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Tue 4 Mar 2008 04:00 AM

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Tough times for Syria’s top tycoon

Arabian Business looks at the implications of the US freeze on Rami Makhlouf's assets.

Each week Arabian Business turns the spotlight on a leading company.

Now then, what's all this racket about?

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

The designation freezes Makhlouf's assets under US jurisdiction and forbids US citizens or entities from doing business with him. The thing is, Makhlouf says he "doesn't have a penny" in the US.

Oh dear, that's not very nice. How did Makhlouf take it?

Not too badly. He said that US sanctions would not stop him expanding his business empire, and announced he was in talks to sell a majority stake in Syria's leading mobile operator Syriatel, to its Turkish counterpart Turkcell. "I should thank [US] President George W. Bush because the sanctions have raised the level of my support in Syria," he deadpanned.

I am no hit-and-run businessman. My companies employ 6000 Syrians, mostly young qualified professionals."

He doesn't sound too bothered... So what does Makhlouf do, exactly?

The 39 year-old executive is the cousin of President Bashar Al-Assad, and he is Syria's most powerful businessman. His conglomerate - which stretches from telecoms to banks and an airline - does the majority of its business in Syria, and Makhlouf has also ventured into heavy industry and property development, as local real estate prices spiked.

However, Makhlouf last week said he was considering selling around 51% of Syriatel, in which he currently owns a 69% stake. Turkcell said in November it was looking at bidding for a controlling stake in the operator.

So it looks as though the Syrian can tell George Bush to take a hike?

Yes, it seems that way. Makhlouf recently pointed to a US$100m joint venture between his Cham Holding company and Dubai's Emaar Properties, as evidence of an undiminished appetite to do business across the region.

So the sanctions mean that he can't deal with the US. But there's still hundreds of other countries he can deal with, right?

Correct. For example, he has announced that Syria Pearl airline, in which he owns a major stake through Cham Holding, is seeking to buy a fleet of planes made by Canadian company Bombardier. I think we can safely say that US manufacturer Boeing won't be receiving any such orders in the near future.

So what have the ongoing US sanctions meant for Syria?

It has not been easy, although investment has continued to flow. Sanctions imposed by the US on Syria in 2004 undermined efforts by the government to attract investment, although billions of dollars of Gulf capital is still estimated to have been committed to projects in Syria over the last few years.

Arabian Business: why we're going behind a paywall