''A Declaration of Economic War''

For more than 8 months now, the Syrian protest movement has been feeling the full force of its government's violent crackdown against its own people. Military and security forces have been using heavy artillery on cities such as Homs, Hama or Daraa, with people being arrested, tortured or simply disappearing, their houses and businesses plundered.

Months of violence against civilians have led the international community to impose a range of different sanctions on the country. But just how effective can economic sanctions be as a means of putting pressure on the Syrian regime?

Critics point out that in the past, such actions have failed to reach their objectives, and if anything, tend to contribute to the suffering of innocent civilians. In response to growing criticism of the negative effects of sanctions on civilians – Iraq having provided a shocking example – countries or organisations that apply sanctions are now increasingly turning to the use of so-called "smart sanctions". The idea being that only specifically targeted individuals and businesses will be affected.

US and EU sanctions

​​Sanctions are nothing new to Syria. In 1979, the US put Syria on its list of State Sponsors of Terrorism and imposed a number of punitive measures on the country. Since Bashar al-Assad came to power, these have been successively increased, first by the Bush administration under the Syria Accountability and Lebanese Sovereignty Restoration Act (SALSA), and more recently, following the outbreak of the Syrian "Revolution for Freedom".

Measures taken by the European Union over the last decade have included the postponement of the ratification of a 2004 association agreement in response to the murder of former Lebanese Prime Minister Rafik Hariri. In May 2011, they also imposed travel bans on selected members of the regime, later adding the president to the list and freezing the country's assets in European banks. A ban on oil imports from Syria followed at the beginning of September.

The EU also joined the US in imposing an arms embargo and recently banned the export of technological equipment for use in the fuels sector as well as stopping all European investment in energy production. Given all this, it seems rather strange that the Siemens group should have put pen to paper on a major contract for the building of a power station to the north of Damascus just a short time before the most recent round of sanctions.

The member states of the EU have bought around 90 per cent of Syria's oil exports in recent years. Foreign companies such as Shell and Total were allegedly requested to cut back their oil production some time ago and have received no payments for several weeks. Shell now wants to call a complete halt to its activities in Syria. Along with tourism and trade, the oil export industry has been one of the country's most important in recent years, accounting for around 30 to 40 per cent of annual government revenue.

Because the state-owned oil trading company has also been affected by the measures, it may well find it difficult in future to secure the necessary imports of refined products. This will cause real problems for both private consumers and businesses in Syria. In recent years, the ability of the two Syrian refineries to meet the country's needs has been steadily decreasing.

Arab League and Turkish sanctions

In mid-November 2011, the Arab League suspended Syria's membership. The League's members then went on to break new ground by voting to impose sanctions on Syria including an arms embargo, restrictions on movements of capital and money, the suspension of international trade, a halt to official aid and investment and the freezing of Syrian government deposits.

In a further move, flights between the Arab states and Syria are to be cut by half from 15 December. Certain individuals have also been banned from travelling and have had their assets seized. The list of those affected includes senior members of the government and the security services as well as one Rami Makhlouf, the most notorious of Syria's oligarchs. Makhlouf, a cousin of the president, has become a symbol of the country's rampant corruption; he has also been the focus of the protesters' hatred from the beginning.

​​Turkey followed a little later, imposing sanctions of its own on Syria, including the suspension of all financial transactions and a travel ban on Syrian officials. In their official statements, the Arab countries, the EU and Turkey have all insisted that their sanctions were solely intended to put pressure on the Syrian government in order to bring an end to its oppressive treatment of insurgents.

However, given the fact that the measures outlined above already go well beyond the mandate of "smart sanctions", this may well be little more than wishful thinking. Then again, what are the alternatives?

Iran's oil solidarity

The advocates of such actions expect economic and financial sanctions to restrict the ability of the regime to finance its oppression and convince business to change sides. In order for this to happen, however, sanctions not only have to work effectively, they also have to work to an extent that would convince those who have thus far kept their distance from the protests that a "post-Assad" future would be one with real and viable prospects.

