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Middle east

Are sanctions the key to crippling Assad's regime?

Text by Perrine MOUTERDE

Latest update : 2011-08-18

Several Western countries are looking at ways to increase the pressure on Syria's President Bashar al-Assad after the targeted sanctions so far levied on his regime have had little effect on stemming a crackdown on anti-government protests.

World leaders and diplomats have condemned a bloody crackdown on pro-democracy protesters ordered by Syria’s President Bashar al-Assad, but sanctions targeting members of the government and even the Assad family have so far had little effect on the regime’s attempts to stamp out dissent.

Now the question that several Western nations are considering is whether increasing sanctions would work fast enough to weaken the regime without hurting ordinary Syrians.

Washington repeated calls on Monday to tighten the financial pressure on the Syrian government while Germany asked the United Nations Security Council to discuss a new range of sanctions.

A European oil and gas embargo?

US State Department spokeswoman Victoria Nuland said stricter sanctions would make it harder for Damascus to continue its “abhorrent” attacks on demonstrators.

“There are countries out there still putting money into the coffers of the Syrian regime,” she said, referring in particular to countries that continue to buy oil and gas from Syria.

France, Germany and Italy are among Syria’s biggest oil and gas buyers, and an embargo by these countries would deprive Syria of a third of its revenue. Turkey could also make a considerable economic dent – bilateral trade between the two countries was worth $2.5 billion in 2010.

But according to some, imposing sanctions at this level would punish ordinary Syrians and could be counterproductive. Citing the example of Iraq after the first Gulf War (1990-1991), Syrian economist and opposition supporter Samir Aita said he was “totally opposed” to broader sanctions.

In Iraq, he said, the oil-for-food programme had been largely bypassed by Saddam Hussein’s government, and in the end it was the civilian population that suffered.

“Such measures would play into the hands of the regime, which will continue to import banned goods illegally, something it has been doing anyway since the first limited US sanctions imposed in 2003,” Aita said.

“Not only will sanctions be ineffective, but they could have a dubious effect,” he continued. “Either the US has not learned its lessons from Iraq, or it has learned the lessons and is trying deliberately to make the country implode.”

Instead, Aita called for increasing pressure on the regime to allow humanitarian aid to get through to those who need it and to allow journalists back into the country.

A new class of elites

The West, led by Washington, would want any new sanctions to alienate Syria’s business community – which has stayed very much on the sidelines of the unrest – from the Assad regime.

Some analysts say Syria’s business community can be split into two distinct groups. On one hand there is a new class of elites that has emerged in the last decade, made up of a small number of businessmen with close links to the ruling Assad clan. Among these is Assad’s wealthy cousin Rami Makhlouf, a businessman who has a monopoly on the Syrian mobile phone market.

Middle East specialist Randa Slim of the New America Foundation writes in Foreign Policy magazine that there are only around 200 of these elites, the majority of them belonging to the minority Alawite sect of which the Assad family are also members, and whose interests are inextricably linked with the survival of the regime.

Then there are the merchant families in the major cities of Damascus and Aleppo that make up the country’s traditional commercial class and are mostly Sunni Muslim, with a significant Christian minority. They are neither pro-Assad nor pro-regime change. What they fear above all is political instability.

For Aita, this fear of instability, sectarian conflict and foreign intervention explains why the commercial class has stayed on the sidelines of the opposition protests. But now the regime’s crackdown is beginning to harm their interests. “Assad is now becoming part of the problem, even for them,” Aita said.

Can the regime hold on?

Five months after the first demonstrations, one thing is certain – the Syrian economy is grinding to a halt. Recent travellers to the country describe hotels and restaurants that are virtually empty.

Lahcen Achy, an economist at the Carnegie Middle East Centre in Beirut, said every important sector of the Syrian economy had been affected.

“Tourism, trade and foreign investment are the main sources of revenue for the regime, and they are all affected,” he said. “There are supply problems, prices are too high, civil servants are not getting paid … It is a very serious situation.”

In March, the International Monetary Fund revised its growth forecast for Syria downward while the country’s stock exchange, open since 2009, has been in freefall since the beginning of the protests in March.

One sector is booming, however. Aita says that the Syrian population has taken advantage of the chaos to build up to half a million buildings illegally, in contravention of the country’s strict planning laws.

But without the return of tourists, and perhaps soon without its oil revenue, how long can Assad hold on to power? Five months ago, Syria had $17 billion in foreign exchange, according to official figures. Without a crisis on its hands, this amount of cash would normally last the Syrian government about six months.

“It is possible that the regime deliberately released a much lower figure,” said Achy. “They may well have other sources of money. It has been reported that Rami Makhlouf put a billion dollars into the Syrian central bank in order to bolster the Syrian Pound, and no one knows how much financial support Syria is getting from Iran.”

In mid-July Adib Mayaleh, the governor of the Central Bank of Syria, categorically denied that the country’s economy was weakening. He insisted that the Syrian Pound remained strong, that the bank still had significant foreign reserves and that the majority of foreign investors were there to stay.

Everything was, he said, business as usual.
 

Translated from the original French article, available by clicking here.

 

Date created : 2011-08-17

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