VZCZCXRO6232 OO RUEHQU DE RUEHPU #1381/01 2751548 ZNY CCCCC ZZH O 011548Z OCT 08 FM AMEMBASSY PORT AU PRINCE TO RUEHC/SECSTATE WASHDC IMMEDIATE 8914 INFO RUEHZH/HAITI COLLECTIVE RUEHBR/AMEMBASSY BRASILIA 2071 RUEHMN/AMEMBASSY MONTEVIDEO 0242 RUEHSA/AMEMBASSY PRETORIA 1844 RUEHSG/AMEMBASSY SANTIAGO 2426 RUEHMT/AMCONSUL MONTREAL 0332 RUEHQU/AMCONSUL QUEBEC 1267 RUEATRS/DEPT OF TREASURY WASHDC RUCOWCV/CCGDSEVEN MIAMI FL RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL C O N F I D E N T I A L SECTION 01 OF 04 PORT AU PRINCE 001381 SIPDIS STATE FOR WHA/CAR, DRL, S/CRS, INR/IAA SOUTHCOM ALSO FOR POLAD STATE PASS AID FOR LAC/CAR TREASURY FOR MAUREEN WAFER E.O. 12958: DECL: 09/29/2018 TAGS: PGOV PREL HA SUBJECT: WHY WE NEED CONTINUING MINUSTAH PRESENCE IN HAITI PORT AU PR 00001381 001.2 OF 004 Classified By: Ambassador Janet A. Sanderson. Reason: E.O. 12958 1.4 (b), (d) ¶1. (U) This report responds to recommendation number 2 of the Embassy Port au Prince OIG inspection report. Summary -------- ¶2. (C) The UN Stabilization Mission in Haiti is an indispensable tool in realizing core USG policy interests in Haiti. Security vulnerabilities and fundamental institutional weaknesses mean that Haiti will require a continuing - albeit eventually shrinking - MINUSTAH presence for at least three and more likely five years. Haiti needs the UN presence to fill the security gap caused by Haiti's fledgling police force's lack of numbers and capabilities. It needs MINUSTAH to partner with the USG and other donors in institution-building. A premature departure of MINUSTAH would leave the Preval government or his successor vulnerable to resurgent kidnapping and international drug trafficking, revived gangs, greater political violence, an exodus of seaborne migrants, a sharp drop in foreign and domestic investment, and resurgent populist and anti-market economy political forces - reversing gains of the last two years. ¶3. (C) Summary Continued: MINUSTAH is a remarkable product and symbol of hemispheric cooperation in a country with little going for it. There is no feasible substitute for this UN presence. It is a financial and regional security bargain for the USG. USG civilian and military assistance under current domestic and international conditions, alone or in combination with our closest partners, could never fill the gap left by a premature MINUSTAH pullout. The U.S. will reap benefits from this hemispheric security cooperation for years to come - but only if its success is not endangered by early withdrawal. We must work to preserve MINUSTAH by continuing to partner with it at all levels in coordination with other major donor and MINUSTAH contributor countries from the hemisphere. That partnering will also help counter perceptions in Latin contributing countries that Haitians see their presence in Haiti as unwanted. The Department and Embassies in Latin countries contributing troops should work to ensure th ese countries' continuing support for MINUSTAH. End summary. Haiti Needs MINUSTAH to Become Viable State ------------------------------------------- ¶4. (C) The fundamental USG policy goal in Haiti is to make it a viable state that does not post a threat to the region through domestic political turmoil or an exodus of illegal migrants. To reach that point, Haiti must be able to assure its own domestic security, govern itself with stable democratic institutions, and create a business climate that will get the economy moving. Haiti has made progress but is still a long way from these goals. The United Nations Stabilization Mission in Haiti (MINUSTAH) is the largest and most effective external institution pursuing them. Haiti's progress toward viability hinges on a large international security presence and continued injections of assistance to consolidate its institutions and ease human misery. MINUSTAH is the implementing instrument of the security goal, and MINUSTAH elements are key players in the goal of consolidating institutions and providing critical disaster relief. MINUSTAH a Security Linchpin ---------------------------- ¶5. (C) MINUSTAH's core stabilization function is security: filling the gap left by inadequate force levels and capabilities of the Haitian National Police (HNP). The HNP currently has approximately 9,000 officers. MINUSTAH in 2006 set a five-year target of training and fielding 14,000 officers - although the police reform report to the UN Security Council says 20,000 are needed to adequately police the country. At current training and vetting rates, Haiti PORT AU PR 00001381 002.2 OF 004 will reach this goal by 2012 at the earliest, provided the GOH is willing to fund and staff this level. (Note: This projection rests on HNP plans to expand the capacity of the Police Academy beginning with the summer class of 2008. End note.) This gain in force will be reduced if the HNP acts on the results of the ongoing UN vetting process and weeds out officers found to be linked to crime, corruption, and other misconduct. Normal attrition will also push the 2012 target date further out. Deficient capabilities - in experience, investigative skills, and management, all exacerbated by corruption -- limit the HNP's security clout. ¶6. (C) Given HNP's lack of capability, MINUSTAH's backup security and police training functions are needed to fill the resulting gap in security. MINUSTAH troops continue to provide security in areas such as the Cite Soleil slum, liberated from overt gang rule in early 2007. They are also the country's ultimate riot control force which in times of unrest protects strategic government installations, including the National Palace and the airport. In MINUSTAH's UN police operations pillar, Formed Police Units (FPU - gendarmerie-type police units from individual contributor countries) aid the HNP with security operations, such as helping put down the mutiny at the national penitentiary last November, and performing riot control during the April disturbances. UNPOL officers provide support to HNP operations, down to helping the anti-kidnapping unit and beginning to assist the HNP's counter narcotics unit. The UNPOL development pillar works with the HNP to develop its capabilities. UNPOL officers guide and monitor the training of the HNP at the Police Academy and in the field. The MINUSTAH apparatus is also conducting the vetting of the entire HNP, an essential aspect of HNP reform. ¶7. (C) The April food riots threw into stark relief MINUSTAH's role as a security force of last resort. MIUSTAH troops, FPU's and UNPOL provided the criticl extra security capability that prevented riotes from overrunning the Presidential Palace and pobably chasing President Preval from office. INUSTAH Role in Institution Building ------------------------------------ ¶8. (C) MINUSTAH contibutes to building up Haiti's political and judiial institutions and supporting them day-to-day n the ground. It has a civilian presence througout the country: its civil affairs division has tams of advisers deployed in larger towns in all tn departments. These units advise and train oficials at a level of government that is just getting off the ground. At the national level, MINUSTAH is a key partner of the U.S. and other donor countries in building up and reforming Haiti's judicial system. The dimensions of the UN's civilian technical assistance and training for Haiti's national and local institutions exceed that of all other diplomatic missions in Haiti put together. MINUSTAH Post-Hurricane Role ---------------------------- ¶9. (C) The August-September series of hurricanes and floods have put MINUSTAH's disaster relief role in the spotlight. Cut roads and fallen bridges meant that Prime Minister Michele Pierre-Louis' visits to flooded regions were possible only in MINUSTAH helicopters. Their rotary wing aircraft have also flown emergency aid to areas cut off from ground transport, supplementing the air assets of the USS Kearsarge and the World Food Program. MINUSTAH troops rescued flood victims trapped in their homes, and continue to provide security for food convoys and distribution points, assuring that emergency aid commodities reach their destination and are distributed in an orderly manner. MINUSTAH serves as the coordinating body among donors and between donors and the Government of Haiti. Bottom Line on Continuing MINUSTAH Presence ------------------------------------------- PORT AU PR 00001381 003.2 