The implementation of sanctions was rejected by two of Syria's neighbours, Iraq and Lebanon, while Jordan made a case for its own exemption from the League's ruling. At international level too, there are those – including Russia and China – who, in spite of the fact that well over 4,000 people have been killed, are against sanctions at UN level. Iran and the Lebanese Hezbollah have pledged their full support to the Syrian regime. Iran is believed to have demonstrated its solidarity by buying oil from Syria, which rather begs the question as to what they intend to do with the oil, seeing as Iran itself has to import refined products.

The Arab sanctions in particular are likely to be causing a great deal of discomfort to those who have either actively or passively supported the regime thus far. In recent years, the Arab states have become Syria's most important export markets by a long way. Foreign investment outside of oil and gas production has come almost exclusively from the region, and Arab money was used to fund much-needed projects such as the modernisation of infrastructure.

Businesses are actively supporting the regime's efforts to crackdown on the protests by providing funds, vehicles and even manpower. The few major Syrian companies that exist are either part of the regime itself or have links to high-ranking members of the government, civil service or the Alawite-dominated security forces. The interests of such businesses are, therefore, very much bound up with the survival of the regime.

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Divided opposition

Syrian opposition groups are divided on the question of how best to topple the regime. Critics argue that economic sanctions – particularly a boycott of trade and investment – would be more likely to have detrimental effects on the people, thus damaging the revolution and not the regime.

The regime, they argue, is well placed to maintain its own contact networks and lines of supply. Members of the Syrian National Council, on the other hand, argue that even tougher sanctions are needed and should be combined with diplomatic isolation. They are also, it seems, no longer completely opposed to the idea of international military intervention. Those protestors who take to the streets of the Syrian cities day by day are now increasingly calling for humanitarian aid corridors or for the setting up of a buffer zone.

As yet, however, none of the countries applying sanctions appears to have come up with a plan for their speedy removal followed by a comprehensive revival of the Syrian economy in the post-Assad era. So far, the EU has come up with nothing more than a general statement on its readiness to develop "a new and ambitious partnership with Syria across all areas of mutual interest."

Syrian economy weakened

​​According to some reports, the Syrian economy is falling into an ever-deepening state of crisis. The Syrian pound is in freefall, private assets have been withdrawn from the banks on a large scale and prices – including those for basic necessities – have already risen sharply. The way in which the current Syrian leadership has reacted to this, however, seems at best contradictory.

The Syrian government is trying to turn the people against the international sanctions and is threatening those applying the sanctions with retaliation. Foreign Minister Walid Muallem recently announced that Syria would be suspending its membership of the "Union for the Mediterranean". Demonstrations against the Arab sanctions were immediately organised in Damascus, with Muallem referring to the sanctions as "a declaration of economic war against Syria." The Syrian administration responded to sanctions imposed by Turkey by terminating the free trade agreement between the countries.

Some of the measures reveal just how desperate the situation has become for the government. For example, the kinds of phrases it is bandying about in an attempt to stiffen resolve are reminiscent of the slogans used in the 1980s when the Syrian economy came perilously close to bankruptcy.

Clearly, the economic problems are mounting for Syria, and the Arab sanctions can only lead to a further deterioration of the situation. There are very few who believe that punitive economic measures in themselves will be enough to make the Syrian regime see the error of its ways, far less to bring about its overthrow.

Anja Zorob and Salam Said

© Qantara.de 2011

Anja Zorob is a lecturer at the Center for Middle Eastern and North African Politics at the Free University Berlin.
Salam Said is a Syrian economist.
Their study Globalisierung und Regionalisierung im arabischen Raum (globalisation and regionalisation in the Arab world) was recently published by Klaus Schwarz.

Translated from the German by Ron Walker

Editor: Aingeal Flanagan/Qantara.de