US Sanctions Renewal Causes Dismay

Decision to maintain restrictions at time of increased diplomatic engagement surprises observers in Damascus.

US Sanctions Renewal Causes Dismay

Decision to maintain restrictions at time of increased diplomatic engagement surprises observers in Damascus.

Friday, 15 May, 2009
United States president Barack Obama’s decision to renew sanctions against Syria has caused disappointment in the country, dashing hopes that the emerging dialogue between the two states might bear early fruit, according to local analysts.

The punitive measures – which former president George Bush imposed in 2004, citing alleged Syrian support for terrorism – were prolonged for another year by the new US administration on May 8.

Under the sanctions, US companies are prohibited from contracting business with Syria and all US exports to the country are banned, except for basic items like medicine and food.

In 2006, a further sanction specifically targeted the Commercial Bank of Syria, while other punitive measures deny certain Syrian citizens and entities access to the US financial system.

In a letter to Congress notifying it of his decision, Obama said Syria continued “supporting terrorism, pursuing weapons of mass destruction and missile programmes, and undermining US and international efforts with respect to the stabilisation and reconstruction of Iraq”.

Damascus, he said, “poses a continuing unusual and extraordinary threat to the national security, foreign policy and economy of the United States”.

In Syria, the decision came as a shock since it came after several high-ranking US officials visited Syria in recent months. A political analyst, speaking on condition of anonymity, said these visitors had underlined the importance of engaging Damascus in a positive dialogue.

On May 6, just two days before sanctions were extended, Jeffrey Feltman, Acting Assistant Secretary for Near Eastern Affairs, met Foreign Minister Walid al-Muallem in Damascus. Muallem later described the talks as “constructive”.

“It is hard to believe that the timing of the visit was pure coincidence. It is clear that Obama wanted to reduce the impact of prolonging sanctions,” said the analyst. “Obama wanted to reassure the Syrians that dialogue will continue and that results will be seen on the ground if Damascus makes some changes to its behaviour in the region.”

The analyst believes sanctions were not lifted as doing so at this point would have been seen as “defeat” for a US administration which opposes Syrian policies in the region, for instance support for militant groups in Gaza and Lebanon and alliance with Iran.

Although Syrian officials did not comment on the sanctions, the sense of disappointment was plainly felt in state-run media.

A May 10 editorial in the official daily Tishreen, for example, said the US needed to prove that its “openness” towards Syria was not merely rhetorical, but translated into concrete actions.

“The political behaviour of any state cannot be expressed solely in words and speeches, but [it must be apparent] also through actions and processes,” said the editorial.

Al-Baath, another official newspaper, said in its May 11 edition that the US administration should be aware that sanctions would not hurt the Syrian economy, nor would they persuade Damascus to alter its policies in the region.

But while officials have repeatedly insisted that the economy is not affected by the US measures, observers say the sanctions do have an impact on the banking sector as well as on inward investment.

Against the backdrop of the international financial crisis, the Syrian economy is facing challenges that include the fall in oil revenues. These recent problems have been compounded by the severe three-year drought which has devastated agriculture.

According to a May 11 article in the London-based Arab newspaper Al-Hayat, Syria has asked all the US delegations visited Damascus recently to reconsider the sanctions – a step which could alleviate pressure on its economy.

“It shouldn’t just be about politics. The economy should come first,” said a senior private bank official in Syria, who spoke on condition of anonymity.

The banker argued that US bans on Syrian companies needed to be lifted before normal relations could be restored.

He noted that sanctions had compelled the Syrian authorities to modify the national currency’s reliance on the US dollar, which had negative effects on the economy. The Commercial Bank of Syria, which manages all international transactions, found itself unable to deal with any US company, while the aviation industry and other high-tech sectors were deprived of the US technology they need, he added.

In a noteworthy development in February, Washington allowed Syria to purchase some aircraft parts, which was taken as a positive sign that political tensions were easing.

According to the banker, the sanctions also curbed investment flows, as many international banks and firms did not feel it was safe to do business with Syria. Meanwhile, the fact that many Syrian businessmen had their US assets frozen left a narrow circle of owners inside the country in a position to strengthen their monopoly over the economy.

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