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Economic Pressure Can Make Syria’s Assad the Next to Fall: View

November 18, 2011

Nov. 17 (Bloomberg) -- The Arab League has shed its milquetoast image in recent months, first approving Western intervention in Libya and, this week, suspending Syria from its ranks. The question is whether this latest step against the Bashar al-Assad regime, which has killed more than 3,500 citizens since the spring, will lead to more concrete changes in Syria.

Cynics say the suspension was a defensive move -- Arab leaders, scared of their own restless publics, cut bait with a teetering government in Damascus. The cynics are probably correct. Yet, as in the Libya case, the league’s move gives cover to Europe and the U.S. to step up pressure.

The vote also makes it more difficult for Syria and its allies -- Iran, China and Russia -- to paint international sanctions as Western meddling, and it may lead the wealthier and more influential Arab and Islamic nations to take unilateral steps. On Nov. 14, King Abdullah II of Jordan became the first Arab leader to call for Assad to step down.

Each day brings more signs of weakness from the Assad regime. Yesterday’s assault by army defectors on a large security complex outside Damascus was the most striking attack by anti-government forces in the eight-month uprising. Such rebel operations, however, are nowhere near the scale of what we saw in Libya before the downfall of Muammar Qaddafi. And for this reason, U.S. and European military intervention isn’t an immediate possibility.

Still, it’s a mistake for Western leaders to publicly take that option off the table, as NATO Secretary General Anders Fogh Rasmussen and the U.S. ambassador to the organization, Ivo Daalder, have done recently. Even if NATO has “no planning, no discussion and no thought” of using force in Syria, as Daalder put it on Nov. 7, why advertise that to Assad?

So, what can the West do? As of now, there’s no real prospect of seriously aiding the country’s dispersed, weak dissident factions; the Syrian National Council, an exile group that claims to speak for the majority of the anti-government forces, has proved fractured and ineffectual. Any United Nations-based effort to punish the regime would run into a Russian veto. Some have called for international war-crimes charges, but such indictments can give tyrants greater impetus to dig in, as may well have been the case with Qaddafi.

The best approach for now is to take advantage of the fact that Assad, an Alawite Muslim, depends on economic favoritism and outright bribery to maintain control of a nation that is three-quarters Sunni. With foreign reserves dwindling, and having pledged to increase government spending by 58 percent this year, Assad will struggle to make his payroll. Thus we should look to drive an economic wedge between the regime and the military officers, government functionaries and business elites that underlie it.

The U.S. and European Union have built a strong foundation since 2004 by sanctioning scores of individuals and companies associated with the regime, barring most U.S. exports to Syria, freezing assets belonging to the state security apparatus, and, as of Nov. 15, barring European imports of Syrian oil. (Petroleum exports, almost all of them to Europe, make up about 20 percent of the Syrian economy.) As a result, tourism and direct foreign investment have fallen by about half in the last year, and hyperinflation is a real possibility.

More can be done. In the U.S., several proposals before Congress are worth pursuing, such as denying companies that do business with Syria’s energy sector access to U.S. financial institutions and requiring federal contractors to certify that they are not involved in sanctionable activity. Europe, for its part, might expand its ban on Syrian imports beyond oil. Turkey should make good on its threat to cut off power exports, even if it would be more symbolic than effectual, as Syria can produce its own electricity.

One hopes that the Arab League vote is a sign that the Persian Gulf states, which have filled much of the vacuum left by decreased Western business activity in Syria, will change their ways. And though it may be tempting to embarrass Russia and China by holding a UN Security Council vote on an embargo, it would be wiser for now to work behind the scenes to convince them that standing with Syria -- and its sponsor, Iran -- is not in their long-term interests.

It’s true that much of the economic hardship falls on average Syrians, which risks driving them to solidarity with the government. That scenario seems unlikely, however, in multiethnic, multisectarian Syria, where the Assad family has held power largely because of its perceived ability to keep the peace and maintain the economy. Day after day of civil unrest, price increases and new sanctions from abroad only make clearer the regime’s increasing inability to do either.

--Editors: Tobin Harshaw, Mary Duenwald

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To contact the Bloomberg View editorial board: view@bloomberg.net.


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