Briefing: Just how ‘smart’ are sanctions on Syria?

For the past eight years, the United States and the European Union have spun an ever-growing web of “smart sanctions” around the Syrian government to push for a transition of power and punish President Bashar al-Assad and those around him for attacks on civilians.

But non-governmental organisations working on the ground in Syria, independent experts, and the UN Human Rights Council’s special rapporteur say the sanctions aren’t smart enough and are doing just what Western countries said they wouldn’t: impeding aid.

An EU spokesperson said the European sanctions are designed to spare civilians and “include exemptions for humanitarian needs and purposes”.

But, with overlapping restrictions imposed by various countries and complicated by corruption inside Syria, aid groups are faced with a vast bureaucracy and private companies unwilling to do business with them if it risks Western punishment, making everything from importing computers to paying staff difficult.

“On top of the day-to-day unpredictability of operating in Syria, the difficulties of transferring funds has resulted in unfortunate delays to providing humanitarian relief and securing critical goods and equipment,” said Rachel Sider, a policy and advocacy advisor with the Norwegian Refugee Council.

Idriss Jazairy, the UN rapporteur on sanctions, also takes a dim view of the measures.

“Unilateral sanctions applied to Syria have visited untold sufferings on ordinary people,” Jazairy told The New Humanitarian, adding that seeking to combat rights violations by imposing sanctions is akin to trying “to extinguish a blaze with fire rather than water”.

The US State Department did not respond to requests for comment, but European diplomats rejected criticism of the sanctions. “If you look at the EU decisions, the language in there is very clear,” said one. “It is all about restricting goods that could be used to repress the population, things that could be used to further the war and the violence against civilians that was perpetrated by the regime.”

As government-held Syria comes out of a winter of fuel shortages that have been blamed on sanctions, and a bill makes its way through the US Congress that would add even more restrictions, here’s a look at what the sanctions are, and how they impact humanitarian work.

What sanctions have been imposed on Syria?

There are no UN sanctions on Syria – Russian and Chinese vetoes have seen to that. But sanctions have been imposed unilaterally by many nations hostile to al-Assad, including the United States, the 28 member states of the European Union, and Japan, Canada, Australia, Switzerland, Norway, and Turkey. The 22-nation Arab League has also sanctioned Syria, but those measures have only been spottily enforced.

Most restrictions on trade with Syria were imposed when the war began in 2011, but recent years have seen increased attention paid to the financial dimension of the conflict. Since Western nations began to cut ties to the armed opposition in 2016-2017, they have relied more heavily on economic pressure to force concessions from al-Assad, or simply to make their disapproval of him clear.

Few Western leaders seem to believe trade restrictions can rid them of al-Assad, which was the purpose of the original measures taken in 2011. But policymakers may nevertheless see sanctions as a useful “symbolic” way to send a “strong signal”, said Mikael Eriksson, a Swedish specialist on sanctions.

Many different and overlapping sets of sanctions are now simultaneously at play.

The US sanctions are the most comprehensive, made up of several layers of increasingly severe legislation.

Washington has listed Syria as a “state sponsor of terrorism” since 1979, which, among other things, limits trade in “dual-use” products that can have both civilian and military applications.

On top of that, the export of US goods other than food or medicine to Syria has been prohibited since 2004, and an August 2011 executive order also banned trade in services and in Syrian oil.

In addition, Washington has slapped targeted sanctions on Syrian individuals and institutions linked to the regime, many of whom are blamed for repression, human rights abuses, war profiteering, and chemical attacks.

Economic penalties for violating US sanctions can be extremely severe: in 2015, the French bank BNP Paribas pled guilty to violating US sanctions on Sudan, Cuba, and Iran and was made to pay a fine of $8.9 billion.

“To be frank, European investors are not so worried over the EU sanctions, but they are extremely scared of the US ones.”

The EU sanctioned the Syrian oil sector in 2011. Dual-use products that may be exploited for military purposes, internal repression, or online surveillance are also controlled, and the EU bans trade in luxury goods and the building of new power plants.

In February 2019, three Belgian companies were handed conditional fines of up to €500,000 each – a manager was also given a one-year jail sentence – for illegally selling a total of 168 tonnes of isopropanol to Syria. Isopropanol is an EU-listed dual-use product employed in civilian manufacturing and as a medical disinfectant, but it can also be used to manufacture the nerve gas sarin.