OF 004 ¶10. (C) The U.S. has a strong interest in maintaining MINUSTAH's presence in Haiti until Haiti's security, judicial and political institutions are can maintain a minimal level of domestic security and political stability on their own. Embassy therefore believes that MINUSTAH's presence here is needed until the HNP reaches at least 14,000 officers and Haiti has installed a new President after the 2011 Presidential transition. A UN civilian advisory presence will be needed for an additional period after the MINUSTAH military and police are drawn down to help along Haiti's institution-building. MINUSTAH already envisions gradually transitioning the current force structure from predominantly infantry to more military police and engineering units, provided the UNSC agrees. It will reduce its civilian presence as Haiti's institutions become more solid. However, a significant withdrawal of the MINUSTAH security forces and civilian advisers is not advisable for a minimum of three years, and we believe that a fu ll withdrawal of MINUSTAH should not be considered before five years. Scenario of a Premature MINUSTAH Departure ------------------------------------------ ¶11. (C) A precipitous withdrawal of or premature drawdown of MINUSTAH's security component could open the door to elements that threaten Haiti's political stability and the consolidation of its democratic institutions. These are goals which we and our hemispheric and European allies since 2004 have devoted over two billion USD in resources to achieve. Increased security and other assistance from the U.S. and other large donors individually could not immediately make up for the loss of MINUSTAH boots on the ground. ¶12. (C) We could see a rollback of stabilization and security gains made since MINUSTAH began to serious confront security problems in 2006. Kidnappings, now reduced through effective police work, might spike upward again. Drug trafficking networks, a large threat even with the current MINUSTAH presence, could ramp up shipments through Haiti and further their penetration of police, the judiciary, parliament -- where we estimate perhaps a score of deputies and senators are linked to the drug trade. Gang structures, weakened but not eliminated from Port-au-Prince, Cap Haitien and Gonaives, could flex their muscles again. If gangs resurface, we could see the revival of politically-linked armed groups that during the Aristide era engaged in targeted violence including murder against regime critics. If these factors produced greater general instability, larger numbers of Haitians would likely to take to the boats and attempt to reach the U.S., as they did in the unstable 1990s. An upward trend of the above factors would cause a deterioration of the economic environment and a drop in domestic and foreign investment. MINUSTAH a Good Deal for the U.S. --------------------------------- ¶13. (C) MINUSTAH's presence produces real regional security dividends for the U.S. Paying one-quarter of MINUSTAH's budget through our DPKO assessment, the U.S. reaps the security and stabilization benefits of a 9,000-person international military and civilian stabilization mission in the hemisphere's most troubled country. The security dividend the U.S. reaps from this hemispheric cooperation not only benefits the immediate Caribbean, but also is developing habits of security cooperation in the hemisphere that will serve our interests for years to come. In the current context of our military commitments elsewhere, the U.S. alone could not replace this mission. This regionally-coordinated Latin American commitment to Haiti would not be possible without the UN umbrella. That same umbrella helps other major donors -- led by Canada and followed up by the EU, France, Spain, Japan and others -- justify their bilateral assistance domestically. Without a UN-sanctioned peacekeeping and stabilization force, we PORT AU PR 00001381 004 OF 004 would be getting far less help from our hemispheric and European partners in managing Haiti. But We Must Short Up Support ---------------------------- ¶14. (C) The U.S. will continue to reap these security benefits only if MINUSTAH's mission succeeds and enables Haiti to carry itself as a country. The USG thus has a strong interest that contributing countries continue their commitment until Haiti's stability is self-sustained. The USG should work to shore up support for MINUSTAH in Haiti and in hemispheric troop-contributing countries. We should take emphasize in UN venues and bilaterally to our Latin partners that the Haitian people and their legitimate government support MINUSTAH's presence, and that the UN is here at the express request of the Government of Haiti. We must be sensitive to Latin fears that any Haitian opposition to the UN presence undermines their domestic support for deployments in Haiti. During the April riots, the Brazilian MINUSTAH Force Commander told Ambassador and others that his greatest fear was that his troops would be forced to fire on demonstrators. He understood that this could ignite opposition in Haiti, Brazil, and other contributing countries to his troops' presence in Haiti. The Brazilian Embassy's national day celebration in Port au Prince September 8 was an exercise aimed at the Brazilian domestic audience. Attended by several Brazilian senators, it featured slide paels extolling the humanitarian work of Brazil's army at home and in Haiti, and a pathos-filled speech by the Ambassador about the history and culture Brazil shares with Haiti. ¶15. (C) The Port au Prince embassies of Latin countries contributing to MINUSTAH look to the strength of the U.S. commitment to the UN presence as a bellwether. Any slippage of U.S. commitment would embolden domestic elements who oppose these countries' participation in in the UN mission here. We sense that the strong U.S. embrace of the UN presence in Haiti helps their case at home for continuing deployments in Haiti. The Embassy uses every opportunity to partner publicly with and support MINUSTAH. The current post-hurricane relief effort, however disordered, is proving an opportunity for U.S., Canadian, and other bilateral donors to partner with MINUSTAH in disaster assistance and reconstruction. We sense that the humanitarian focus of these crisis-response efforts -- in contrast to riot-control efforts in April -- is helping the case in Latin countries for continuing their peacekeeping contributions in Haiti. ¶16. (C) The USG in Washington, New York, and in Latin capitals must also do their part to buck up support for MINUSTAH. In UN Security Council discussions of Haiti-related items, U.S. rhetorical appreciation for the UN presence here helps reassure contributor countries that their deployments are justified. Similar expressions of support to Latin representatives in Washington and Latin capitals are also helpful. ¶17. (C) In the end, what will maintain MINISTAH participants' support for deployments in Haiti is progress toward Haitian stabilization and state viability. Continuing the UN presence at projected levels for three to five years will not guarantee that result, but abruptly downsizing or prematurely withdrawing it will make more likely a result in Haiti we do not want, and would make future hemispheric peacekeeping efforts more difficult to justify. SANDERSON
Tag: dept of treasury
SECRET: CORRUPTION INVESTIGATION RATTLES BUSINESS COMMUNITY
