Enab Baladi – Khaled al-Jeratli

With Bashar al-Assad winning a fourth term as the president of the Syrian government following last May’s presidential elections described as a farce by critics, pro-Assad rallies were launched in al-Qardaha city (al-Assad’s birthplace), headed by a fleet of luxury and different types of cars celebrating al-Assad’s win. On the opposite side of the scene, Syrians continue to line up in long queues waiting to receive their subsidized allocations of bread, domestic gas cylinders, and other basic and necessary materials.   

The al-Mayadeen TV channel known for its closeness to the regime reported several supporting rallies to the regime in the Syrian capital of Damascus, the latest of which contained a group of cars led by two luxurious Hummer vehicles.  

These displays of material wealth come to light at social events attended by Syrian businessmen or on social media platforms, raising questions about the efficacy of the Caesar Syria Civilian Protection Act (CSCPA) imposed on 16 June 2020 by the United States (US) on Syrian officials, mainly the regime’s president Bashar al-Assad and his wife Asma al-Assad, besides other Syrian individuals belonging to the regime’s inner circle or have ties with it.   

The US-enacted Caesar Act provides for the freezing of reconstruction donations to the regime and targets the regime and companies enabling it until those targeted by the sanctions are brought to justice. It also includes Russian and Iranian entities supporting or cooperating with the Syrian regime.

The Syrian pound dramatically declined in value immediately before the application of the Caesar Act, reaching more than 5000 Syrian pounds against the US dollar in 2020. A year later, the pound’s exchange rate settled at the rate of 3,200 to the US dollar.

In this report, Enab Baladi investigates the impact of the Caesar Act sanctions on the Syrian regime, the means used by Syrian businessmen to circumvent the sanctions and their effects, and whether the US sanctions harmed or not the lives of ordinary Syrians and made them poorer without affecting the interests of high profile Syrian businessmen backing the al-Assad regime.  

Were decades of sanctions fruitful in terms of punishing the Syrian regime? 

The Syrian regime underwent sanctions from the 1980s to the Caesar Act today. During these years, the sanctions caused the regime a hefty price for its misguided foreign policy and interference in other countries’ affairs, the head of the Syria Economy Working Group and economic expert Osama al-Qadi told Enab Baladi.

Al-Qadi said that the Caesar Act is, above all, a message from the US to Russia, the guardian of al-Assad, that no reconstruction is allowed before Syrians return to their homes after being released from the regime’s prisons or being voluntary repatriated from asylum countries, after ending hostilities against schools and hospitals in Syria.

The Caesar Act imposed penalties on any State or company to have dealings with the Syrian regime before Syrians return home from their places of refuge or detention centers.

Al-Qadi added that when passed, the Caesar Act did not meet the Syrian people’s expectations of a suitable punishment mechanism against the totalitarian Syrian regime of more than 50 years. To make things worse, the US implementation of the Caesar Act was kept at the minimum levels. 

According to al-Qadi, the US did not make any military move in Syria to help end Syrians’ suffering, unlike what it did in Libya when it intervened militarily, six months after the outbreak of the Libyan revolution. The Americans did not exert enough political pressure to force the al-Assad regime to step down from office to serve the Syrian people some justice. 

Al-Qadi cited Bashar al-Assad, who said that Syria’s economic woes were not caused by the Caesar Act, pointing out that the downturn was attributed to the smuggling of billions of money out of Syria, in addition to Syria’s “corrupt system.”

Al-Qadi said that those responsible for corruption in Syria are the very people at the core of Syria’s economic system, be it Rami Makhlouf and his companies or other individuals who call themselves Syrian businessmen. Hence, the Syrian regime bears the responsibility for corruption in Syria. 

He added that the regime is responsible for the depreciation of the Syrian pound and shortage of foreign exchange in the Syrian market after it passed Decree No. 3 of 2020, which criminalized dealings in foreign currencies other than the local currency (Syrian pound). Back then, the regime ordered the shutdown of money transfer and exchange companies that brought billions of US dollars into the Syrian market through millions of Syrians living abroad.

In 2020, al-Assad issued decrees No. 3 and 4, stiffening penalties on those conducting financial transactions in currencies other than the Syrian pound, causing fear among Syrians in conjunction with increased activity for criminal security patrols, which arrested a large number of individuals for dealing in hard currencies.

Decrees No. 3 and 4 sparked concern between Syrian industrialists, who became at risk of financial losses due to the lack of foreign exchange necessary to finance their imports of raw materials needed for their industries. Major industrialists and traders demanded the government to facilitate their access to foreign exchange to finance their importation of raw materials and inputs.

The futile impact of Caser sanctions on Syrian tycoons

The Caesar Act affected the external economic activity of businessmen close to the Syrian regime, but their domestic illegal economic activities remained unharmed since they derive their legitimacy from the Syrian regime, economic analyst and researcher Khaled Turkawi told Enab Baladi. 

According to Turkawi, these corrupt businessmen are draining the Syrian economy with or without the Caesar Act by smuggling assets abroad and circumventing sanctions aided by the Syrian regime.

Syrian economist and researcher at the Middle East Institute in Washington, Karam Shaar, told Enab Baladi that the Syrian regime and businessmen who have ties with it are one corrupt entity.  

Shaar added that the regime and its affiliate entities have been circumventing sanctions since they were first imposed, primarily through establishing a web of offshore front companies, often in Lebanon, the United Arab Emirates (UAE), or Russia.

According to Shaar, the illicit wealth of high profile businessmen close to the regime cannot be traced because their economic activities are concentrated inside Syria, but the value of their real wealth and activities is often much higher than the figures announced when registering their companies in official records, for purposes of tax evasion.

In addition, the regime portrays its “economic agents” as independent businessmen who own independent companies, but in reality, they are mostly economic fronts used by the regime to escape international sanctions.

Shaar noted the existence of a class benefiting from facilitations provided by the regime to circumvent US and European sanctions. This class cleverly dodges sanctions through traditional tools he described as “front companies” or “front individuals.” 

Below poverty line

International sanctions are designated to restrict the activities of the regime, and their ramifications are clear. However, the sanctions are also affecting Syrian civilians, as a “collective punishment method,” targeting the class profiteering from the regime and the Syrian population.

Shaar added that the deterioration of the Syrian economy over the last year and a half was the worst during the Syrian revolution years for several factors, including international sanctions against the Syrian regime.

Shaar stressed that the regime’s corruption and mismanagement of crises remain the biggest factor behind the decline of the Syrian economy. He added that international sanctions had had a negative impact on the economy, but they were not a major reason to push Syrians below the poverty line.

The World Health Organization (WHO) representative to Syria, Akjamal Majtimova, said in a press briefing that 90 percent of the Syrian population lives below the poverty line by less than 2 USD daily.

The United Nations World Food Program (WFP) spokeswoman Elizabeth Byers warned of an unprecedented food crisis in Syria following the coronavirus (COVID-19) pandemic outbreak. 

Byers noted that nine million and 300 thousand people in Syria lack sufficient food and said that the number of Syrians lacking basic foodstuffs increased by 1 million and 400,000 during the first half of 2020.