VZCZCXRO8623
PP RUEHLA
DE RUEHMD #0489 1391521
ZNR UUUUU ZZH
P 191521Z MAY 09 ZDK
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 0659
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
INFO RUEHDM/AMEMBASSY DAMASCUS 0364
RUEHLO/AMEMBASSY LONDON 1077
RUEHLA/AMCONSUL BARCELONA 3989

UNCLAS MADRID 000489 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA A.MONZ AND EUR/WE SZERDECKI/ESAMSON 
STATE ALSO FOR EEB/ESC/TFS C.BACKEMEYER 
COMMERCE FOR BIS: T.CHRISTINO, J.SONDERMAN, J.JUST 
 
E.O. 12958: N/A 
TAGS: EAIR ETRD ETTC PGOV PREL SP SY
SUBJECT: FOLLOW-UP WITH GOOVERNMENT OF SPAIN RE ORION AIR 
 
REF: A. STATE 49690 
     ¶B. MADRID 468 
     ¶C. MADRID 462 
     ¶D. STATE 47933 
     ¶E. MADRID 439 
     ¶F. MADRID 413 
     ¶G. SECSTATE 41098 
 
¶1.  (SBU) Econoff met May 19 with Jose Alberto Plaza, 
Director General for International Trade in Services at the 
Ministry of Industry, Tourism, and Trade (MITYC); Enrique 
Feas, MITYC Deputy Director for Trade and Investments, who 
handles Middle East countries; Inigo Febrel, MITYC Deputy 
Director General for EU Trade Policy; and Jose Luis Rodriguez 
de Colmenares, MFA Deputy Director General for Bilateral 
Economic Relations with Europe and OECD Countries, to discuss 
the Orion Air matter and request GOS assistance.  Econoff 
reviewed the history of post's conversations and meetings 
with Orion Air, including ref G demarche, subsequent 
conversations, and delivery per ref D of Temporary Denial 
Order (TDO) after Orion sent the first aircraft to the Syrian 
company and expressed the intention of sending the second 
imminently.  Noting that to the best of his knowledge, the 
second aircraft had not been sent to Syria - the GOS 
officials also thought it had not - econoff requested GOS 
assistance to prevent Orion from sending the second aircraft. 
 
¶2.  (SBU) Director General Plaza Tejera replied that the GOS 
had no authority to stop Orion from sending the aircraft.  He 
noted that Orion and Syrian Pearl has entered into a standard 
service contract (wet lease) that he stated was not deemed an 
export under EU law or regulations.  There followed some 
discussion of what constitutes an export under the U.S. 
Export Administration Regulations (EAR), with econoff calling 
attention to various parts of the Regulations, especially 
those related to aircraft and vessels.  Econoff reiterated 
that post had urged Orion to seek an advisory opinion from 
Commerce's Bureau of Industry and Security (BIS) before 
sending the aircraft.  The GOS officials also noted that 
Spain, unlike the U.S., does not have a general prohibition 
on  exports to Syria.  That said, they could talk further 
with Orion and attempt to persuade it not to send the second 
aircraft. 
 
¶3.  (SBU) The GOS officials characterized Orion as a victim 
of its own ignorance of foreign laws and stated that by the 
time Embassy first approached Orion, the company had already 
signed the contract with Syrian Pearl and was committed to 
delivering the planes.  In addition, they noted that absent 
the contract with Syrian Pearl, Orion was likely to go 
bankrupt and lay off all its employees. Citing the EAR's 
Administrative Enforcement Proceedings, IV.B., Denial of 
Export Privileges and Exclusion from Practice, which states 
that BIS may consider adverse economic consequences of the 
order, Deputy DG Febrel asked if it might not be possible to 
suspend the TDO, which is apparently already causing Orion 
problems. In this vein, the GOS officials asked if the two 
governments, working together, might not be able to arrive at 
some mutually satisfactory resolution of the problem, some 
sort of compromise. 
 
¶4.  (SBU) Econoff responded that we would welcome continued 
conversations with the GOS and would like to find a solution 
but that as a first step, Orion Air should recall the first 
aircraft from Syria and commit not to send the second one to 
the Syrian company.  While undertaking to consult further 
with State and Commerce, he expressed serious doubt that any 
agreement could be reached that did not include these 
conditions.  The GOS officials expressed concern that Orion 
would expect the GOS to defend it in its problems with the 
USG, and also raised the spectre of negative publicity if the 
company did go bankrupt.  Nevertheless, they said they would 
urge Orion not to proceed with delivery of the second 
aircraft, while again expressing hope that some solution 
could be found. 
 
¶5.  (SBU) Comment: The GOS officials appear sincere in their 
interest to engage further with us on this issue, but, like 
Orion Air itself, appear to hold out hope that the company 
can somehow fulfill its contract with Syrian Pearl and still 
avoid trouble with the USG, which appears to be an 
unrealistic scenario.  End Comment. 
DUNCAN