VZCZCXYZ0011 PP RUEHWEB DE RUEHDM #0274/01 0991518 ZNY SSSSS ZZH P 091518Z APR 09 FM AMEMBASSY DAMASCUS TO RUEHC/SECSTATE WASHDC PRIORITY 6245 INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 7573 RUEHGB/AMEMBASSY BAGHDAD PRIORITY 1047 RUEHLB/AMEMBASSY BEIRUT PRIORITY 5119 RUEHEG/AMEMBASSY CAIRO PRIORITY 3877 RUEHLO/AMEMBASSY LONDON PRIORITY 0517 RUEHFR/AMEMBASSY PARIS PRIORITY 0486 RUEAIIA/CIA WASHINGTON DC PRIORITY RHEFDIA/DIA WASHINGTON DC PRIORITY RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY RHEHNSC/NSC WASHDC PRIORITY S E C R E T DAMASCUS 000274 SIPDIS DEPT FOR NEA/ELA; NSC FOR SHAPIRO/MCDERMOTT; PARIS FOR WALLER; LONDON FOR TSOU E.O. 12958: DECL: 04/08/2019 TAGS: ETRD EFIN ETTC PGOV PREL SY SUBJECT: CORRUPTION INVESTIGATION RATTLES BUSINESS COMMUNITY REF: A. DAMASCUS 168 ¶B. DAMASCUS 218 ¶C. 08 DAMASCUS 541 Classified By: Charge d'Affaires Maura Connelly for reasons 1.4(b,d) ------- Summary ------- ¶1. (S) The recent imprisonment of a prominent businessman thought to be close to President Asad has rattled the Syrian business community. Although the high-profile arrest was not reported by Syrian media, Prime Minister Utri made a veiled reference to it in a daily newspaper, saying, "we will cut off the hand of any who dare to abuse the public funds." Business contacts report that two other business elites are currently under investigation for corruption charges linked to the February arrest of Customs Directorate Chief Brigadier General Hasan Makhlouf, including the current Chairman of the Damascus Chamber of Industry. Adding to their concern, a popular local business magazine recently published profiles of "The Top 100 Syrian Businessmen," which many feared would raise their profile to the regime. Conspicuously absent from the article was Syria's most famous tycoon, Rami Makhlouf. End summary. --------------------------- Computer Magnate Imprisoned --------------------------- ¶2. (C) Syrian business elites are abuzz with the news that SARG security officials jailed Engineer Firas Bakour (DOB: 01/30/1966) in late March, along with former Minister of Communication and Technology Amro Salem and two unnamed employees of Syria Telecommunications Establishment (STE). Contacts report that Bakour's arrest stemmed from a USD 65 million SARG tender that he was awarded to provide a Voice Over Internet Protocol (VOIP) service to STE. According to the reports, SARG officials were angered at the slow pace of Bakour's progress in fulfilling the contract -- particularly when his "winning" bid for the tender had been over twice as high as those of several foreign companies. A close friend of Bakour's offered a different take, claiming that the Sunni Bakour's Alawi enemies had grown jealous of the virtual monopoly his company enjoyed over IT in Syria and the USD 10 million that he was reportedly earning each month. ¶3. (C) The President and CEO of INANA Group -- an umbrella of eight subsidiary companies that offer a variety of information technology, telecommunications, marketing, entertainment and business development lines -- Bakour was close to President Bashar al-Asad in the mid-1990s when Asad headed the then-nascent Syrian Computer Society (SCS). A longtime Embassy contact with a sister living in Florida, Bakour's presence at Embassy rep events in 2007 had a chilling effect on other guests due to his alleged ties to SARG security services. While Syrian media has not reported the high-profile arrest, Prime Minister Utri made a thinly-veiled reference to it in the March 31 edition of daily Tishreen, saying, "we will cut off the hand of any who dare to abuse the public funds." ¶4. (C) In 2008, former Minister of Communications and Technology Amro Salem told us that he was asked to resign from his ministerial post in December 2007 because he had launched an investigation into Bakour's suspicious business activities. He claimed then that President Asad had personally cleared him of any wrongdoing and had ordered the investigation of Bakour to proceed. (Note: It would not be unusual for Syrian security forces to arrest all suspects while sorting out individual stories. End note.) ------------------------ Known By the Company You Keep ------------------------ ¶5. (C) Adding to the business community's case of the jitters, the locally popular Syrian business magazine al-Iqtissadi (the Economist) dedicated this week's edition to profiling "The Top 100 Syrian Businessmen." Listing the businessmen alphabetically, the 55-page article contained photographs and 3-5 paragraph corporate biographies of each prominent businessman and his family. Firas Bakour was featured in the magazine, as was one-time SyriaTel Chief Operating Officer Nader Qa'lai, who is reportedly himself under investigation for embezzlement. Syria's most infamous tycoon -- Rami Makhlouf -- was conspicuously absent, as were Muhammad and Abdulsalam al-Haykal, who own the media company that publishes al-Iqtissadi. The website "Syrian Informer," which is blocked in Syria, commented disparagingly on the list as largely comprising nouveaux riches who have acquired wealth through opportunism and corruption, presumably in contrast to the more "virtuous" Damascenes who inherited their fortunes. ¶6. (C) Embassy contacts who were listed in the article expressed nervousness at having their profiles publicly elevated, while others were relieved to have not been mentioned. The head of one featured family lamented that the article was probably already in the hands of the SARG's equivalent to the Internal Revenue Service (IRS), which he claimed would be examining the tax returns of each listed family over the last several years. (Note: The only Syrians who consistently pay the correct amount of income tax seem to be public servants, whose taxes are withheld automatically from their government salaries. End note.) ----------------------------- Wider SARG Campaign Underway? ----------------------------- ¶7. (S) Bakour's arrest is the latest event in what contacts report is a wide-ranging SARG crackdown on "corruption" that began with the January sacking of Political Security Department Chief Major General Muhammad Mansurah and mid-February arrest of Chief Customs official Brigadier General Hasan Makhlouf (refs A,B). (Note: By all accounts, Hasan is not close to his more famous cousins Muhammad, Rami and Hafiz Makhlouf. End note.) The oft-heard rumor on the Damascus streets is that Hasan Makhlouf attracted the ire of Maher Asad after the President's brother learned from a real estate agent that the Customs Director's driver had tried to purchase a multi-million dollar property in Lattakia. Investigators allegedly discovered some USD 50 million hidden in the driver's home, which -- according to the story -- enraged Maher and prompted the Palace to act. ¶8. (S) The rumor of Hasan Makhlouf's millions is strikingly similar to another story that circulated around Damascus following the August 2008 assassination of Brigadier General Muhammad Sulayman (ref C). Sulayman, who was Asad's top security aide and reportedly managed several sensitive military projects, was killed by sniper fire in the coastal city of Tartous while Asad was visiting Tehran. The subsequent investigation into Sulayman's slaying reportedly uncovered USD 80 million cash in a basement room of the general's home in the mountains between Damascus and the Lebanese border. Asad was said to be devastated by the discovery, and, fearing Sulayman had betrayed him, redirected the investigation from solving his murder to finding out how the general had acquired so much money. ------------------- Car Importers Under Suspicion ------------------- ¶9. (S) Embassy contacts report that two prominent businessmen are under suspicion in the Makhlouf/Mansurah investigation -- Ammar Karkour and Chairman of the Damascus Chamber of Industry Imad Ghreiwati. Karkour, the Syrian agent for Audi/VW, and Ghreiwati, who owns the Ford dealership and represents LG electronics, are both suspected of bribing the Customs Director to accept grossly reduced invoices on their imported cars and electronics in order to avoid paying customs duties on the goods' actual value. The Ghreiwati family may have had a falling out with the Asad clan in fall 2008, as Imad's brother Issam then complained bitterly to us about the President, the SARG's decision to close Damascus Community School -- where the Ghreiwati children studied -- and revealed that the entire family was considering emigrating to the U.S. (Note: Ghreiwati's fall from grace would be cheered by many of his class-conscious peers, who resent his family's meteoric ascent to social prominence and his once-favored status among the Alawis. End note.) ------- Comment ------- ¶10. (S) While there does not yet appear to be a direct link between Bakour's arrest and the Makhlouf/Mansurah investigation, our contacts believe that his incarceration is part of a broader "anti-corruption" campaign ordered by the Palace to re-assert Asad's authority and to shake-up the status quo. The Palace has probably already chosen the eventual winners and losers in this investigation, the timing of which may coincide with a long-anticipated cabinet reshuffle. Regardless of the SARG's motivation, the business community's concern is illustrative of their tenuous relationship with the Syrian government. While Bakour's and Ghreiwati's situations demonstrate that proximity to the regime is no guarantee of long-term security, other businessmen equate Syria's byzantine legal and tax codes -- and not their lack of compliance to them -- to a sword of Damocles the regime dangles over their heads to keep them in line. CONNELLY
