Could the Syrian economy sink to even lower depths? Here is a country whose economy has shrunk by two thirds after nine years of civil war. Two thirds of the population are internally displaced or fled abroad. Among the Syrians who remain, 40% are unemployed and 80% live in poverty. Millions are food insecure.
Yet the Trump administration seems to believe that the regime of President Bashar Assad is still not under enough economic pressure. More needs to be done to push it to change its violent and oppressive ways (the official line) or to push the regime over a cliff in hope of a better one arises (the real reason). So, starting last week, the United States imposed even more punishing sanctions under what is popularly known as the Caesar Act.
The new sanctions come on top of those imposed over the years by the United States and European Union, all of which include a mix of pleasing, ineffective and absurd elements.
The pleasing elements are the direct sanctions imposed on the Assad family and its allies. They have been living high even as the rest of Syria suffers, and who can condemn any measure that will force them to drive last year’s BMW. But they are also probably the least effective, because imported luxuries can easily circumvent sanctions.
The more serious, but absurd, element is the sanctions directed at third parties doing business with the regime. These aim to strangle the smuggling that keeps what’s left of the Syrian economy going and deter any entrepreneurs and companies out there anxious to win fat contracts as part of Syria’s post-war reconstruction.
On paper, reconstruction is a lot of action to get a piece of: It is estimated that it will involve spending as much as $1 trillion. But no one has yet explained who is going to pay for it. The U.S. and Europe want no part of Syria. Russia and Iran, who enabled Assad to more or less win the war, don’t have the resources. They could supply arms and men, but they can’t supply economic aid of any consequence. The Syrian government is corrupt and incompetent and indebted to its patrons who want payback for the assistance in the form of the best business opportunities that may emerge.
Under the circumstances, why would, for instance, a risk-averse Chinese entrepreneur or a Gulf billionaire want to put money into such a place? The Caesar Act sanctions may add an extra wall of deterrence, but there are already so many it hardly seems worth the trouble of erecting another one, much less the trouble entailed in enforcing it.
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But in any case, at this point, the sanctions are all kind of pointless: With and without the Caesar Act, Assad has nowhere he can take Syria, economically or politically. Worse still, they make the U.S. looks sanctions-crazy, a country that imposes them left and right without any strategic forethought. Ultimately, sanctions could undermine U.S. economic leadership by creating sanction fatigue on the part of its allies.
Even without new sanctions, the Assad regime is vulnerable to toppling, perhaps even more so than it was when the war broke out in 2011. Back then, Syria was no economic superstar, but it was a middle-income country that could field an army and offer regime insiders concessions and other economic benefits to keep them loyal. It was competent and powerful enough to position itself as the bastion of stability and normalcy against the Islamic extremism of the rebels. When the war started to go badly despite all the regime’s advantages, it had willing allies in Tehran and Moscow.
Today, it has none of these assets. Even before the new sanctions kicked in, the economy was in desperate shape and anti-regime protests had erupted in Syria’s southeast, exactly where the civil war began under the same circumstances nine years ago. Regime loyalists are being hit for money and billionaire Rami Makhlouf has had his most valuable holding, the mobile home operator Syriatel, confiscated. The collapse of the Syrian pound has not only impoverished ordinary Syrians but left those on the public payroll, including generals, with salaries worth no more than a pittance.
Iran and Russia are still committed militarily to Assad, but the way things are now, Syria looks like a bottomless pit into which they are constantly throwing men, materiel and money. The country is far from being pacified and the reconstruction bonanza shows no sign of emerging any time soon. Both countries are straining economically and contending with the coronavirus.
The rebels are tired, too. But the critical difference is that now it wouldn’t take nearly as much effort to give the Assad regime a final, fatal push.
There’s no need to mobilize rebel armies, recruit deep-pocketed foreign backers and conquer territory. Syria’s economic distress and regime fatigue is setting the country up for a scenario akin to Eastern Europe in 1989. A few days of mass protests was enough to topple governments that had been in power for decades and still controlled a vast apparatus of police and army. They simply lost the will to fight on.
Nine years of fighting, 12 million refugees and 500,000 casualties couldn’t defeat Assad, but the economy may turn out to be the enemy he couldn’t defeat. That would be true even without the Caesar Act.