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Saturday, June 25, 2011

West hopes deteriorating economy will be Syrian president Assad’s tripwire

France's President Nicolas Sarkozy (left) and the toppled Egypt's President and summit co-chairman Hosni Mubarak (right) welcome Syria's President Bashar Al Assad as he arrives to attend the Paris' Union for the Mediterranean founding summit.  Europe is Syria’s main trading partner. (File Photo)

France's President Nicolas Sarkozy (left) and the toppled Egypt's President and summit co-chairman Hosni Mubarak (right) welcome Syria's President Bashar Al Assad as he arrives to attend the Paris' Union for the Mediterranean founding summit. Europe is Syria’s main trading partner. (File Photo)
As they inch ever closer to calling for the departure of Syrian president Bashar Al Assad, Western nations are hoping that the country’s rapidly deteriorating economy will become the Syrian leader’s trip wire.

Faltering economics in Syria play a key factor on both ends of the turmoil that has been racking the country for the past months.

If Western economic pressure forces Mr. Assad to halt his brutal crackdown on protesters and engage in serious political and economic reform or helps drive him out of office, Syria could become a model for a US and European policy that supports anti-autocratic protests in the Middle East and North Africa but stops short of military intervention in a bid to protect demonstrators from brutal crackdowns.

The mass anti-government protests were fueled by the corruption and nepotism of Mr. Assad’s regime as well as reforms that cut subsidies on food and fuel and a multi-year drought that has deprived farmers of their income and forced them to migrate to cities unable to provide them with jobs.

The European Union, Syria’s main Western trading partner, is betting on the fact that Syria’s already troubled economy has been hard hit by the turmoil. Syrian tourism receipts estimated at $8 billion a year have all but dried up. Exports are down, the government’s coffers are being depleted, foreign investment is screeching to a halt and the Syrian pound has suffered blows, dropping an estimated 17 percent. Syria’s economy could start to contract rather than grow.

Mr. Assad acknowledged his woes in a speech earlier this week when he warned that the Syrian economy was collapsing. In a bid to quell the protests, Mr. Assad has restored fuel subsidies, increased public salaries and raised wages for the security forces on whose loyalty he depends. The measures are much like those taken by oil-rich Gulf states seeking to avert protests with one difference: the conservative Gulf states have a positive cash flow while Mr. Assad’s cash is drying up.

Mr. Assad’s concern and the West’s hope is that the deteriorating economic situation will persuade the country’s business community, which so far has either sat on the side lines of the conflict or maintained its support for the Syrian president, that their survival depends on something giving. That would have to be either reform or Mr. Assad’s departure.

The business community as well as the middle class in major cities like Damascus and Aleppo, like the United States and Europe, has been reluctant to back the protesters for fear that Islamists may be the strongest contender to succeed Mr. Assad. The question is how long the community is willing and able to sustain substantial losses.

Some economists predict that the Syrian economy can sustain its losses for at best another four months, others suggest that with $17 billion in reserves that period could be extended by several more months. Nonetheless, that is what the European Union is banking on.

In a bid to hasten the process, the EU on Friday extended its sanctions against Syria to include several Syrian companies as well as four more Syrian officials and for the first time three commanders of Iran’s Revolutionary Guard accused of supporting Mr. Assad’s crackdown on dissent that has already killed more than 1,300 people.

Syrian Foreign Minister Walid Muallem this week slammed the EU’s earlier sanctions as “equivalent to war.”

The EU and the US have in recent weeks slapped sanctions on Mr. Assad and more than 20 of his cohorts.

In a statement, EU President Herman von Rompuy condemned the “unacceptable and shocking violence the Syrian regime continues to apply on its own citizens” and warned that “by choosing a path of repression instead of fulfilling its own promises on broad reforms, the regime is calling its legitimacy into question.”

Despite Western reluctance to become militarily involved in the conflict in Syria, US Secretary of State Hillary Rodham Clinton warned that Syria was massing troops on its border with Turkey. Ms. Clinton said this could escalate the turmoil.

A military conflict between Syria and Turkey could force the West’s hand given that Turkey, which has been accepting thousands of Syrian fleeing the violence across the border, is a member of NATO.

To be sure, the battle hardened Turkish military is likely to be able to cope with Syria on its own. Syria quickly buckled down more than a decade ago when Turkey threatened it with military action if it failed to expel a Turkish Kurdish rebel leader.

It seems however unlikely that Syria would want to risk a military confrontation with Turkey, a close economic partner, despite the fact that Turkish leaders are becoming increasingly disgusted with Mr. Assad’s brutality and his refusal to initiate far-reaching political and economic reform. More likely is that the Syrian troops are there as part of their crackdown on towns near the border and to prevent Syrians from fleeing into Turkey.

Turkey has however a key role in US and European strategy. It has so far stopped short of imposing sanctions of its own. It may have however not be able to do so for much longer. Turkish economic sanctions would significantly boost the impact of measures taken by its Western allies and could help draw the Syrian business community and middle class across the line.

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