SECRET: MAXIMIZING THE IMPACT OF RAMI’S DESIGNATION
VZCZCXRO5973 OO RUEHDE DE RUEHDM #0070/01 0311027 ZNY SSSSS ZZH O 311027Z JAN 08 FM AMEMBASSY DAMASCUS TO RUEHC/SECSTATE WASHDC IMMEDIATE 4583 INFO RUEHAD/AMEMBASSY ABU DHABI IMMEDIATE 1372 RUEHAM/AMEMBASSY AMMAN IMMEDIATE 7207 RUEHAK/AMEMBASSY ANKARA IMMEDIATE 5447 RUEHTH/AMEMBASSY ATHENS IMMEDIATE 0324 RUEHGB/AMEMBASSY BAGHDAD IMMEDIATE 0758 RUEHLB/AMEMBASSY BEIRUT IMMEDIATE 4839 RUEHKU/AMEMBASSY KUWAIT IMMEDIATE 1295 RUEHNC/AMEMBASSY NICOSIA IMMEDIATE 7624 RUEHRH/AMEMBASSY RIYADH IMMEDIATE 7932 RUEHTV/AMEMBASSY TEL AVIV IMMEDIATE 2081 RUEHVI/AMEMBASSY VIENNA IMMEDIATE 0147 RUEHDE/AMCONSUL DUBAI IMMEDIATE 0161 RUEAIIA/CIA WASHDC IMMEDIATE RHEFDIA/DIA WASHDC IMMEDIATE RHEHNSC/NSC WASHDC IMMEDIATE RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE S E C R E T SECTION 01 OF 04 DAMASCUS 000070 SIPDIS SIPDIS STATE FOR NEA/ELA, EEB/TFS; TREASURY FOR U/S LEVEY; NSC FOR ABRAMS/SINGH E.O. 12958: DECL: 01/31/2018 TAGS: ECON EINV EPET ETTC PGOV PINR KCOR SY SUBJECT: MAXIMIZING THE IMPACT OF RAMI'S DESIGNATION REF: A. DAMASCUS 54 ¶B. 05 DAMASCUS 2364 ¶C. 06 DAMASCUS 03 Classified By: Charge d'Affaires Michael Corbin for reasons 1.4(b,d) ------- SUMMARY ------- ¶1. (S/NF) As Washington moves towards designating Rami Makhlouf, Embassy Damascus recommends that the Department's roll-out strategy focus on linking his corrupt activities to consequences suffered by the Syrian people (see para 11). In some of the largest economic sectors -- electricity, petroleum, and telecommunications -- Makhlouf has used government instruments to squeeze out legitimate businessmen, receive lucrative public contracts, establish cash cows and then milk them with impunity from oversight or competition. Significantly, several of his ventures exploit weaknesses in the Syrian economy and undermine reform efforts while increasing the burden on Syria's lower classes. Embassy contacts report that Makhlouf is anticipating his eventual designation, and that he has taken steps to lower his profile and mitigate risk to his personal fortune. End summary. ------------------ MAKING THE CASE... ------------------ ¶2. (C) In one well-known example, Makhlouf used his regime ties to muscle-out the local agent for Iberdrola, just before the Spanish company was awarded a 430 million-euro contract to build a new power plant. Having previously obtained exclusive rights to represent Siemens, Rami profited again when additional power infrastructure projects were awarded to the German company. Currently, both the Iberdrola (Iberinco) and Siemens projects are behind schedule and over-budget. Over the same period, the Syrian public suffered from rolling blackouts and increased electrical bills. During last summer's August heatwave, poorer neighborhoods went without power up to ten hours per day while Prime Minister Utri blamed Syria's electrical woes on "international pressure" rather than insufficient SARG investment in infrastructure. Blackouts have recently returned to Syria and Rami's avarice (reportedly demanding a USD 30 million "commission" in Iberdrola's case) is a key contributing factor. ¶3. (U) Rami is suspected of delaying the SARG's anticipated licensing of a third GSM service provider in Syria until he closes a deal to sell SyriaTel, which reportedly earned USD 692 million in 2007 alone. Since GSM service was first introduced in 2000, Syrians have been forced to choose between two providers, Makhlouf's SyriaTel and Areeba (now MTN), which was reportedly owned by First Lady Asma al-Akhras' family. Syrians widely resent the duopoly's ability to set prices for the entire country. With market forces unable to compete, regime corruption elevated the price of basic GSM service on which the average Syrian relies as his primary means of communication. (There are six million mobile subscribers to roughly three million land-line connections.) ¶4. (C) At a time when Syria's petroleum exports are contracting and the Syrian people are increasingly suffering from fuel shortages, Rami's presence in the petroleum sector is exacerbating the problem. The French company Total proposed a venture that would have brought additional Syrian gas reserves on-line in time to avert recent shortages, but the deal has inexplicably floundered facing SARG bureaucratic inaction. Similarly, a Shell offer to upgrade and increase capacity of Syrian refineries remains mired in SARG bureaucracy at a time of acute shortages in refined product. Interestingly, the only petroleum project currently proceeding at full-speed in Syria is the Gulfsands (35 percent) "strategic partnership" with the Rami-led Cham Holding Company (65 percent) to develop the recent oil and gas discovery in the Khurbet East region (Northeastern Syria). According to a Gulfsands' statement, the joint venture soon expects to bring 10,000 bpd of new oil production on-line. ¶5. (U) In a particularly brazen venture, Makhlouf also seems intent on profiting from the impact of US sanctions on Syrian Arab Airlines. Rami's Cham Holding Company (40 percent) has joined with Syrian Air (25 percent) and the Kuwaiti company Al Aqeelah (35 percent) to create the first "private airline" in Syria, dubbed the Cham Pearl. The Kuwaiti company's subsidiary, Aqeeq Aviation Holding, is apparently exploring ways to circumvent US sanctions and provide commercial aircraft. Once operational, Cham Pearl intends to take over Syrian Air's most profitable routes of three hours or less -- 75 percent of Syrian Air's business -- from Damascus to major regional airports, leaving Syrian Air with the less profitable long-haul routes. (See "Syria: Opening Skies," Oxford Business Group, January 29, 2008) ¶6. (U) Makhlouf remains unabashed about employing SARG muscle when necessary. In one oft-repeated example on the Damascus street in 2007, a Syrian businessman purchased a prime piece of real estate along the Mezzeh autostrade and received a permit from the city to construct a large apartment building. As the project progressed, the SARG security services informed the building's owner that he could not complete his project as it would allow future occupants to have direct line-of-sight to the Damascus airport. Rami's agents then visited the distraught owner and offered to buy the unfinished building for a fraction of the property's actual value. Rebuffing Makhlouf's initial offer, the owner sought recourse in the local courts for weeks to no avail. In late 2007, Cham Holding announced that it had acquired the property and would be developing a five-star Marriott hotel on the site at a cost of USD 70 million. ¶7. (C) Note: A hospitality-industry contact told Econoff that Rami and Nabil Kuzbari (ref A) had traveled to the US and met with senior Marriott executives in December to present a potential business proposal and discuss design options for the site. According to the contact, the Syrians left the US believing they had closed the deal and upon returning, prematurely leaked their success to the local media. In late December, Marriott reportedly informed Cham Holding that it was no longer interested in the proposal due to "political reasons." End note. ¶8. (U) Although difficult to prove, various internet-based newsletters claim that Makhlouf is the political patron of many high-ranking public SARG officials, including Minister of Construction Hamud al-Hussein, Minister of Petroleum Sufian Allaw, Minister of Electricity Ahmad Khalid al-Ali, Central Bank Governor Adib Mayaleh and former Minister of Telecommunications Amro Salem. As officials with these portfolios would be in position to wield substantial influence over industry regulation and lucrative tenders, it is doubtful that Rami would have enjoyed such uncanny business successes without government collusion. ------------------------ DIFFUSING RESPONSIBILITY ------------------------ ¶9. (U) Since returning from his brief exile in Dubai (ref B), Rami has taken several measures to try to both lower his profile and insulate his personal fortune. In 2006, Makhlouf founded the Al Mashrek Fund, a holding company with a reported capitalization of SYP 4 billion (USD 80 million), including SYP 1 billion (USD 20 