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Syria Eyes Russia as Sanctions Hit Airbus Purchase

Sept. 24 (Bloomberg) -- Syria is in talks to buy planes from Russia after U.S. sanctions stalled negotiations on the purchase of as many as 50 Airbus SAS aircraft, said Abdallah Dardari, deputy prime minister for economic affairs.

“I’m looking for planes with less than 10 percent of U.S. components,” Dardari told reporters today in Paris. “That leaves only Russia. We’ve spoken about it with President Dmitry Medvedev. We are in negotiations.”

Dardari said in an August 2008 interview that Syria plans to modernize the fleet of state-run Syrian Arab Airlines. The carrier had sought to buy single-aisle Airbus A320s as well as twin-aisle A330, A340 and A350 models. It planned to lease four planes and then take delivery of the first 14 airliners from Toulouse, France-based Airbus from 2010 to 2018 and a further 36 by 2028.

The U.S. imposed economic sanctions on Syria in May 2004, including a ban on transactions by U.S. entities with the Commercial Bank of Syria, the country’s largest bank, after then-President George W. Bush’s administration accused the government in Damascus of aiding militants in Iraq and destabilizing Lebanon. The sanctions have prevented the sales of Airbus planes to Syria because some of the company’s aircraft parts are U.S.-made.

General Electric Co. and United Technologies Corp. make aircraft engines, including models built in partnership with European companies. Charlotte, North Carolina-based Goodrich Corp. is the world’s biggest supplier of landing gear.

Embraer, Bombardier

The use of U.S. parts has also ruled out turning to Brazil’s Empresa Brasileira de Aeronautica SA and Canada’s Bombardier Inc., Dardari said.

The sanctions, preventing Boeing from taking part in recent bidding, have scuttled previous efforts to overhaul Syrian Air’s fleet. The carrier, known as Syrian Air, was set up in 1946. Its fleet includes A320s and single-aisle Boeing 727s, according to its Web site.

Part of Syrian Air’s multibillion-dollar restructuring may include preparing it for an initial public offering on the Damascus Stock Exchange, Dardari said in the 2008 interview.

To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net; Massoud A. Derhally in Beirut, Lebanon at mderhally@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

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