However, unlike the US, the EU has not imposed a blanket ban on commercial trade with Syria.

“Since there is no EU trade embargo against Syria, most products can be traded, including food and medicine,” said an EU spokesperson.

Like the US, the EU has blacklisted individuals linked to al-Assad’s government, including cabinet ministers, intelligence chiefs, and many businessmen and military officers, some of whom stand accused of grave war crimes or chemical attacks. Since 2011, the EU has targeted 275 individuals and 77 companies or institutions with travel bans or frozen assets.

Financial transactions into Syria have been interrupted by US and EU restrictive measures against major Syrian banks, many of which are state-owned or controlled by designated individuals. Prohibitions against correspondent banking also prevent financial institutions from making payments in Syria through local banks.

According to a humanitarian NGO source who requested anonymity due to the sensitivity of the matter, it’s the US sanctions that have a greater impact. “The EU sanctions are more targeting specific entities and persons, while the ones from the US are more blanket in nature and more restrictive,” the source said. “To be frank, European investors are not so worried over the EU sanctions, but they are extremely scared of the US ones.”

How do sanctions impact aid work?

A series of experts have concluded that sanctions exemptions are not working as intended in Syria.

In a strongly worded May 2018 report, later endorsed by the UN’s Commission of Inquiry on Syria, Jazairy argued that the process of obtaining licences was too confusing, time-consuming, and costly for most humanitarians and traders.

“While UN actors and the largest INGOs [international non-governmental organisations] have been able to meet their needs, other actors described being confused or overwhelmed by the process,” Jazairy wrote.

British sanctions expert Justine Walker reached similar conclusions in an independent 2016 expert study commissioned by ESCWA, the UN Economic and Social Commission for Western Asia, which was never published but later leaked online.

Aid groups working in Syria say the bureaucracy involved in getting exemptions can be bewildering, slow, and costly.

One problem both Jazairy and Walker identified is the wide definition of dual-use products.

Items flagged as dual-use reportedly include: nitrous oxide (used for anaesthetics in hospitals but also to make bombs), agricultural fertiliser and pesticides, certain drilling tools, pipes, chlorine products used for water purification and sanitation (and as chemical weapons), construction equipment, computers and IT equipment, and power generators. Even importing spare parts for dialysis machines reportedly runs into a “labyrinth of legal injunctions”.

Aid groups working in Syria say the bureaucracy involved in getting exemptions can be bewildering, slow, and costly, especially given that it often requires the involvement of trained legal staff.

An exemption from EU sanctions must be cleared with both an EU office in Beirut and with national European authorities involved in the trade of whatever product an NGO wants to bring into Syria.

In the US, clearance under one set of laws may not exempt an item from another layer of US sanctions. And since the American sanctions are applied to any item containing at least 10 percent US parts, many European products are also subject to US restrictions.

Aid workers in northeastern Syria, speaking on condition of anonymity, reported that the US government typically takes between three to six months to process a request for the purchase of IT equipment for NGO staff.

According to a European NGO official cited in Walker’s report, “seeking US approval for a computer which is destined to Syria can cost three times as much as the actual computer”.

What role do private companies play?

The complications of bureaucracy are far from the only challenge humanitarians face in doing their work.

Syria’s opaque, politicised, and extremely corrupt economy, in which members of the ruling family and other elite figures have their hands in every pot, means that non-Syrian companies tend to err on the side of caution and turn down requests to transfer money or goods to the country.

“We in the humanitarian sector are supposed to be exempt from sanctions, but when you’re dealing with private entities, like banks to make transfers, you have what we call the ‘chilling effect’,” the humanitarian NGO source told TNH.

“[The chilling effect] means that private entities, out of fear of the sanctions, prefer not to deal with us,” the source continued. “You cannot oblige a private entity to perform a service. Banks prefer to take a very conservative position, saying, ‘no, actually, we prefer not to do those transfers’.”

The source pointed out that, from the perspective of banks, the money involved in aid operations is relatively small, enabling them to simply turn down the business to avoid risk.

Both Walker and Jazairy described this “chilling effect” as a major problem for aid operations, but supporters of al-Assad’s government and business people working in regime-controlled parts of the country have also long complained about over-cautious banks. They have their own reasons for wanting sanctions lifted or diluted.