million) in cash deposited with Banque Bemo Saudi Fransi. Later that year, Makhlouf and 69 prominent Syrian businessmen formed the Cham Holding Company with an initial capitalization of USD 200 million, now estimated to be worth USD 350 million. Representing Makhlouf, the Al Mashrek Fund is the majority shareholder in Cham Holding, which currently has 65 partners and a ten-member board of directors. By mid-2007, Cham Holding was pursuing six "landmark" development projects valued at USD 1.3 billion, primarily in energy, transportation and real estate. (See The Syria Report, April 30 and Sept 12, 2007) ----------------------------------------- USING CUT-OUTS AND PRIVATE BANKING SECTOR ----------------------------------------- ¶10. (S/NF) In addition to his public financial activities, Makhlouf has undertaken several behind-the-scenes machinations to mitigate his financial risk. Possibly concerned by the vulnerability of UAE banks to US pressure -- or frustrated by Emirati laws limiting foreign investment to real estate and the stock market -- Rami reportedly brought a part of his fortune back into Syria in 2006. According to a well-informed contact, Rami befriended then-expatriate Syrian Morthada al-Dandashi in Dubai and hired him to manage many of Makhlouf's "parallel" financial activities in Syria. The contact said that Rami paid Dandashi's USD 2 million "ante" to become a partner in Cham Holding, and deposited significant sums under Dandashi's name in the Damascus branch of the Lebanese Byblos Bank -- where Dandashi subsequently became a partner. Syrian-Austrian citizen and Cham Holding director Nabil Kuzbari is also reported to have deposited money for Rami in Austrian banks. Finally, contacts say Makhlouf has also opened accounts under different names in Lebanon, Greece, Turkey, and possibly Cyprus -- where Post has learned that Rami once explored obtaining citizenship. ------------------------- SUGGESTED ROLL-OUT THEMES ------------------------- ¶11. (U) Post recommends the following themes for public statements regarding the designation of Rami Makhlouf: -- Electricity: Rami Makhlouf used his influence with the regime to gain lucrative contracts in the power sector. Yet, as the Syrian people continue to suffer from chronic power outages and higher electrical bills, Rami has already been paid for projects that are behind schedule and well over-budget. -- Petroleum: Although several Western petroleum companies are interested in helping Syria develop its gas and oil sector, the only new project to be proceeding without SARG impediment is Rami's. As a result, Syria has become a net importer of petroleum products. In the midst of an unusually severe winter, severe fuel shortages are forcing the Syrian public to wait in long lines for, and frequently go without, heating fuel for their homes. -- GSM service: Rami Makhlouf has made millions of dollars from his ownership of SyriaTel, one of only two GSM service providers in Syria. Currently, Rami is said to be blocking the licensing of a third GSM provider until he completes a deal to sell SyriaTel. Until free market forces are allowed to compete, Makhlouf will continue to subject the Syrian public to artificially elevated prices for basic telecommunications services. -- Aviation: The Syrian national air carrier, Syrian Arab Airlines (Syrian Air), has an aging fleet that is in need of replacement. Rather than addressing any of Syrian Air's needs, the Assad regime instead awarded Rami Makhlouf a license to operate a private airline that intends to assume the most profitable of Syrian Air's routes. -- Tourism/Hospitality: The Syrian people are known for their hospitality and entrepreneurial expertise. Unfortunately, legitimate Syrian businessmen hoping to invest in the emerging tourism sector have again been muscled-out by Rami Makhlouf and regime thugs who wish to monopolize every opening in the Syrian economy for their own profit, rather than share the country's potential with the hard-working Syrian people. ------- COMMENT ------- ¶12. (S/NF) Makhlouf's efforts to divest and diversify suggest that he is expecting eventual USG action against him, particularly since the November 2007 designation of his brother, Hafiz. Although his countermeasures will likely mitigate the impact of his designation, we believe that it will still send a strong signal to the regime and to his current and potential future business partners. Corruption is a theme that resonates here, as every Syrian has been a victim of it. Rami has long been Syria's poster-boy for corruption, so making the charge stick is not difficult. Citing examples that impact the daily lives of Syrians should help to amplify the designation's roll-out and ensure that it receives the widest possible coverage. HOLMSTROM
CONFIDENTIAL: INFLUENCING THE SARG IN THE END
VZCZCXRO4219 OO RUEHAG RUEHBC RUEHDE RUEHKUK RUEHROV DE RUEHDM #5399/01 3471603 ZNY SSSSS ZZH O 131603Z DEC 06 FM AMEMBASSY DAMASCUS TO RUEHC/SECSTATE WASHDC IMMEDIATE 2621 INFO RUEHEE/ARAB LEAGUE COLLECTIVE IMMEDIATE RUCNMEM/EU MEMBER STATES COLLECTIVE IMMEDIATE RUEHTV/AMEMBASSY TEL AVIV IMMEDIATE 1450 RHEHNSC/NSC WASHDC IMMEDIATE RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL IMMEDIATE RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE RUCNDT/USMISSION USUN NEW YORK IMMEDIATE 0200 S E C R E T SECTION 01 OF 04 DAMASCUS 005399 SIPDIS SIPDIS NEA/ELA NSC FOR MARCHESE TREASURY FOR GLASER/LEBENSON E.O. 12958: DECL: 11/30/2016 TAGS: PGOV PREL PTER SY SUBJECT: INFLUENCING THE SARG IN THE END OF 2006 Classified By: CDA William Roebuck, for reasons 1.5 b/d ¶1. (S) Summary. The SARG ends 2006 in a much stronger position domestically and internationally than it did 2005. While there may be additional bilateral or multilateral pressure that can impact Syria, the regime is based on a small clique that is largely immune to such pressure. However, Bashar Asad's growing self-confidence )- and reliance on this small clique -- could lead him to make mistakes and ill-judged policy decisions through trademark emotional reactions to challenges, providing us with new opportunities. For example, Bashar,s reaction to the prospect of Hariri tribunal and to publicity for Khaddam and the National Salvation Front borders on the irrational. Additionally, Bashar,s reported preoccupation with his image and how he is perceived internationally is a potential liability in his decision making process. We believe Bashar,s weaknesses are in how he chooses to react to looming issues, both perceived and real, such as a the conflict between economic reform steps (however limited) and entrenched, corrupt forces, the Kurdish question, and the potential threat to the regime from the increasing presence of transiting Islamist extremists. This cable summarizes our assessment of these vulnerabilities and suggests that there may be actions, statements, and signals that the USG can send that will improve the likelihood of such opportunities arising. These proposals will need to be fleshed out and converted into real actions and we need to be ready to move quickly to take advantage of such opportunities. Many of our suggestions underline using Public Diplomacy and more indirect means to send messages that influence the inner circle. End Summary. ¶2. (S) As the end of 2006 approaches, Bashar appears in some ways stronger than he has in two years. The country is economically stable (at least for the short term), internal opposition the regime faces is weak and intimidated, and regional issues seem to be going Syria,s way, from Damascus, perspective. Nonetheless, there are some long-standing vulnerabilities and looming issues that may provide opportunities to up the pressure on Bashar and his inner circle. Regime decision-making is limited to Bashar and an inner circle that often produces poorly thought-out tactical decisions and sometimes emotional approaches, such as Bashar,s universally derided August 15 speech. Some of these vulnerabilities, such as the regime,s near-irrational views on Lebanon, can be exploited to put pressure on the regime. Actions that cause Bashar to lose balance and increase his insecurity are in our interest because his inexperience and his regime,s extremely small decision-making circle make him prone to diplomatic stumbles that can weaken him domestically and regionally. While the consequences of his mistakes are hard to predict and the benefits