Economic Sanctions Hit Syrians - Washington Post

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This is how economic sanctions work. They are like a medieval siege, pitting the population against the city fathers, until they lower the drawbridge and let the siege layers in. The function of economic sanctions is to make the lives of a population so miserable that they turn on their own leadership.

Syria running out of cash as sanctions take toll, but Assad avoids economic pain
By Joby Warrick and Alice Fordham,

Syria’s remaining cash reserves are quickly dwindling as the country’s anti-government uprising marks its 13th month, according to intelligence officials and financial analysts who describe a steady hollowing-out of the country’s economy in the face of sanctions.

The financial hemorrhaging has forced Syrian officials to stop providing education, health care and other essential services in some parts of the country, and has prompted the government to seek more help from Iran to prop up the country’s sagging currency, the analysts said. Revenue from Syrian oil, meanwhile, has almost dried up, with even China and India declining to accept the nation’s crude, they said.

At the same time, President Bashar al-Assad appears to have shielded himself and his inner circle from much of the pain of the sanctions and trade embargoes, which are driving up food and fuel prices for many of the country’s 20 million residents, U.S. and Middle Eastern analysts and financial experts say. Assad’s reserves and sizable black-market income are probably sufficient to keep the regime’s elite in power for several months and perhaps longer, intelligence officials and outside experts said.

The government is not expected to have trouble funding its military operations anytime soon.

“The economic pressure is severe, but unfortunately it’s not yet enough,” said a Middle Eastern intelligence official whose government closely monitors economic trends in Syria. The official, like several others interviewed, spoke on the condition of anonymity to discuss sensitive intelligence on Syria’s economy.

The assessments of Syria’s fiscal deterioration come amid new efforts by Western governments to tighten the financial noose around the nation, which faces increasing economic and political isolation after brutally repressing anti-government activists for more than a year.

The European Union on Monday adopted measures prohibiting the sale of luxury goods to Syria, and the Obama administration ordered sanctions against individuals or firms that provide Assad with surveillance equipment and other technology that could be used to stifle dissent.

The new strictures are among more than a dozen rounds of sanctions since the start of the uprising in March 2011, and more are expected next month when representatives of as many as 75 countries gather in Washington to coordinate efforts to shut down Syria’s remaining revenue streams.

Defense Secretary Leon E. Panetta, in testimony to U.S. lawmakers last week, said that the sanctions are “undermining the financial lifeline of the regime,” cutting government income by nearly a third.

Western officials stress that the sanctions and an earlier embargo against Syrian oil imports are intended to target the country’s government and business elite, rather than ordinary people. But the measures have fueled a succession of fiscal shocks that are being felt across the Syrian economy, so far without directly endangering Assad’s 12-year rule, analysts say. These include not only a jump in consumer prices but a sharp drop in the value of the Syrian pound. Wages have stayed stagnant.

‘Flying through cash’

More ominous for Assad’s survival is the depletion of what was once a mountain of hard currency in the government’s bank accounts. A cash cushion estimated at $20 billion a year ago has plunged to between $5 billion and $10 billion and now loses about $1 billion a month, according to Middle Eastern and Western intelligence officials with access to intelligence assessments of Syria’s economy. U.S. officials separately confirmed that Syria’s reserves have dropped by more than half since the start of the uprising.

“They are flying through cash in order to finance the crackdown, and they have no prospects for getting more,” said a senior Obama administration official briefed on the latest intelligence.

The official described oil-laden tankers stuck indefinitely in Syrian waters, unable to find foreign buyers because of embargoes. Even Syrian efforts to sell oil through Iranian intermediaries have failed, the official said, because sanctions have prompted maritime insurance companies to drop coverage for Syrian and Iranian vessels.

“The hope,” the official said, “is that Assad not only will be unable to finance his crackdown, but the pressure will permeate in other ways,” driving a wedge between him and the country’s military and business elites.

The emptying of the government’s coffers — combined with fears of a further drop in the value of the Syrian pound — has prompted Syrian officials to repeatedly call on Iran, their closest foreign ally, to help stabilize their currency, the officials said.

“Iranian money is helping Assad survive,” said a second Middle Eastern intelligence official. “But Iran is having its own problems, and they are more limited now in the support they can offer.”

Syria’s fiscal unraveling stems not only from the loss of oil revenue but also from the collapse of its vital tourist industry, economic analysts say. In addition, economic sanctions on banks have hobbled the country’s import businesses, which no longer get the vital letters of credit from banks that serve as guarantees in import deals. The International Monetary Fund estimated a 2 percent contraction in the economy last year.

As exports have dwindled along with tourist bookings, the flow of foreign currency into the country has ebbed, causing the value of the Syrian pound against the dollar to plummet. An exchange rate of about 50 Syrian pounds to a dollar a year ago plunged last month to more than 100 pounds per dollar on the Syrian black market. With intervention from Syrian banks, the pound recovered on the black market to about 70 to the dollar, still well below pre-uprising levels.

