WYSO

Western Sanctions May Put Slow Squeeze On Syria

Aug 26, 2011
Originally published on August 27, 2011 6:08 pm

The Syrian economy has so far weathered the mass protests and widespread violence that have rocked most every major city. But in a move that could increase the pressure, the European Union is considering a ban on imported Syrian oil, similar to sanctions the U.S. imposed earlier this month.

Western governments say the Syrian regime's harsh response to an anti-government uprising has demonstrated that it is not fit to lead.

In March, when the uprising first began, Syria's economy took a huge hit. Tourism — which accounts for a large segment of the economy — dropped to almost nothing.

But later, the economy bounced back a bit, and the middle and upper classes of Syria, based mainly in the city of Aleppo and in the capital, Damascus, recovered.

On a recent government-sponsored tour, called "Syria Is Fine," reporters were shown bustling markets in Damascus where Syrians bought clothes, electronics and basic necessities.

The tour was arranged shortly after the United States formally called for Syrian President Bashar Assad to step down and banned the import of oil and gas.

American officials acknowledge this will have little impact unless Europe joins in as well. Europe buys nearly all of Syria's crude exports, and those sales account for about one-third of Syria's economy.

Looking To Iran

In an interview on Syrian state TV, Assad called these moves by the West "meaningless."

"We have alternatives," Assad said. "We'd already decided to start looking to the east, and we will continue to look east."

Analysts say that means if Syria can't sell its oil to Europe, it will sell it to India and China. But Assad wasn't just talking about India and China. He also was referring to his strongest ally, Iran.

Regional news outlets have reported that Iran recently moved billions of U.S. dollars to Syria to help keep the Syrian currency stable. Syrian economic officials denied the reports.

Abdulhamid al-Dashti, a Kuwaiti lawyer and businessman based in Damascus who has close ties to the Syrian leadership, says he has seen documents that show a massive influx of Iranian cash.

"We know that the officials and semi-officials and businesspeople, they support the central bank with a lot of cash," he says. That is, he adds, "the reason the economy is still strong."

Still, Dashti says it's an arrangement that can't last forever. That's why he and other businessmen are wary of making any big moves right now.

"They don't like to spend more money, they don't like to start any projects, they want to keep all the plans hanging until the situations will be clear," he says.

Ban As Symbolic Move

Dashti says he does have a Plan B — namely investing outside the region altogether.

That kind of eventual pullout would be a slow bleed on Syria's economy — the same effect, analysts say, that new oil sanctions would have.

Asaad al-Achi, a Syrian activist based in Qatar, says he doubts the sanctions would have an immediate effect on the Syrian economy. But banning the sale of Syrian oil to Europe would be an important symbolic move.

"In the mind of a lot of Syrians, oil is linked to the army. All the revenue that they get from the oil industry is spent on buying arms," he explains. "So when you say, 'OK, we're going to stop the flow of crude,' you're basically saying to the Syrian people at the same time, 'We're going to stop the flow of blood.' "

With the death toll in Syria now at more than 2,000 people, activists say that symbolic move can't come soon enough.

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SCOTT SIMON, host: The European Union is expected to soon ban the import of oil from Syria. Earlier this month, the U.S. imposed similar sanctions. The idea is to squeeze Syrian President Bashar Assad who Western governments say is using brutal tactics against anti-government protestors. More than 2,000 people have been killed since the protests began in March. NPR's Kelly McEvers recently completed a trip to Syria and she sent this report.

KELLY MCEVERS: When the protests first began back in March, Syria's economy took a huge hit. Tourism, which accounts for a large segment of the economy, dropped to about nothing. But later, the economy bounced back a bit and the middle and upper classes of Syria, based mainly in the city of Aleppo, and in the capital, Damascus, recovered. On a recent government-sponsored tour called Syria is Fine, reporters were shown bustling markets in Damascus where Syrians bought clothes, electronics and basic necessities.

The tour was arranged shortly after the United States formally called for Syrian President Bashar Assad to step down, and banned the import of Syrian oil and gas. American officials acknowledge this will have little impact until Europe joins in on the ban. Europe buys nearly all of Syria's crude, and those sales account for about a third of Syria's economy. In this interview on Syrian state TV, President Assad called these moves by the West meaningless.

President BASHAR AL-ASSAD: (Foreign language spoken)

MCEVERS: We have alternatives, Assad said. We'd already decided to start looking east, and we will continue to look east. Analysts say that means if Syria can't sell its oil to Europe, it will sell it to India and China. But Assad wasn't just talking about India and China. He was also referring to his strongest ally, Iran. Regional news outlets have reported that Iran recently moved billions of U.S. dollars to Syria to help keep the Syrian currency stable. Syrian economic officials denied the reports.

Abdulhamid al-Dashti is a Kuwaiti lawyer and businessman who's based in Damascus and has close ties to the Syrian leadership. He says he's seen documents that show a massive influx of Iranian cash.

ABDULHAMID AL-DASHTI: And we know that officials and semi-officials and the businesspeople, they support the central bank with a lot of cash. For that reason the economy is still strong.

MCEVERS: Still, Dashti says it's an arrangement that can't last forever. That's why he and other businessmen are wary of making any big moves right now.

AL-DASHTI: They don't like to spend more money, they don't like to start any projects, they want to keep all the plan hanging until the situations will be clear.

MCEVERS: Dashti says he does have a plan B - namely, investing outside the region altogether. That kind of eventual pullout would be a slow bleed on Syria's economy - the same affect, analysts say, that new oil sanctions would have. Asaad al Achi is a Syrian activist based in Qatar. He says he doubts the sanctions would have an immediate affect on the Syrian economy. But banning the sale of Syrian oil to Europe would be an important symbolic move.

ASAAD AL ACHI: In the mind of a lot of Syrians, oil is linked to the army. All the revenue that they get from the oil industry is spent on buying arms. So when you say OK we're going to stop the flow of crude, you're basically saying to the people at the same time, we're going to stop the flow of blood.

MCEVERS: With the death toll in Syria now at more than 2,000 people, activists say that symbolic move can't come soon enough. Kelly McEvers, NPR News.

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SIMON: And you're listening to NPR News. Transcript provided by NPR, Copyright NPR.