SECRET: WHY WE NEED CONTINUING MINUSTAH PRESENCE IN HAITI

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

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