Middle East
10:01 pm
Thu August 25, 2011

Western Sanctions May Put Slow Squeeze On Syria

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

"And 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 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 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.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.