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Wed 27 Feb 2008 10:28 AM

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Syrian tycoon defiant over US sanctions

Rami Makhlouf says he is in talks to sell majority stake in Syriatel to Turkish counterpart Turkcell.

Syrian tycoon Rami Makhlouf said on Tuesday US sanctions would not stop him expanding his business empire and announced he was in talks to sell a majority stake in Syrian's leading mobile operator Syriatel to Turkish counterpart Turkcell.

"A deal between Turkcell and Syriatel would cement relations between the two countries," Makhlouf told newswire Reuters in an interview.

"I cannot say, however, that we will reach an agreement. The negotiations are ongoing," he said.

"I should thank [US] President George W. Bush because the sanctions have raised the level of my support in Syria. I am no hit and run businessman. My companies employ 6,000 Syrians, mostly young qualified professionals."

Makhlouf, Syria's most powerful businessman, said he was considering selling between 51% of Syriatel or more. Turkcell said in November it was looking at bidding for a controlling stake.

The 39 year-old executive is the cousin of President Bashar Al-Assad. He owns 69% of Syriatel. Gulf investors and Syrian shareholders own the rest of the company, which controls HITS-Unitel, a Yemeni cellphone operator.

Members of the Saudi royal family also have a stake in HITS-Unitel.

But Makhlouf's conglomerate, which stretches from telecoms to banks and an airline, does the majority of its business in Syria. He has ventured into heavy industry and property development as local real estate prices spiked.

Makhlouf pointed to a $100 million joint venture between his Cham Holding company and Dubai Emaar Properties due to signed on Wednesday as evidence of an undiminished appetite to do business with companies he has stakes in.

"This venture will develop areas in Damascus that turned chaotic because of illegal housing. We are talking about first-rate urban projects," Makhlouf said.

He said Syria Pearl airline, in which he owns a major stake through Cham Holding, was seeking to buy a fleet of planes made by Canadian company Bombardier.

The airline, in which state-owned Syrianair was granted a 25% stake, aims to regain market share lost by the national carrier to foreign airlines.

"Syrianair has six aircraft, which is unacceptable for a country the size of Syria," he said.

Syria's airline sector opened to private companies last year as part of limited economic liberalisation measures ordered by Al-Assad.

However sanctions imposed by the US on Syria in 2004 have undermined efforts by the government to attract investment, although billions of dollars of Gulf capital is estimated to have been committed to projects in Syria in the last few years.

The US froze the assets of Makhlouf on Thursday under new economic sanctions aimed at stepping up pressure against Damascus, saying Makhlouf benefited from corruption in the Syrian government.

The Treasury Department designated Makhlouf under an expansion of US economic sanctions against Syria announced February 13 by Bush. The designation freezes Makhlouf's assets under US jurisdiction and forbids US citizens or entities from doing business with him.

Makhlouf said he "did not have a penny" invested in the US. (Reuters)

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