitulate."

    ---------------------------------
    WHILE OTHER ELITES ARE DISMISSIVE
    ---------------------------------

    ¶9. (S)  Elites with a pro-regime bias characterized the
    designation as a purely symbolic gesture with no tangible
    economic repercussions.  They viewed the designation as a
    feckless personal attack on the Asad family from a U.S.
    Administration with little remaining political leverage over
    Syria.  Regarding Makhluf's many prominent business partners
    in Cham Holding, this group's opinion was that no Syrian
    would dare try to divest from Rami -- even if he wanted to --
    for fear of being perceived as a coward in the face of US
    pressure.  Consequently, this line of thinking concluded,
    Makhluf's designation will result in a "circling of the
    wagons" around the regime.

    ¶10. (S) One Cham Holding partner -- who holds U.S.
    citizenship -- admitted to Econoff that, after hearing about
    the designation on Al Jazeera, he had run his own name
    through Google to see what public information might connect
    him to Rami.  Claiming to have no affection for the Makhlufs
    or the regime, he said he still could not imagine divesting
    his family business from Cham Holding and remaining in Syria.
     "I love the U.S.," he explained, "but my entire life is in
    Syria.  What am I supposed to do, take my family to the U.S.
    and get a job making 5000 dollars a month, or be my own boss
    and give my children a better life in Syria?"  After arguing
    that his two-percent share of Cham Holding would not put him
    in legal jeopardy, he finally shrugged his shoulders and
    said, "Whatever happens to Rami, happens to all of us."

    ¶11. (S)  University of Wisconsin alum and Regional Director
    of Management Development Consulting International Hassan al
    Nouri assessed Rami's designation as an empty, desperate
    attempt by the outgoing Bush administration to punish a
    member of Bashar's inner circle.  A marketing expert, al
    Nouri asked, "What was the intended message (of the
    designation)?  I looked and looked, but could find very
    little.  The time for such an action was two years ago."
    Unless the U.S. could sanction Rami's Byblos Bank (five
    percent share) or convince the Emiratis to freeze Rami's
    UAE-based assets, he concluded that the designation would
    have very little teeth and would be regarded by most Syrians
    as yet another "wayward arrow from the warped bow of George
    Bush."

    ¶12. (S) Samir al-Taqi, foreign policy analyst and informal
    advisor to the MFA, characterized Rami's designation as a
    "mostly symbolic gesture" that would have little impact on
    the regime's policies.  Al-Taqi said Bashar had already put
    some distance between himself and his cousin and Makhluf had
    moved a great deal of his personal assets to Dubai.  Al Taqi
    conceded that most Syrians viewed Rami in a negative light
    and that his strong-arm business tactics had earned him many
    enemies.  He nonetheless believed that a majority of Syrians,
    at least the few who had heard about it on BBC or read about
    it on the internet, would see the act as a last-ditch effort
    by the Bush administration to punish Bashar.

    ¶13. (S)  Former Minister of Telecommunciations Amr Salem, who
    left office under a cloud of suspected corruption last
    December, said he had had several run-ins with Makhluf over
    Syriatel during his tenure, but that Rami had learned "the
    hard way" from Bashar that there was a limit to how much he
    could get away with on the basis of his family ties.  He
    predicted that Bashar would secretly welcome any U.S.
    sanctions against corruption, because corruption was rife in
    Syrian government and society and had undermined the
    President's credibility with the Syrian people.  Designating
    Rami, however, would have very little practical impact
    because Rami had diversified his many investments and it
    would be hard to identify majority share interests that he
    owned.

    -------
    COMMENT
    -------

    ¶14. (S) Rami Makhluf's designation has generated the most
    reaction among Embassy contacts of any USG action vis-a-vis
    Syria in the past three years among.  With increased
    murmurings casting a pall over the Arab League summit,
    uncertainty about what will happen in Lebanon, and
    never-ending conspiracy theories about the Mughniyeh
    assassination, Rami's designation occurred at a time when the
    SARG is facing pressure from multiple sources.  Early
    indications are that the "business community," regardless of
    political affiliation, is definitely nervous about the
    potential implications of doing business with Rami.
    CORBIN

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