may vary, if we are prepared to move quickly to take advantage of the opportunities that may open up, we may directly impact regime behavior where it matters--Bashar and his inner circle. ¶3. (S) The following provides our summary of potential vulnerabilities and possible means to exploit them: -- Vulnerability: -- THE HARIRI INVESTIGATION AND THE TRIBUNAL: The Hariri investigation ) and the prospect of a Lebanon Tribunal -- has provoked powerful SARG reactions, primarily because of the embarrassment the investigation causes. Rationally, the regime should calculate that it can deal with any summons of Syrian officials by refusing to turn any suspects over, or, in extreme cases by engineering "suicides.8 But it seems the real issue for Bashar is that Syria,s dignity and its international reputation are put in question. Fiercely-held sentiments that Syria should continue to exercise dominant control in Lebanon play into these sensitivities. We should seek to exploit this raw nerve, without waiting for formation of the tribunal. -- Possible action: -- PUBLICITY: Publicly highlighting the consequences of the ongoing investigation a la Mehlis causes Bashar personal angst and may lead him to act irrationally. The regime has deep-seated fears about the international scrutiny that a tribunal -- or Brammertz accusations even against lower-echelon figures -- would prompt. The Mehlis accusations of October 2005 caused the most serious strains in Bashar's inner circle. While the family got back together, these splits may lie just below the surface. -- Vulnerability: -- THE ALLIANCE WITH TEHRAN: Bashar is walking a fine line in his increasingly strong relations with Iran, seeking necessary support while not completely alienating Syria,s moderate Sunni Arab neighbors by being perceived as aiding Persian and fundamentalist Shia interests. Bashar's decision to not attend the Talabani ) Ahmadinejad summit in Tehran following FM Moallem,s trip to Iraq can be seen as a manifestation of Bashar's sensitivity to the Arab optic on his Iranian alliance. -- Possible action: -- PLAY ON SUNNI FEARS OF IRANIAN INFLUENCE: There are fears in Syria that the Iranians are active in both Shia proselytizing and conversion of, mostly poor, Sunnis. Though often exaggerated, such fears reflect an element of the Sunni community in Syria that is increasingly upset by and focused on the spread of Iranian influence in their country through activities ranging from mosque construction to business. Both the local Egyptian and Saudi missions here, (as well as prominent Syrian Sunni religious leaders), are giving increasing attention to the matter and we should coordinate more closely with their governments on ways to better publicize and focus regional attention on the issue. -- Vulnerability: -- THE INNER CIRCLE: At the end of the day, the regime is dominated by the Asad family and to a lesser degree by Bashar Asad,s maternal family, the Makhlufs, with many family members believe to be increasingly corrupt. The family, and hangers on, as well as the larger Alawite sect, are not immune to feuds and anti-regime conspiracies, as was evident last year when intimates of various regime pillars (including the Makhloufs) approached us about post-Bashar possibilities. Corruption is a great divider and Bashar's inner circle is subject to the usual feuds and squabbles related to graft and corruption. For example, it is generally known that Maher Asad is particularly corrupt and incorrigible. He has no scruples in his feuds with family members or others. There is also tremendous fear in the Alawite community about retribution if the Sunni majority ever regains power. -- Possible Action: -- ADDITIONAL DESIGNATIONS: Targeted sanctions against regime members and their intimates are generally welcomed by most elements of Syrian society. But the way designations are applied must exploit fissures and render the inner circle weaker rather than drive its members closer together. The designation of Shawkat caused him some personal irritation and was the subject of considerable discussion in the business community here. While the public reaction to corruption tends to be muted, continued reminders of corruption in the inner circle have resonance. We should look for ways to remind the public of our previous designations. -- Vulnerability: -- THE KHADDAM FACTOR: Khaddam knows where the regime skeletons are hidden, which provokes enormous irritation from Bashar, vastly disproportionate to any support Khaddam has within Syria. Bashar Asad personally, and his regime in general, follow every news item involving Khaddam with tremendous emotional interest. The regime reacts with self-defeating anger whenever another Arab country hosts Khaddam or allows him to make a public statement through any of its media outlets. -- Possible Action: -- We should continue to encourage the Saudis and others to allow Khaddam access to their media outlets, providing him with venues for airing the SARG,s dirty laundry. We should anticipate an overreaction by the regime that will add to its isolation and alienation from its Arab neighbors. Vulnerability: -- DIVISIONS IN THE MILITARY-SECURITY SERVICES: Bashar constantly guards against challenges from those with ties inside the military and security services. He is also nervous about any loyalties senior officers (or former senior officers) feel toward disaffected former regime elements like Rif,at Asad and Khaddam. The inner circle focuses continuously on who gets what piece of the corruption action. Some moves by Bashar in narrowing the circle of those who benefit from high-level graft has increased those with ties to the security services who have axes to grind. -- Possible Action: -- ENCOURAGE RUMORS AND SIGNALS OF EXTERNAL PLOTTING: The regime is intensely sensitive to rumors about coup-plotting and restlessness in the security services and military. Regional allies like Egypt and Saudi Arabia should be encouraged to meet with figures like Khaddam and Rif,at Asad as a way of sending such signals, with appropriate leaking of the meetings afterwards. This again touches on this insular regime,s paranoia and increases the possibility of a self-defeating over-reaction. Vulnerability: -- REFORM FORCES VERSUS BAATHISTS-OTHER CORRUPT ELITES: Bashar keeps unveiling a steady stream of initiatives on economic reform and it is certainly possible he believes this issue is his legacy to Syria. While limited and ineffectual, these steps have brought back Syrian expats to invest and have created at least the illusion of increasing openness. Finding ways to publicly call into question Bashar,s reform efforts )- pointing, for example to the use of reform to disguise cronyism -- would embarrass Bashar and undercut these efforts to shore up his legitimacy. Revealing Asad family/inner circle corruption would have a similar effect. -- Possible Action: -- HIGHLIGHTING FAILURES OF REFORM: Highlighting failures of reform, especially in the run-up to the 2007 Presidential elections, is a move that Bashar would find highly embarrassing and de-legitimizing. Comparing and contrasting puny Syrian reform efforts with the rest of the Middle East would also embarrass and irritate Bashar. -- Vulnerability: -- THE ECONOMY: Perpetually under-performing, the Syrian economy creates jobs for less than 50 percent of the country,s university graduates. Oil accounts for 70 percent of exports and 30 percent of government revenue, but production is in steady decline. By 2010 Syria is expected to become a net importer of oil. Few experts believe the SARG is capable of managing successfully the expected economic dislocations. -- DISCOURAGE FDI, ESPECIALLY FROM THE GULF: Syria has enjoyed a considerable up-tick in foreign direct investment (FDI) in the last two years that appears to be picking up steam. The most important new FDI is undoubtedly from the Gulf. -- Vulnerability: -- THE KURDS: The most organized and daring political opposition and civil society groups are among the ethnic minority Kurds, concentrated in Syria,s northeast, as well as in communities in Damascus and Aleppo. This group has been willing to protest violently in its home territory when others would dare not. There are few threats that loom larger in Bashar,s mind than unrest with the Kurds. In what is a rare occurrence, our DATT was convoked by Syrian Military Intelligence in May of 2006 to protest what