“Banks are making their own buffer zones and refusing to deal with any reference to Syria regardless of the nature of the commodity,” said Humam al-Jazaeri, an economist who served as Syria’s economy and foreign trade minister from 2014 to 2016 and was added to the EU blacklist for joining the Syrian cabinet.

“It affects everything, whether you’re trying to transfer money to pay for something, whether it’s insurance, whether it’s shipping.”

Al-Jazaeri – who is not related to the UN rapporteur – said the difficulty in finding shipping, insurance, and financing can make deals overly expensive and economically unviable.

Though critical of the government’s economic “ineptitude”, a Damascus-based businessman, who preferred to speak anonymously, made many of the same points.

“It affects everything, whether you’re trying to transfer money to pay for something, whether it’s insurance, whether it’s shipping,” the businessman said. “Syria is not a big enough country to be worth all the trouble of all the extra paperwork.”

The businessman said the exemptions have become “almost meaningless”, even for clearly green-lighted products like medicine.

“People would rather not deal with the whole headache,” he said. “So rather than… risking some small compliance error they might make, it ends up affecting the health sector too.”

All of this has forced NGOs to come up with alternative solutions for paying staff and buying supplies. Some simply carry bags of cash across the border, despite the dangers. Others use unregulated money transfer networks known as hawalas, which carries its own sanctions risks. In the northwestern Idlib region, which is home to millions of vulnerable civilians, the UN-sanctioned jihadist group Tahrir al-Sham has reportedly tried to control local hawala offices.

How might humanitarian exemptions work better?

With the war now in its ninth year and al-Assad showing no signs of planning to relinquish power, the US is looking to tighten sanctions. The House of Representatives early this year approved a draft version of the Caesar Syria Civilian Protection Act, which would expand the reach of US sanctions by targeting non-Americans trading with Syria.

It aims to slash fuel shipments to Syria even further and deter international companies from investing in post-war reconstruction, as long as al-Assad clings to power.

Civilians in regime-controlled parts of the country felt the impact of fuel sanctions this winter, as the US reinstated sanctions on Iran last November and Iranian ships that had previously carried fuel to Syria could no longer find insurance. The US also issued stern warnings to shipping companies carrying fuel to Syria in October and again in March, aiming to shut down trade from Russia. The result was drastic shortages and a hike in food prices.

Read → The blame game over Syria’s winter fuel crisis

 

Experts say that as the US tightens the screws, humanitarian exemptions grow in importance – but they need to work in practice, not just on paper.

Walker has argued that Western capitals should create “a viable banking payment channel into Syria” that can “serve as a custodian for humanitarian-related inflows of capital”.

Jazairy, who wants to see many sanctions lifted, has endorsed those ideas and also proposed that the UN set up its own procurement office for humanitarian goods and transfers to Syria, essentially acting as a middleman to reduce the “chilling effect”.

“This proposal would shift the burden of ensuring sanction regime compliance,” Jazairy wrote in his last report, “thereby giving comfort to banks and exporters that the transaction in question would be considered safe by all countries with sanctions in place.”

But it’s unclear exactly how such an office would operate, and if it would even be workable, particularly as the UN looks to move the decision-making power for its Syria operations to Damascus, a shift that has been criticised by the NGOs and donors.

European diplomats declined to comment directly on Jazairy’s proposal, but warned that al-Assad and his associates would exploit any loophole created by changes to the sanctions system.

“There has been an effort to both simplify and speed up the process for exemptions,” said one European diplomat.

Humanitarian officials, too, pointed out recent efforts to bring together representatives of the aid and banking sectors for brainstorming sessions on how to facilitate legitimate transfers.

“The EU and its member states are the largest donors of humanitarian aid to the Syria crisis. We are of course greatly invested in assuring that the aid reaches those in need in the most efficient ways,” a diplomat from an EU member state told TNH.

“We are willing to discuss further measures in how to make the sanctions smarter for the sake of the people in Syria, but the sanctions against al-Assad and his closest circle will remain in place until we see irreversible progress on a broad range of issues, not least the political process.”

(TOP PHOTO: Residents of Syria's Juret al-Shayah district of Homs have returned to find streets are only half-cleared of rubble and homes lack electricity and water.)

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This work was supported in part by a research grant from The Harry Frank Guggenheim Foundation