home Current Events, national security, news, Russia, sanctions, Syria Ten Percent Rule Snags Syria’s International Shopping List

Ten Percent Rule Snags Syria’s International Shopping List

Syria — under U.S. law designated a state sponsor of terrorism — is lamenting that it will not be able to upgrade its state-owned and operated airlines fleet with European-made Airbuses.  Abdallah Dardari, Syria’s Deputy Prime Minister for Economic Affairs, told the media this week that he was shopping for “planes with less than 10 percent of U.S. components.” Syrian Arab Airlines will need to turn to the Russians to do that because European planes are chock full of Made-in-the-USA parts and components.

Despite being heavily subsidized by the European Union, the Europeans still need American ingenuity and know-how to build an efficient flying machine.  According to Airbus the planes are “literally equipped with U.S.-manufactured parts and components from nose to tail.”  U.S. companies selling to the Europeans include Alcoa, GE, Goodrich, Hamilton Sundstrand, Honeywell, Northrop Grumman, Pratt & Whitney and Rockwell Collins, among others.

Without getting to much into the legal and policy weeds, U.S. economic sanctions prohibit the export to Syria any foreign-made items (i.e., Airbus planes) that contain a certain percent of U.S.-origin content (i.e., engines or parts, tires, etc.).  As detailed in the Export Administration Regulations (EAR), companies literally need to go piece-by-piece — from “nose to tail” — to determine the percentage value of U.S-origin controlled content incorporated in, commingled with, or ‘bundled’ with the foreign-made item.  While the rule appears rather straightforward, it can be a tricky and, at times, imprecise analysis.

Syrian Arab Airlines is basically out of luck.  It cannot purchase European-made planes, or for that matter planes sold by Brazil or Canada because these all of these planes contain U.S. made parts and components that trigger the 10% rule.  As a result, according to news reports the Syrians are in talks with the Russians. And despite the most recent wave of laments from Syrian government officials, the Russian deal will suit the Syrians, the Russians, (and Hezbollah), just fine.

Russia and Syria are close business partners.  Just last week, Russian officials announced that Russia is planning to sell $300 million worth of Yakhont cruise missiles to Syria. Interesting sweetener for the likely forthcoming plane sale.  According to the Russians these sales are for defensive purposes, not for Syria continue developing and enhancing its weapons of mass destruction (WMD) capability, including chemical munitions and delivery systems.

I know what you are thinking, Syria needs planes so that people can travel safely and goods move freely.  In this particular case the whole point of sanctions, though folks in this town would never admit to it, is to ground Syrian Arab Airlines so that we can exact concessions from the Syrian regime, a close ally of another state sponsor of terror, Iran.  If the Russians comes in with a parachute, as they will undoubtedly will, it defeats the purpose.

%d bloggers like this: