Sanctioning Syria: Costs and Consequences
By: Khalil Habash
Published Saturday, October 8, 2011
Since the beginning of the Syrian uprising, the UN Security Council has imposed sanctions on individuals and entities benefiting from or supporting the regime. The latest measures marked a seventh round of EU and US sanctions on Damascus. The call for sanctions has currency among some Syrians as well. Several Syrian opposition groups and popular committees including the newly formed Syrian National Council are in favor of sanctions while opposed to foreign military intervention. It may be hard to determine with certainty whether sanctions will help Syrians topple the Assad regime. But a close examination of the type of sanctions involved and the regime's room to outmaneuver them suggests that these sanctions will mostly harm the people and not the regime. The Syrian regime is no different from other past and present regimes that can continue to rule and repress its own people even under an embargo.
New Sanctions: Oil and Money Main Targets
The severity of sanctions is growing by the day. Currently, over 50 Syrian nationals are now subject to travel bans and 18 entities, including banks and companies such as Real Estate Bank, Cham Investment Group, and Mada Transport, have had their assets frozen.
Switzerland has frozen US$51 million in assets linked to the Syrian regime. Last August, Berne had already blocked assets amounting to 27 million Swiss francs (US$21.9 million). In May, Switzerland adopted financial and travel sanctions against 23 senior officials in Damascus, including chief of intelligence, Ali Mamlouk and Interior Minister Mohammad Ibrahim al-Shaar, for "their involvement in the repression of demonstrators" on Syrian territory.
On Tuesday August 23, the US, France, and Britain circulated a draft resolution to the UNSC proposing that the foreign assets of President Assad, his brother Maher, as well as 21 other government officials be frozen. However, President Assad was left off the list of the 22 officials whose travel from Syria would also be barred.
Sanctions reached a new level during the past few weeks when the EU and the US imposed an embargo on Syrian oil. While the US does not import significant amounts of petroleum products from Syria, sanctions from the EU will hit the country particularly hard. Close to 28 percent of Syria's revenue comes from the oil trade and France, Germany, Italy, and the Netherlands are major customers. Syria exports some 150,000 barrels of oil per day, with the vast majority going to the European Union. EU trade spokesman John Clancy said Syria earned 3.1 billion euros (US$4.4 billion) by selling oil to the bloc in 2010. Oil from Syria amounted to 1.5 percent of EU's total crude oil imports that year.
Along with banning investments in the oil industry in Syria, the EU also expanded the list of Syrian officials subject to an asset freeze and visa ban, and barred the delivery of banknotes to the country’s central bank.
Surviving Sanctions: Past Lessons and Future Hopes
However, the embargo will not be decisive in breaking the hold of the regime for two reasons. Firstly, the embargo will not start immediately. As requested by Italy – which imports up to 30 percent of Syrian oil – delivery contracts signed by European oil companies with Syria and its two state-controlled companies (Syria Petroleum Company and Sytrol) will actually continue to be honored until November 15. Italy defended its demand for a grace period, saying Italian firms needed time to adapt. It was also decided to postpone the additional option, a ban on European investment in the Syrian oil sector. Secondly, the Syrian regime can find countries outside Europe to sell its oil.
Smuggling and money transfers are also useful ways to bypass the embargo and enrich small elites. In the same vein, the Syrian Central Bank has actually spent 2 to US$3 billion defending its currency since the start of the uprising six months ago. The money came from a fund the government created two years ago that had US$20 billion by the time the revolt began. The Syrian currency has actually only lost between 3 to 8 percent against the dollar during the same period.
They also temporarily restricted imports of products that are subject to tariffs of more than 5 percent, excluding only basic supplies that are not manufactured locally. The merchandise affected by these measures represent around 25 percent of the total value of Syrian imports and allowed the regime to save at least US$6 billion. The import suspension affects around a quarter of 10,000 types of items that are imported, including cars, furnishings, domestic appliances, clothes, and some food products. The Syrian regime recently overturned the decision of suspending the importation of goods whose customs duties exceed 5 percent, citing its negative impact on the market and the raised price of goods.
Alternative methods can be used to preserve Syria's foreign currency reserves while maintaining the flow of goods to and from Syria. For example, by downsizing the program for financing exports by the Central Bank, a significant amount of foreign currency will be freed up. This will also preserve the traders’ freedom and maintain the flow of goods, thus preventing price hikes while respecting trade agreements with other countries.
These different precautionary measures are designed to protect the regime’s currency reserves, which are currently over US$17 billion. According to different sources, including the Central Bank of Syria, economists estimate that Syria has sufficient financial reserves to cover 16 months of imports under the new rules.
It's not the economy or economic sanctions that will bring down the regime; it will only impoverish the people, while the elements of the bourgeoisie still supporting and benefiting from the regime will find other opportunities to continue to enrich themselves. It is also worth noting that the Syrian regime has been under sanctions since 2003, without any visible weakening effect. The Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 actually provided for the imposition of a series of sanctions against Syria if “it did not end its support for Palestinian terrorist groups, curtail its military and security interference in Lebanon, cease its pursuit of weapons of mass destruction, and meet its obligations under United Nations Security Council resolutions regarding the stabilization and reconstruction of Iraq.” These sanctions prohibited US products from being exported to Syria, but excluded food and medicine and the arrival and departure of Syrian Government-owned aircraft in the US.
Sanctions and the call for human rights monitors demanded by the popular movement against the regime are understandable in many regards, notably the increasingly bloody repression, and should be respected on the basis of the people's self-determination. They are the ones struggling on the ground and know what they need in their specific context.
But it is also important to draw lessons from history. Wide economic sanctions on authoritarian regimes rarely weaken them. In Iraq and Iran, the opposite happened. Sanctions strengthened the regimes and weakened the people. In the case of Syria, these measures could actually play into the hands of the regime. Syria has been importing goods illegally since 2003, when limited sanctions were imposed and recalls the oil-for-food program which was “largely bypassed” by Saddam Hussein’s regime, leading to massive suffering among the civilian population.
It is important to understand that the same imperialist states, which yesterday supported the Assad regime, or at least did not oppose it, are now encouraging and implementing sanctions against it. The latter are not interested in the freedom of the Syrian people, but only to advance their economic and political interests.
It is the Syrian people's struggle, not sanctions, that will guarantee the downfall of the regime. If anything, sanctions may be a Trojan horse by which imperial powers will be able to co-opt the Syrian revolution, something they have not been able to do so far due to the insistence of the popular movement and the opposition to oppose any interference in their struggle. Sanctions could also be a tool to pave the way for a future military intervention by imperialist powers against the will of the majority of the Syrian people – something which would be catastrophic for the country.
Khalil Habish is the pen name of a Syrian activist and PhD student of political science and development.
The views expressed by the author do not necessarily reflect al-Akhbar's editorial policy.