Syria starts feeling the pain of Western sanctions

Embat­tled Pres­i­dent Bashar al Assad is feel­ing the pain of West­ern sanc­tions for the first time since anti-gov­ern­ment protests erupt­ed in Syr­ia five months ago. 

Already deprived of $8 bil­lion a year in tourism receipts, Syr­ia was this week forced to halt all US dol­lar denom­i­nat­ed trans­ac­tions as a result of new US sanc­tions announced last Tues­day. As if that were not bad enough, some of the world’s largest oil com­pa­nies have sev­ered their ties to Syr­ia in antic­i­pa­tion of a new Euro­pean Union sanc­tion regime. 

Tak­en togeth­er, the mea­sures aimed at forc­ing Mr. Assad to halt his bru­tal crack­down on the pro­test­ers are the first by West­ern gov­ern­ments and insti­tu­tions to be more than sym­bol­ic in the short term. The halt on US dol­lar trans­ac­tions was prompt­ed by US Trea­sury sanc­tions against the state-owned Com­mer­cial Bank of Syr­ia, which han­dles most of Syria’s oil busi­ness and a ban on imports and exports to Syr­ia, includ­ing oil and gas. 

Tuesday’s US tar­get­ing of Syr­i­an oil exports and imports was designed to prompt Europe, the main buy­er of Syr­i­an oil, to fol­low suit. The EU has yet to decide whether it too will tar­get the Syr­i­an oil sec­tor, which funds up to a third of the bud­get of Mr. Assad’s government. 

Even so, the effec­tive sanc­tion­ing of US dol­lar trans­ac­tions and the antic­i­pa­tion of Euro­pean sanc­tions was suf­fi­cient for the likes of Trafigu­ra, British Petro­le­um, Roy­al Dutch Shell and Total to qui­et­ly cut their ties to Syr­ia. The four com­pa­nies are among the most impor­tant buy­ers of Syr­i­an crude, which is refined in Euro­pean refiner­ies, or the country’s main sup­pli­ers of refined prod­ucts such as gaso­line and diesel. 

The four com­pa­nies stopped doing busi­ness with Syr­ia as Britain’s oil explor­er Gulf­sands Petro­le­um was this week forced to defend itself against mount­ing crit­i­cism of its links to Mr. Assad’s cousin Rami Makhlouf, who by some esti­mates con­trols more than half of Syria’s econ­o­my. Mr. Makhk­louf is on a list of 35 peo­ple that includes Mr. Assad on whom the EU and the Unit­ed States imposed sanc­tions ear­li­er this year. 

The deci­sion by the oil com­pa­nies is like­ly to make it eas­i­er for the EU to impose oil sanc­tions of its own despite fears that such a mea­sure would impose hard­ship on ordi­nary Syr­i­ans. Syr­i­an offi­cials have been feed­ing those fears by warn­ing that the coun­try will have to tight­en its belt as unem­ploy­ment and pover­ty increas­es as a result of the sanctions. 

The US sanc­tions and the oil com­pa­nies’ refusal to do fur­ther busi­ness with Syr­ia have increased the pres­sure on Mr. Assad, but like a cat with nine lives, the pres­i­dent is look­ing to Chi­na and Rus­sia to ease his predica­ment. Syr­i­an offi­cials are cer­tain that Chi­na will step in to take over the oil busi­ness they were con­duct­ing with Europe. At the same time, Syria’s cen­tral bank is shift­ing all trans­ac­tions from US dol­lars to euros. 

Syr­i­an offi­cials also believe that Gulf states who in recent weeks for the first time con­demned Mr. Assad’s crack­down, with­drew their ambas­sadors from Dam­as­cus and qui­et­ly halt­ed invest­ments in Syr­ia are hav­ing sec­ond thoughts. They take heart from the fact Sau­di Ara­bia recent­ly arrest­ed anti-Assad demon­stra­tors while Qatari emir Sheikh Hamad bin Khal­i­fa al-Thani is vis­it­ing Iran, Syria’s clos­est ally. That could prove to be an illu­sion. Sau­di-led crit­i­cism of Mr. Assad is moti­vat­ed by the desire to fur­ther iso­late Iran rather than by con­cern about the blood­shed in Syria. 

Nonethe­less, Sheikh Hamid’s vis­it to Iran has spe­cial sig­nif­i­cance to the Syr­i­ans. He is the first Gulf leader, albeit one who con­ducts an inde­pen­dent for­eign pol­i­cy, to vis­it Iran since anti-gov­ern­ment-protests began sweep­ing the Mid­dle East and North Africa in Decem­ber of last year. Most Gulf nations accuse Iran of insti­gat­ing the protests. 

Russia’s Unit­ed Nations ambas­sador Vitaly Churkin encour­aged Syr­i­an hopes that his coun­try togeth­er with Chi­na may come to Mr. Assad’s res­cue by say­ing that Rus­sia was like­ly to con­tin­ue to oppose West­ern efforts to get the Unit­ed Nations Secu­ri­ty Coun­cil to impose sanc­tions on Syr­ia. Mr. Churkin said Rus­sia advo­cat­ed dia­logue and diplo­ma­cy instead of sanctions. 

The Russ­ian approach and China’s reluc­tance to con­demn vio­lence failed in Libya where Moscow unsuc­cess­ful­ly tried to per­suade Colonel Moam­mar Qaddafi to seek a nego­ti­at­ed set­tle­ment with NATO-backed rebels who have now gained con­trol of the cap­i­tal Tripoli and most of the rest of the coun­try. The fail­ure of Rus­sia and Chi­na to sup­port the rebels or at least gar­ner favour with them by strong­ly con­demn­ing Mr. Qaddafi threat­ens to deprive them of lucra­tive con­tracts in the post-Qaddafi recon­struc­tion of Libya. 

Mr. Assad has so far proven to be as intran­si­gent as Mr. Qaddafi. He has reject­ed appeals to stop his crack­down by his clos­est friends, includ­ing Turkey. Shield­ing Mr. Assad from the pain he is start­ing to feel from West­ern sanc­tions the­o­ret­i­cal­ly would put Rus­sia and Chi­na in a posi­tion to push the Syr­i­an leader to halt the vio­lence and imple­ment the kind of polit­i­cal and eco­nom­ic reforms that would sat­is­fy the pro­test­ers demands. 

There is how­ev­er lit­tle rea­son to believe that Mr. Assad would be sus­cep­ti­ble to Russ­ian or Chi­nese pres­sure. For that, it is too late. It is hard to envi­sion any com­pro­mise after five months of bru­tal­i­ty that has cost some 2,200 lives that would not lead to Mr. Assad’s demise. Mr. Assad may be able to cling to pow­er for some time yet, but his demise is a ques­tion of when rather than if. That leaves Rus­sia and Chi­na with a clos­ing win­dow of oppor­tu­ni­ty to plan for a post-Assad Syr­ia in which they are not seen as in Libya as pow­ers that opposed the very peo­ple that ulti­mate­ly will replace the country’s auto­crat­ic leader. 

About The Author:
James M. Dorsey is a senior fel­low at the S. Rajarat­nam School of Inter­na­tion­al Stud­ies at Nanyang Tech­no­log­i­cal Uni­ver­si­ty in Sin­ga­pore and the author of the blog, The Tur­bu­lent World of Mid­dle East Soc­cer.

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