Tightening the noose on Syria

Following the Turkish government’s announcement that it was imposing sanctions on the regime of Bashar al-Assad, the White House issued a statement praising Turkey’s “leadership.” Although allowing for nine months, and 4,000 dead Syrians, to pass before finally taking concrete punitive action does not exactly qualify as leadership, Ankara’s decision is still better late than never.
The Syrian regime has dismissed the impact of the economic measures taken against it, most recently by the Arab League, with Turkey’s participation. “Warnings and sanctions will not work with us,” Foreign Minister Walid Mouallem defiantly declared on Monday. Regime officials have openly stated that as long as Syria continues to have the support of Iran, Iraq and Lebanon, it will continue to have enough breathing room to get by.
The Assad regime’s bluster, however, is misleading. The unrest in Syria has already brought tourism and the broader services sector, which forms 55 percent of the economy, to a halt, dealing it its biggest blow. Sanctions by the European Union targeting the energy sector, which accounts for around 40 percent of all of Syria’s exports and one third of governmental revenue, followed. The sanctions of the Arab League and Turkey will significantly weaken Damascus, even if Syrian trade continues with Iraq and Lebanon.
The significance of Turkish sanctions varies. Turkey’s trade relation with Syria was already lopsided in favor of Turkish exports, which had steadily risen since 2003 to reach around $1.6 billion last year. However, all this changed after the outbreak of the uprising, with trade decreasing dramatically. The drop in Turkish exports, then, will ironically tilt the balance of trade and save Damascus desperately needed hard currency, which would have otherwise gone to Ankara.
Unsurprisingly, Turkish merchants and businessmen in border towns and provinces feel that it is they who are getting the rougher deal. Similarly, the Turkish transport sector, which carried goods to Syria and, through it, to the Arab world, has also been hit hard, forcing Turkey to look for alternative routes, especially via Iraq. It is partially for these kinds of reasons that Ankara had long hesitated before finally adopting sanctions. By the time it did, the Syrian market had become effectively moribund anyway, Turkish investments were practically frozen, and Turkish banks had stopped issuing letters of credit.
However, the importance of Turkey's sanctions lies in cutting Assad’s ability to connect to the world’s financial network through a third party. Ankara is suspending all ties to the Central Bank of Syria, freezing any Syrian government assets in Turkey and suspending any credit deals as well as all new dealings with the Commercial Bank of Syria. With Arab countries also closing their doors in the face of Assad, he must rely on Iran, Iraq and Lebanon.
But Iran is in a similar position, due to international sanctions. Disconnected from world financial networks, Tehran is desperate for hard currency and often offers countries like China barter deals for its oil.
For its part, Iraq, although awash with petro-dollars, lacks a sophisticated banking sector behind which Syria can hide. If Iraq plans to come to Syria's rescue with foreign currency, it will have to do so using suitcases. This might be good enough for Assad and his immediate circle, but it would not be able to keep the Syrian economy afloat.
As for Lebanon, its vibrant banking sector is already under international scrutiny for fear that Iran could use it to circumvent its sanctions. Syria too will find it hard to use the closely monitored Lebanese banks as a third party for its financial operations.
What remains for Syria are its exports to Iraq and Lebanon, which account for around 40 percent of Syria's $13 billion annual exports. While too little to keep the Syrian economy going, these exports are not exclusively Syrian manufacture and include transit trade. As Syrian transit trade drops to a minimum, the Syrians will be left with exporting food, textiles and other staple products as their only source of income.
A key element of the Arab League sanctions on the regime will be the compliance of the United Arab Emirates, where Assad and his entourage presumably keep their money, and where his family has reportedly recently purchased $60 million worth of property. The UAE have yet to freeze Syrian assets. It's possible they are either holding out hope for a last-minute compromise, or they are giving the Assads time to move out their money to another, as of yet unknown destination.
The reluctance of Turkey and the UAE, to say nothing of Iraq and Jordan, puts in perspective the White House’s praise of these regional actors’ supposed leadership. 

The Obama administration’s continued desire to look for others to lead on Syria will run against the vulnerabilities and hesitance of these states. The US will need to press these allies hard to ensure the noose is tight around Assad’s neck. There is no substitute to Washington’s leadership.
Hussain Abdul-Hussain is the Washington Bureau Chief of Kuwaiti newspaper Al-Rai. Tony Badran is a research fellow at the Foundation for Defense of Democracies. He tweets @AcrossTheBay.

  • ali daoud

    Mick, your comparison between Saddam and Bashar is baseless, saddam did nothing but destroyed his great country through his invasion and war against Iran, and later his invasion of Kuwait which costed millions of lives and billions of dollars and which lead to the US invasion that completely destroyed Iraq. Syria, in the contrary, Assad turned a poor small nation into a powerful major state in the region that played a major role in building a Resistance axis that has claimed many victories in the struggle against israel and USA and their allies. syria harboured millions of Iraqis for decades, if that is not a debt, then what it is?!!!!!! last, about the Salafists and their presence in syria, i don`t agree with you, my proof is what happened in Tunisia, have you ever thought that Islamists in Tunisia will win overwhelmingly?!!!! well, they did even in that supposedly secualr state, so in syria, it is crystal clear what kind of retarded puppet state we will have.

    December 6, 2011

  • Mick

    Majd, your talking about the leaders relationship, where as, I am discussing there political parties, which was the Baath Party. It was the same system, you know that and I know that. The same terrible police state presiding over its people. No freedom for anyone. Saddam Hussein terrorised the shia people in Iraq. The Assad family has been terrorising their people for the last 41 years. The Iraqi government should have at the very least, sympathised with the Syrian population. They went through this horror, they should know better. Concerning your other statement. No, this is not the way for Iraq to pay back Syria for excepting its refuges by not adopting the arab league sanctions. This is clearly a sectarian move and a very dangerious one. The word Salafists have been blown out of proportion in Syria. They might have a strong base in Egypt but in Syria, they don't have any support. The word Al Qaeda is mostly used for cover by other terrorist people who have evil plans in the midd

    December 5, 2011

  • ali daoud

    Mick, why you surprised? it`s known al Assad and saddam were enemies, and it`s known that syria harboured 2 million Iraqi refugees during saddam`s rule, so today`s iraqi leaders are owed to syria, it`s time to pay back, add that if Muslim Brotherhood ruled in syria then they will pose a threat to iraq through their alliance with salafists and qaeda in iraq.

    December 4, 2011

  • Mick

    This is probably one of the biggest contradictions coming out of the Iraqi government. I would have thought they would easily be one of the first arab countries to announce sanctions on Syria, since there former leader was from the same political party branch as Bashar Al Assad and the abuse and oppression of there former leader, Saddam Hussein fresh in their minds. His Baath Party did much the same and were very similar in practice to the Syrian version of the Baath party. A dictator oppressing and killing his own people. Yet, that doesn't really concern the Iraqi government or its people. I'm very angry by the way the Iraqi's have handled this issue. It's no supprising that this comes down to a sectarian adoption. The majority of the population is shia which makes the decision of Iraq not to abide by the sanctions of the arab league, a dangerious one. The Iraqi government says its because of trade and commerce. I think the general public knows better. They are clearly not going to ad

    December 3, 2011

  • Susan-America

    When it comes to America finding new leadersip in Syria find someone else to help if that is what is required. With US help you may be exchanging bad for worse. Be independent try on your own see what you can come up wtih. If it's a mistake it will be Syria's mistake.

    December 2, 2011