Crackdown stays steady

The financial weakening has notably failed to slacken the government’s resolve to crush the uprising, analysts note. Activists reported heavy fighting in the countryside around the central city of Hama this week, and images posted on rebel Web sites showed U.N. monitors in the heavily damaged Mashaa al-Arbaeen area of the city walking among piles of rubble.

On Tuesday, Kofi Annan, who is serving as the joint U.N.-Arab League envoy for Syria, delivered a carefully worded briefing to the U.N. Security Council that both raised concern about the government’s conduct in recent weeks and urged the council to maintain support for his fragile diplomatic bid.

“Our patience has been tested severely — close to its limits,” he said, according to notes taken by a council diplomat. “But we have also seen signs that there is the possibility for the parties to implement a cessation of violence, which can lead to a political process and peaceful way out of the crisis.”

Syrian state media on Tuesday reported a car bombing in the al-Marjeh area of Damascus and said two members of the security forces were killed by armed groups in the suburbs of the city. As a rule, such reports cannot be verified because Syria restricts journalists’ access.

Staff writer Colum Lynch at the United Nations contributed to this report.

Roger Casement's picture
Roger Casement
Nov. 22, 2011 11:07 am


Amazing the that this sh** can be enforced. I keep hearing about how the neoliberal empire is loosing its grip but no one under these sanctions seems to be willing to test their being enforced. Notice however that in the case of Iran Obama gave exceptions so that European countries don't suffer from the sanctions imposed upon Iran and Iran can still export oil to the European countries and Japan. Why doesn't OPEC take action? Americans should have to pay higher gas prices if only to compensate Iraq for all the bombing and chaos and sanctions.

nimblecivet's picture
Jul. 31, 2007 4:01 pm


Define "higher gas prices". We are all paying higher gas prices than when the Iraq war began. Now, the reason for those high gas prices are to do with anything and everything, but Iraq. Still, the previous Administration made the sale to the American People that the war would lead to lower gas prices and only cost $5 billion...obviously wrong on both counts. Still, if the American People have to pay higher gas will take the highest toll on the people in this country who benefitted least by the war. The 1% of Americans who benefitted financially from all those dead Iraqis will probably navigate around the higher gas prices and not be affected at all. Those who did not benefit would be the ones really hurt. In short, your idea sounds good in principle, but horrendous in practice. And, the tables are so stacked against them that, if they tried to rise up against the 1% who benefitted from all the dead Iraqis...they would be cut down in the streets.

DanP's picture
Apr. 16, 2012 2:08 pm

Good points. I think part of the solution may be to encourage a diversity of currencies being used instead of the US dollar being the exclusive global reserve currency. How we can do so as US citizens I don't know.

But one of the reasons Iran is in trouble now may be that they had been making moves to open new "bourses" where oil would have been sold in different currencies, including their own. I'm not sure how that would affect "the commodities market" referred to when we here that "the commodities market" has been deregulated which contributes to the profiteering we see by the 1% who are able to come out the winner in any situation no matter what happens.

I'm no expert I know, but common sense indicates that as long as we continue along the path of being the world's banker we're going to continue to be the world's police. Maybe if we reverse the dynamic and force a crisis on the 1% we will be able to see that higher gas prices will be a burden but within the overall scheme of things we'll all be better off getting our economy out of the hands of the neoliberal global cabal.

nimblecivet's picture
Jul. 31, 2007 4:01 pm
Quote nimblecivet:

Amazing the that this sh** can be enforced.

They (IMF/World Bank, EU) are remote controlling governments throughout the world with economic sanctions, suspension of 'donor aid' and with it large parts of state budgets, suspension of financial services, etc.

These are the workings of neocolonialism, the successor to the old style colonialism. And the banking dynasties that are behind both are still the same.

Quote nimblecivet:

I keep hearing about how the neoliberal empire is loosing its grip but no one under these sanctions seems to be willing to test their being enforced. Notice however that in the case of Iran Obama gave exceptions so that European countries don't suffer from the sanctions imposed upon Iran and Iran can still export oil to the European countries and Japan. Why doesn't OPEC take action?

My guess is that they are afraid that Greek style demonstrations in Northwestern Europe were going to destabilize the Euro. I think that is why the Dutch cabinet caved in and the new cabinet is backtracking on a lot of the proposed austerity measures that would hit the poorest people.

Roger Casement's picture
Roger Casement
Nov. 22, 2011 11:07 am

The America I Knew Has Almost Disappeared

Like an alcoholic family that won't discuss alcoholism (and proving Don Quixote's warning to never mention rope in the home of a man who's been hanged), far too many Americans are unwilling to acknowledge or even discuss the ongoing collapse of democracy in the United States.

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