the Syrians believed were US efforts to provide military training and equipment to the Kurds in Syria. -- Possible Action: -- HIGHLIGHT KURDISH COMPLAINTS: Highlighting Kurdish complaints in public statements, including publicizing human rights abuses will exacerbate regime,s concerns about the Kurdish population. Focus on economic hardship in Kurdish areas and the SARG,s long-standing refusal to offer citizenship to some 200,000 stateless Kurds. This issue would need to be handled carefully, since giving the wrong kind of prominence to Kurdish issues in Syria could be a liability for our efforts at uniting the opposition, given Syrian (mostly Arab) civil society,s skepticism of Kurdish objectives. -- Vulnerability: -- Extremist elements increasingly use Syria as a base, while the SARG has taken some actions against groups stating links to Al-Qaeda. With the killing of the al-Qaida leader on the border with Lebanon in early December and the increasing terrorist attacks inside Syria culminating in the September 12 attack against the US embassy, the SARG,s policies in Iraq and support for terrorists elsewhere as well can be seen to be coming home to roost. -- Possible Actions: -- Publicize presence of transiting (or externally focused) extremist groups in Syria, not limited to mention of Hamas and PIJ. Publicize Syrian efforts against extremist groups in a way that suggests weakness, signs of instability, and uncontrolled blowback. The SARG,s argument (usually used after terror attacks in Syria) that it too is a victim of terrorism should be used against it to give greater prominence to increasing signs of instability within Syria. ¶4. (S) CONCLUSION: This analysis leaves out the anti-regime Syrian Islamists because it is difficult to get an accurate picture of the threat within Syria that such groups pose. They are certainly a long-term threat. While it alludes to the vulnerabilities that Syria faces because of its alliance with Iran, it does not elaborate fully on this topic. The bottom line is that Bashar is entering the new year in a stronger position than he has been in several years, but those strengths also carry with them -- or sometimes mask ) vulnerabilities. If we are ready to capitalize, they will offer us opportunities to disrupt his decision-making, keep him off-balance, and make him pay a premium for his mistakes. ROEBUCK
CONFIDENTIAL: BRAZIL: MORE OBSERVATIONS ON FOREIGN POLICY
VZCZCXRO6643 OO RUEHRG DE RUEHBR #2293/01 3051751 ZNY SSSSS ZZH O 011751Z NOV 06 FM AMEMBASSY BRASILIA TO RUEHC/SECSTATE WASHDC IMMEDIATE 7162 INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 5761 RUEHBO/AMEMBASSY BOGOTA PRIORITY 3987 RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 4384 RUEHCV/AMEMBASSY CARACAS PRIORITY 3488 RUEHGT/AMEMBASSY GUATEMALA PRIORITY 0311 RUEHLP/AMEMBASSY LA PAZ PRIORITY 4961 RUEHPE/AMEMBASSY LIMA PRIORITY 3228 RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 6570 RUEHOT/AMEMBASSY OTTAWA PRIORITY 1003 RUEHPU/AMEMBASSY PORT AU PRINCE PRIORITY 0158 RUEHQT/AMEMBASSY QUITO PRIORITY 2020 RUEHSG/AMEMBASSY SANTIAGO PRIORITY 5900 RUEHRG/AMCONSUL RECIFE PRIORITY 5757 RUEHRI/AMCONSUL RIO DE JANEIRO PRIORITY 3227 RUEHSO/AMCONSUL SAO PAULO PRIORITY 8490 RUEKJCS/SECDEF WASHDC PRIORITY RHEHNSC/NSC WASHDC PRIORITY RUMIAAA/USCINCSO MIAMI FL PRIORITY RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY RUEAIIA/CIA WASHDC PRIORITY S E C R E T SECTION 01 OF 02 BRASILIA 002293 SIPDIS NOFORN SIPDIS E.O. 12958: DECL: 05/25/2016 TAGS: PREL BR SUBJECT: BRAZIL: MORE OBSERVATIONS ON FOREIGN POLICY IN LULA'S SECOND TERM REF: BRASILIA 2245 Classified By: POLITICAL COUNSELOR DENNIS HEARNE. REASONS: 1.4 (B)(D). ¶1. (C) Introduction. Reftel discussed Mission,s views that, despite interesting media reports that President Lula da Silva,s foreign policy in a second term could shift toward closer ties with the U.S., we could not see yet concrete evidence of such a trend. We remain circumspect on this question. At the same time, candid and encouraging conversations with top GOB officials on the day after Lula,s strong victory at the polls left Ambassador and emboffs wondering about the possibility that some change may be brewing. We report what we heard below, with the caveat that we remain in a cautious "wait and see mode" for the time being. End introduction. ¶2. (C) Ambassador and PolCouns visited the Planalto Palace on 30 October, and found a Presidency in an open mood of jubilant celebration. A steady column of VIPs streamed through for audiences with re-elected President Lula. A relieved and buoyant Gilberto Carvalho, Chief of Lula,s Personal Staff, received Ambassador and poloff for a courtesy call, which turned into a compelling conversation about the direction of policy in Lula,s second term. Carvalho, who is perhaps Lula,s closest long-time advisor, made the following comments: --On foreign policy, Carvalho said that Lula,s first term had seen a broad opening of Brazil to new alliances and diplomatic arrangements worldwide. Now, with this base established, the second Lula government will re-focus priority on "quality relationships with traditional partners." Specifically, for Brazil to grow with new investment, the GOB will need to engage more intensively with the United States, Carvalho stressed. --Ambassador welcomed this observation, but said he remained concerned when he heard certain Brazilian officials speak of the need to "counterbalance" against the U.S., and opined that two democracies should be able to debate and work together directly, without such contrivances. Carvalho was emphatic in agreeing, said there will be no further discussion of counterbalances, and asked for the Ambassador,s understanding if rhetoric during the election campaign had occasionally seemed critical of the U.S. He again assured Ambassador that the second Lula government wants investment and growth, and sees relations with the U.S. as central to this. --At the conclusion of the meeting, Carvalho provided his private telephone numbers to Ambassador and PolCouns and encouraged them to contact him directly at any time if there was problematic development in relations between the two governments, of if they wished to present an issue directly to President Lula. Carvalho said he would welcome this direct channel with the Ambassador. ¶3. (S/NF) In a separate meeting at Planalto with General Jorge Armando Felix, Lula,s Minister for Institutional Security, Ambassador, PolCouns and Regional Affairs Chief raised the subject of intensified U.S.-Brazil exchanges and cooperation in intelligence and security. Ambassador noted that President Lula, in a brief aside at the UNGA in New York, had encouraged continued engagement with General Felix, presumably on such issues. General Felix then announced that he had, subsequent to an earlier meeting with Ambassador, commissioned a formal paper outlining specific areas for consultation and collaboration at the policy level with the USG in the intelligence field. Ambassador and Felix agreed BRASILIA 00002293 002 OF 002 that the GOB could also specify in the paper specific equipment or training they might require, and decided to plan together for a high-level bilateral intelligence meeting early in 2007 in Brasilia. ¶4. (C) In an earlier conversation on the same day, Development and Industry Minister Luiz Furlan told Ambassador that Lula was pressing him to stay on in a second government, and Furlan appeared to be considering this option. Furlan, a moderate with a business background who has long pressed within Lula,s cabinet for closer cooperation with the United States, seemed to be of the view that Lula,s second term priorities would be shifting in the direction of closer engagement with the U.S. and other developed nations. ¶5. (C) Comment. Our senior interlocutors were in high spirits yesterday, with a kind word for the world, including the U.S. But without major changes in the foreign ministry's senior staffing and orientation, we wonder about the viability of a tilt toward the U.S. and developing world, and away from the south-south priorities of the first Lula term. Nonetheless, it is intriguing that we have received such a steady stream of strong signals from senior Lula advisors on the day after his victory. Watch this space. Sobel
CONFIDENTIAL: COMBATING ORGANIZED CRIME: ROUND ONE
