Sun 12 Jul 2020

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Caesar Act and Syria’s international highways… Companies that may reconsider their calculations, amid prepared sanctions

Edited by Enab Baladi

Edited by Enab Baladi

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Enab Baladi – Taim al-Haj

With a Russian air and Iranian ground support, the Syrian regime is desperate for controlling the international highways M4 and M5, which cover large distances from areas controlled by opposition factions in northern Syria. Since mid-January up to February this year, military operations have helped the regime to get closer to achieving its goal.

Military operations in both the countrysides of Idlib and Aleppo have severely harmed civilians, bringing the number of IDPs to more than 800,000 people, according to United Nations figures. Amid the suffering of the IDPs, the USA and the European Union have not initiated a severe intervention to curb the regime from reaching its goal.

However, Turkey is the only country whose army’s movements on the ground reflect its opposition to the regime’s actions. Even President Recep Tayyip Erdogan has allocated a deadline until the end of February for the government to stop its operations and retreat to the borders of the Sochi agreement on the Idlib region.

In the past few days, especially after the killing of some of its soldiers by the regime in Idlib, Turkey has received some supportive international positions, specifically from the NATO, in which it is one of the member states. Besides, the US position has publicly spoken about Washington’s standing beside Ankara. However, this position has ruled out the military option, as stated by the US envoy to Syria, James Jeffrey.

In light of this data, an urgent question arises about Washington’s seriousness in interfering to stop the military regime’s operations, amid expectations that the USA will intervene to penalize the government by depriving it of benefiting from international roads, by activating the Caesar Act.

 Caesar Act… A directed sword

The chief negotiator of the Syrian opposition delegation to the Geneva 4 meeting, Mohammad Sabra, considered in an interview with Enab Baladi that the importance of the Caesar Act lies in the fact that it has put the entire economy of the regime under the US’s eyes. It is, therefore, impossible for any company to start business relations now with the government for fear of being included in the Act. Sabra added that this had become clear months ago when the Americans advised the Amman Chamber of Commerce and Industry not to take joint commercial steps with the Syrian regime.

He explained that the implementation of the Caesar Act has nothing to do with control over international roads. “After the Act comes into effect, international roads would rather lose their economic value, and their value for the Syrian regime remains only symbolic.”

Transit profits

Russia and the regime wanted to reactivate international roads, due to the reopening of the land transit linking Europe and the Arab Gulf through Turkey and then Syria to Jordan, according to Sabra. Sabra explained that this land trade line was providing the regime with an essential source of hard currency from traffic fees.

He pointed out that the Nasib Border Crossing linking Syria and Jordan cannot be used until after the reactivation of the transit trade, which was using the two main transportation roads in Syria, namely the M4 and M5. Besides, the regime was willing to secure a set of its various needs of equipment, building materials, and some raw materials through these ground roads, “that is, reconnecting its economy to the economies of neighboring countries, which, for the regime, will contribute to the normalization of its relationship with those countries starting from the gateway of economy and trade,” according to Sabra.

Sabra considered that Russia wants from the recent military operations in Idlib and Aleppo to achieve three goals, two of which relate to the Syrian case, namely the reconnection of the regime with the economies of neighboring countries, as well as turning of parties of the conflict from a local to an international conflict, in the sense that the regime starts facing two countries, Turkey in the West Euphrates and USA in the east of the Euphrates.

Sabra pointed out that this will contribute to the rehabilitation of the regime because the two countries will have to make arrangements with it, related to their presence in Syria, which Russia hopes to reach.

This is in addition to the third goal that Russia aspires to achieve, which is putting NATO in the face of the test of will and feasibility. This falls outside the scope of the Syrian case, but it is vital for Russia in its general strategy in the face of NATO.

The number of profits

According to some estimates, reported by the researcher at Omran Center for Strategic Studies, Mohammed al-Abdullah, in an interview with Enab Baladi, the number of profits of transit trade across the M4 and M5 roads before 2011 exceeded the barrier of three billion US dollars annually.

