Wednesday 27th of January 2021 |
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How Will New U.S. Sanctions Impact Syria and Lebanon?




The United States is imposing new sanctions this week against the Syrian government over alleged crimes during the nine-year war, just as Damascus hopes to launch post-conflict reconstruction.
The sanctions could likewise have a serious knock-on effect in neighbouring Lebanon, which was in many respects Damascus's lifeline and rear base during the war.
What does the Caesar Act aim to achieve? How will these new restrictions likely affect ordinary Syrians? And what are the repercussions for other countries?
- To what end? -
Syrian government officials and associated businessmen have already come under US and EU sanctions.
But under the Caesar Act, the US aims to hamper any foreign person who deals with the Damascus government, or the Iranian and Russian presence on the ground in support of the regime.
They target sectors including construction, the military, and oil and gas, while the central bank could be labelled a "financial institution of primary money laundering concern".
"The US has yet to clarify where -- or to what extent -- the sanctions will be implemented, but it's safe to say that the real estate, construction, energy and infrastructure sectors will be particularly affected," said Edward Dehnert, an analyst at The Economist Intelligence Unit. 
Among Washington's many conditions for any future lifting of sanctions are establishing "meaningful accountability for perpetrators of war crimes", an end to regime or Russian bombardment of civilians, the freeing of political detainees, and the safe return of refugees.
"The Caesar Act is the latest iteration of ongoing US efforts to force a political settlement, and enact... the removal of (President) Bashar al-Assad," Dehnert said.
"We don't see this happening any time soon. Mr Assad's position is secure," he added.
But the sanctions might be somewhat successful in "impeding the extent to which the regime and its cronies are able to profit from the economic opportunities" provided by reconstruction.
"The sanctions are designed to maintain the Assad regime's status as a pariah, and the threat of US punitive action will be enough to scare off the majority of foreign investment," he said.
- How will Syrians be affected? -
Damascus has condemned the measures, and said they would compound "the suffering of the Syrian people" in a war-battered economy.
Analysts from the International Crisis Group and Chatham House have said mere expectations of the sanctions have already accelerated the Syrian pound's recent plunge in value on the black market. 
Dehnert said the measures would complicate food and fuel imports, and push more Syrians into poverty.
"Unfortunately the Syrian people will suffer the most," he said.
"Syrians will suffer a further erosion to their purchasing power, while employment opportunities continue to contract."
For almost two years, government-held areas in Syria have been gripped by fuel shortages and long power cuts.
In Damascus, Heba Shaaban, a 28-year-old masters student, said sanctions were "nothing new for Syrians".
"We've suffered a lot from those already in place... and which in one way or another cause price hikes."
This time, "should we expect freezing cold nights in winter and boiling hot ones in summer during power cuts?"
Hossam Tutanji, a manager of a dispensary in Old Damascus, fears "restrictions on importing equipment and tools" for medical centres.
- What impact on other countries? -
The Caesar Act also targets the influence of top regime backers Russia and Iran, which both have plenty of experience circumventing sanctions. 
"If anything, the latest measures could have the opposite effect," Dehnert said.
"By warding off the more mainstream investment activity, the US is reducing the competitiveness of investment opportunities -- a race in which Russia and Iran already hold significant advantage," he said.
The sanctions could also dampen the enthusiasm of the United Arab Emirates, which had taken the lead among Gulf countries in re-establishing diplomatic and economic ties with Damascus.
They could have a serious knock-on effect in Lebanon, which was in many respects Damascus's lifeline and rear base during the war.
"The Caesar Act aims to starve Lebanon just as it aims to starve Syria," Hassan Nasrallah, head of Lebanon's Hizbullah movement which supports the Damascus regime, said in a televised speech on Tuesday night.
The government in Beirut has set up a committee to start studying the possible impacts on its many trade links with Syria.
Lebanon is already virtually bankrupt and fresh restrictions on its access to the Syrian reconstruction market are likely to make things worse.
"Lebanese construction firms and contractors engaging in Syrian projects will be affected," Dehnert said.
"Logistics, shipping and road haulage" in Lebanon could also be affected, as could agricultural and industrial players, he said.
"While food producers do not specifically target the Syrian market, they do use Syria as a corridor to supplying the wider Middle Eastern market."

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