VZCZCXRO0687 RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR DE RUEHSF #0103/01 0411705 ZNY CCCCC ZZH R 101705Z FEB 10 FM AMEMBASSY SOFIA TO RUEHC/SECSTATE WASHDC 6700 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE RUEAIIA/CIA WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEAWJA/DEPT OF JUSTICE WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHINGTON DC RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000103 SIPDIS E.O. 12958: DECL: 02/03/2019 TAGS: PGOV KCRM KCOR BU SUBJECT: COMBATING ORGANIZED CRIME: ROUND ONE GOES TO THE NEW GOVERNMENT REF: A. 09 SOFIA 508 ¶B. 09 SOFIA 548 ¶C. 09 SOFIA 642 Classified By: AMB JAMES WARLICK FOR REASONS 1.4 (B) AND (D). ¶1. (C) Summary: Elected on an anti-corruption and organized crime platform, the GERB government has made good on its campaign promises and taken some positive steps. Important reforms, bolstered by political will from the top, have ratcheted up the pressure against previously untouchable organized crime figures and enabled marquee busts of a few large well-equipped organized crime groups. At the same time, these arrests have highlighted weaknesses in the judicial system as judges allow members of these groups to make bail and delay proceedings despite prosecutors' assurances of airtight evidence against them. In private meetings with the Ambassador, the government has confirmed its commitment to fight organized crime, but this may be a losing battle if it is unable to convince the judiciary to make the reforms necessary to allow prosecutors to do their jobs and keep dangerous criminals in prison. End Summary. PROGRESS ON ORGANIZED CRIME AND CORRUPTION ----------------------------------------- ¶2. (C) In its short time in office, the government has completed difficult reforms and personnel changes necessary to make law enforcement more effective. It has revamped law enforcement by removing 26 of the 28 regional police chiefs, many of whom were corrupt or incompetent, established embassy-recommended interagency counter organized crime task forces, and passed new laws to resolve jurisdictional conflicts between the State Agency for National Security (DANS) and the Ministry of Interior (MOI). As a result, coordination between law enforcement and the prosecutor's office has dramatically improved. Chief Prosecutor Boris Velchev, a Socialist appointee, confided to the Ambassador during a February 1 meeting that he has the complete support of the PM and the government to "declare war" on the 200 to 300 most dangerous organized crime figures, including the 20 to 50 bosses who are household names (ref A). ¶3. (C) Structural reforms and clear political will have brought some quick and convincing results, including impressive operations in December against two notorious organized crime gangs known as "the Impudents" and "the Crocodiles." The government arrested 30 members of the Impudent gang believed to have carried out 19 high profile ransom kidnappings over the past several years. Breaking up this group was a priority from day one for the new government due to this group's use of sophisticated technology and techniques along with the psychological effect the kidnappings had on the population. Similarly, the Crocodile gang, composed mainly of car thieves and highway robbers, terrorized mostly Turkish citizens driving through Bulgaria to Germany. ¶4. (C) Most recently, the police launched operation "Octopus" in which they arrested 12 people on February 10 believed to be involved in a powerful organized crime group that has operated for the last 10 years. These busts were a public relations coup for the government in that they targeted well-known groups that previous governments had been powerless to stop. The government has had even more success arresting former government officials for corruption. To date, two former ministers have been indicted and five other ministers from the previous two governments will likely face corruption-related charges. This is on top of at least 10 high-level arrests of mayors, judges, agency heads, and MPs for corruption since last summer. JUDICIAL REFORM LAGS BEHIND --------------------------- ¶5. (C) Despite successes on the organized crime and corruption front, the powerful "big fish" mostly remain at large due to the serious flaws in the overly formalistic judicial system (ref B). No case illustrates this better than the Marinov brothers and the January 5 assassination of Boris "Bobby" Tsankov. Tsankov, a self-styled journalist and entertainment figure with extensive underworld ties, was gunned down in typical gangland fashion in downtown Sofia. This unsolved murder is reminiscent of the approximately 140 other Mafia hits that have taken place in Bulgaria from 1993 to 2010. It is widely believed that Krassimir "Big Margin" Marinov and his brother Nikolay "Small Margin" Marinov ordered the hit to prevent Tsankov from providing evidence to the chief prosecutor's office. The Marinovs have been embroiled in serious organized crime and murder cases dating back to 2005 (ref A), but were free on bail at the time of the shooting thanks to legal loopholes that allow the perpetual postponement of serious cases. After the Tsankov killing, Little Margin's whereabouts are unknown and Big Margin was briefly detained for the killing before being released due to a lack of evidence (he was later arrested again on drug-related charges). ¶6. (C) Even the successful operation against the Impudent gang has not been brought to a satisfactory conclusion. Of the 30 members initially arrested, 21 have been released from jail, including one of the ringleaders, Anton "the Hamster" Petrov. Petrov was released on BGN 20,000 (USD 15,000) bail after the Appeals Court determined that the MOI and prosecutors had failed to provide new and convincing evidence against him. Since Petrov's release, two witnesses who were cooperating with the police have reneged on promises to testify against the kidnapping group. This is a familiar pattern that has repeated itself in many other important organized crime cases. REFORM EFFORTS FACE DIFFICULT HURDLES ------------------------------------- ¶7. (C) Chief Prosecutor Velchev and Minister of Justice Popova told the Ambassador in separate meetings that reform of the criminal procedure code had run into fierce opposition from the "old guard" (politicians and judges) allied with defense lawyers and NGOs using the language of human rights to sink necessary reform. Changes to the criminal procedure code would close legal loopholes and likely speed up organized crime and corruption cases, which drag on for years in the current system (ref A). Reforming the code is widely viewed as essential to shift the balance from a system overly favorable to defendants to a more just and effective system. Among other things, the proposed changes to the criminal procedure code would allow police to testify in court, provide a back-up defense lawyer and increase fines if the defendant's attorney fails to show up at court (a common tactic for postponements), and simplify evidence collection procedures. Without radical reform, Minister Popova told the Ambassador that Bulgaria's judiciary could not cope with its entrenched organized crime problem. Radical reforms such as significantly changing how judges and prosecutors are appointed, disciplined, and promoted (ref C) would require constitutional amendments that need 161 of the 240 votes in parliament to pass. GERB is a minority government with 114 MPs, making constitutional reform difficult. ¶8. (C) Comment: The GERB government has set ambitious goals in combating organized crime and has shown it has the political will to fight established criminal enterprises and entrenched interests. Still, this will not be an easy fight, and it will be difficult to achieve convictions and reasonable sentencing of "big fish" if the judicial system is not recalibrated to confront Bulgaria's organized crime problem. Radical judicial reform advocated by the Minister of Justice will not happen overnight given the highly independent and conservative judicial system and the daunting constitutional barriers preventing rapid reform. Despite these challenges, incremental reform is possible with the government's strong support. In the end, the government will be judged not on high profile arrests, but on its ability to speed up corruption cases, close legal loop holes, and successfully lock up previously untouchable organized crime figures. End Comment. WARLICK