Al-Abdullah said that in case Russia manages to control these two roads, it would impose, as a first step, fees on transit trade, which would achieve a considerable financial turnover. This would be followed by Russia’s use of these roads to instill its presence as a sovereign party with a significant impact on the commercial movement in this region and its linking with other international ways in neighboring countries.

Al-Abdullah pointed out that, by looking at the number of Turkish exports to Syria, which for example amounted to approximately $ 1.34 billion at the end of 2018, despite several years since the outbreak of the conflict in Syria, we notice that Turkey has nearly reached its export figures to Syria that it recorded before 2011.

This indicates the importance of these roads for Turkish exports, which lost many of their Arab markets as a result of the suspension of these lines. This is because the majority of Turkish exports were finding their way from Syria to the countries of the region through the M5 high-way line, according to al-Abdullah.

This how Russia will benefit

In this context, al-Abdullah considered that Russia has focused, since its involvement in the Syrian file, on its economic agendas in an attempt to control the most vital sectors that enable it to achieve rewarding financial returns in the shortest period.

He pointed out that, due to Syria’s geographic location in a strategic node of the land transport traffic, Russia has given considerable attention to the international roads to control them. This has been evident in the political agreements that the Russians have participated in terms of including this country in the map of these agreements, and the military battles that it has fought and is still fighting in all Syrian regions through which these roads pass.

On the other hand, through the control of these roads, Russia is seeking to refloat the Syrian regime and alleviate the tremendous economic pressures that the latter is currently suffering from, according to al-Abdullah.

He added that “the control over these roads will thus allow Russia to achieve significant returns from transit. It is, however, unlikely that Russia will be able to achieve direct economic gains by controlling these roads and securing them at present in light of the USA’s adoption of the Caesar Act. However, Russia depends on the future in case this Act is lifted for not achieving the desired results. In the event, it uses its international influence to limit this Act’s impact.”

On the other hand, controlling these roads will guarantee Russia a significant foothold to benefit from the reconstruction process in Syria, in case a political solution is reached, given the expected heavy dependence on these roads by companies that will engage in the reconstruction process, according to al-Abdullah.

US sanctions

In this context, al-Abdullah agrees with Sabra that many companies and merchants in the countries neighboring Syria will reconsider their calculations in terms of concluding deals with the regime in case the international roads are restored.

Al-Abdullah believes that the US sanctions are sanctions directed towards the regime and some of the institutions and people associated with it, considering that in the event international transport lines are reopened, the penalties will affect companies in neighboring and non-neighboring countries, in terms of the nature of the materials that are to be exported to Syria, the party to be dealt with and the extent of its association with the Syrian government.

On the other hand, Sabra said that the imposition of US sanctions on the regime depends on the nature of the report that will be prepared by the US Treasury Secretary regarding the activities of Damascus Central Bank and whether this bank will remain part of the global banking system or it will be removed from it, as happened with the Iranian banking system after the application of the US sanctions on it.

“I think that all companies and individual traders in the neighboring countries and the rest of the world will now reconsider their estimates in any contract or commercial relationship in which the regime may be part of, whether as an original party or an agent,” added Sabra.

He expected that everyone is waiting for May 2020, for the issuance of procedural regulations and reports of the US Treasury and the federal bodies tasked with implementing the Caesar Act.

What is Caesar Act

The Caesar Act is a bill passed by the US House of Representatives, on November 15, 2016, and signed by US President Donald Trump, on December 21, 2019.

The Act provides for punishing any party that provides support to the Syrian regime and obliges the US President to impose sanctions on al-Assad’s allies.

The Act is named after the dissident Syrian officer, who leaked 55,000 photos in 2014 of 11,000 detainees killed under torture.

The Act includes any party that provides military, financial, and technical support to the Syrian regime, including companies, individuals, and countries, even Russia and Iran, and it targets any party that provides aids for the reconstruction process in Syria.

The Act is studying, including the Syrian Central Bank in the imposed sanctions, in addition to setting a list of Syrian regime leaders and officials who are suggested to be included in the sanctions, starting with the regime’s president, Bashar al-Assad, on charges of human rights violations.

Display of Caesar photos in the US House of Representatives (CNN)

Display of Caesar photos in the US House of Representatives (CNN)

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