Sanctions reach only so far in Syria

By: Louise Osborne

It has been just over a year since the United States and Europe announced sanctions against the regime of Bashar Assad to end the violence in Syria. Yet Assad remains in power, and the killings have not only not ended but are escalating.

The sanctions have caused economic pain in Syria; however, the regime survives because the Assad family is intensely loyal to one another and controls revenue sources that international sanctions could take years to crimp.

“Much of that (national) wealth is fixed assets or illiquid — state companies, oil reserves, property,” said Iain Willis, director of research at Alaco, a business intelligence consultant in London. “A lot will have been kept within Syria because the regime needs to distribute largesse to its supporters and because President Assad will want funds accessible in a hurry if he needs them.”

In August 2011, President Obama announced new sanctions against companies and figures in the Assad regime that barred U.S. citizens and firms from dealing with them. The sanctions were announced the same week that the European Union imposed an embargo of Syrian oil.

Syria’s Central Bureau of Statistics revealed last month that consumer prices rose 36% in June from a year earlier amid sanctions on more than 100 individuals and entities. The cost of electricity and gas increased 32%.

But the Assad family, often referred to in the country as a “mafia,” has more than 40 years in power established control over much of Syria’s domestic corporations and large businesses that are relatively unaffected by sanctions.

Besides controlling most of Syria’s national wealth, which runs into hundreds of billions of dollars, the family’s personal assets could equal more than $1 billion, Willis says.

“Probably one of the most effective elements in (the West’s) toolbox are the smart sanctions and looking to seize assets and freeze assets,” said James Denselow, an analyst specializing in Middle East politics and security issues at King’s College in London.

“There are all these rumors about Syria having millions of dollars’ worth of hard currency in its central bank because it was so worried about sanctions essentially bringing the country down to its knees,” he said.

The European Union has frozen assets of regime figures and placed travel bans on 155 individuals associated with Assad. About $158 million worth of the Assad regime’s assets have been frozen in the United Kingdom alone.

But the regime is believed to have shifted some of its funds to Russia and other countries out of the reach of EU and U.S. sanctions, Denselow said. The rest remains inside Syria, where the Assad clan continues to use its firm grip over the country’s wealth to hold on to political power.

President Assad’s cousin, Rami Makhlouf, is estimated to control as much as 60% of Syria’s economy through his interests in telecommunications, oil and gas, construction, banking, airlines and retail sectors, according to Chris Doyle, director of the Council for Arab-British Understanding in London.

Makhlouf controls Syria’s largest private real estate company, Bena Properties, and his Syriatel covers 55% of the mobile telecommunications market in the country, according to the U.K. Treasury Department. His Cham Holding Co. is Syria’s largest private investment firm.

Little is known about the true number of companies and organizations under control of the regime, which employs a web of front companies to conceal their activities, Doyle says.

Still, all may not be well financially with the regime. The Associated Press reported that Syria asked ally Russia for more economic aid after going through $17 billion in foreign reserves. Syria’s Deputy Prime Minister Qadri Jamil said this month that Syria asked Russia for shipments of diesel fuel in exchange for Syrian crude oil.

No analyst could say whether the recent requests mean that the empire begun by Hafez Assad when he took power in 1970 is crumbling.

“What we do know for certain is that at various points Bashar has been offered an exit by various countries, which hasn’t been taken up,” Doyle said. “It’s my belief that he and his family would only take up such a deal if they truly believed that they had lost and there was nothing left to fight for and the game was really up.”

The Assads are Alawites, a sect of Shiite Islam traditionally ill-treated by the majority Sunni Muslims who dominated the region for centuries. When Hafez Assad and his brother, Rifaat, took over Syria in a military coup, they discriminated against Sunnis and other minority groups, at times brutalizing and murdering them.

“The Alawis came down from the mountains into the central plains of Hama and Homs and (Hafez Assad) helped them get opportunities they’d never had before,” Doyle said.

When Hafez Assad died in 2000, Bashar, who had returned from London where he was studying to become an ophthalmologist, was made president by his family members. But analysts said it is not he who rules.

“The real power is held by the shadow state and security apparatus, something that (Bashar Assad) doesn’t have a huge amount of control over,” Denselow said. “The shadow state is made up of 12 security apparatus, intelligence agencies, and a rather tribal, sectarian, praetorian elite, the nucleus of which is the Assad family themselves.”

His younger brother, Maher, is a leader of the Republican Guard and commander of the army’s Fourth Armored Division, who is thought to be the driving force behind the violent response to the uprising. Assad’s brother-in-law, Asif Shawkat, was a feared security chief until killed in a bombing in Damascus in July.

Analysts say that Assad’s mother, Anisa, and sister, Bushra, Shawkat’s widow, are likely powerful forces behind the scenes in the Assad regime.

“Mothers in Syrian society are very important, and my belief is that she has a huge influence over them,” Doyle said. “I believe they’re all in it together. They live or die together, and there is an existential threat to this family as a unit so I don’t think there’s room for dissent.”

Source: USA Today

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