Syria: U.S. Economic Sanctions Carry Little Weight

By John T. Haldane

On November 14, the Reagan administration imposed new sanctions against Syria. These included banning the sale of sophisticated technology, such as computers, aircraft, and related spare parts; ending the financing of exports to Syria by the Export-Import Bank (Eximbank); canceling the US-Syrian air transport agreement; reducing the US Embassy staff in Damascus; and pressuring American oil companies to cease operations in Syria.

President Reagan described the sanctions as an expression of "outrage" at Syria's involvement in international terrorism. More political than economic, they were timed to show support for British Prime Minister Margaret Thatcher, who arrived in Washington the same day President Reagan issued the sanctions. Britain had broken diplomatic relations with Syria on October 24 after charging that Syria was behind an apparent attempt last April in London to smuggle aboard an Israeli commercial airliner a bomb timed to destroy the jet in midair.

Charles E. Redman, the Department of State spokesman, acknowledged the sanctions are unlikely to have "an immediate or dramatic" effect on Syria's policy since the level of US-Syrian economic and commercial ties has been minimal. A State Department Fact Sheet issued about the sanctions states that: "US two-way trade with Syria amounted to $108 million in 1985. Based on trade data for the first eight months of 1986, our trade with Syria this year will be even below the 1985 level." US Department of Commerce statistics on US trade with 18 Arab states during January-October indicate that Syria ranked 15th, at a mere $45.4 million worth of American goods.

Spokesman Redman also noted that Syria has not bought any aircraft from the US or Western Europe since 1981, and that, despite the air agreement, Syria's national airline does not fly to the United States and US carriers do not provide direct service to Syria. As for the Eximbank ban, the State Department conceded that: "There has been little Eximbank support for US exports to Syria in recent years. At present, total Eximbank exposure in Syria is less than one million dollars, all in the form of export insurance."

Regarding the ban on military sales, the Soviet Union and other Eastern European nations have long been Syria's major suppliers, providing large quantities of modern equipment of all types. Military experts consider that recent Soviet shipments have compensated Syria for its losses during Israel's invasion of Lebanon in 1982. Thus, a US ban on military equipment to Syria is meaningless.

Under another sanction, Syria will lose the opportunity to purchase at subsidized prices up to 700,000 metric tons of wheat from the United States under the Export Enhancement Program. Again the Department of State concedes that: "Syria has not taken advantage of the subsidy offer which was announced on April 8, 1986."

US foreign policy export controls first were imposed on Syria in 1979, following its inclusion on the Secretary of State's list of countries that allegedly supported terrorism. These controls banned US exports to Syria of aircraft valued at $3 million or more, helicopters of any value, and exports of other national-security-controlled items valued at $7 million or more. Last June the United States added eight chemical weapons precursors to this list.

The significant measure in this list of economic sanctions is the administration's effort to prevent American oil companies from helping Syria find and produce badly-needed oil. The major US investment in Syria is that of Pecten-Syria Petroleum Company, a wholly-owned subsidiary of Shell. US Pecten has invested heavily in oil exploration and has undertaken development of the new al-Thayyem fields in eastern Syria, which went into commercial production on September 1, 1986. This field currently is producing about 45,000 barrels of oil per day of light crude for Syrian domestic consumption. Pecten also has a contract to provide technical and managerial assistance for operation of the field on behalf of the Syrian company al-Furat. Marathon Oil also has explored for oil in Syria, but to date has not developed any production. Several US oil service contractors, including Core Lab, Dresser, WEstern Geophysical Service (a subsidiary of Texas Instruments), and Halliburton, Ltd. have a presence in Syria.

Redman announced that the administration, rather than ordering the US oil firms out immediately, plans to discuss the matter with them first. But, he added, "We are determined that they are going to leave."

The American oil firms will fight this new obstacle to repatriating some of the costs of their Syrian operations, particularly since, up to the moment of the administration sanctions, the US Department of Commerce seems to have favored oil firm activities in Syria. The October 1986 Foreign Economic Trends report on Syria states:

"The oil drilling and production sector offers strong business opportunity over the medium term. Two US oil companies currently are engaged in drilling in Syria (one of them is responsible for Syria's new oil finds) and a number of US oil field service companies have opened offices in Syria to pursue their, and the Syrian Petroleum Company's, business. The joint venture oil production company constitutes the first large US direct investment in Syria since the Syrian Government nationalized major foreign investment in the 1960's."

Will this ban on American oil companies operating in Syria hurt that country more than it will harm the already ailing US oil sector? Already reeling because of low world petroleum prices, and facing serious unemployment problems among oil exploration and oil equipment manufacturing firms in Texas, Louisiana, and other states, the US petroleum industry can ill afford to lose promising foreign operations. As the ban on exports of American wheat to the Soviet Union made clear, US economic boycotts do not work when non-US firms are waiting eagerly in the wings to take over American markets.

Foreign oil firms already are making their interest in Syria clear. Ozer Altan, general manager of the Turkish Petroleum Company, says frankly, "We would be interested in exploring in Syria." Syrian Deputy Oil Minister Nader Nabulsi says European oil companies are also following Syrian oil developments and that new oil exploration agreements may be signed before too long.

The European Economic Community (EEC), under strong British pressure, agreed on November 10 to a sanctions package of four measures designed to rebuke Syria for its purported involvement in the attempted bombing of the El Al airliner. Arms sales to Syria were banned, high-level visits to and from Damascus suspended, security measures tightened in connection with the operations of Syrian Arab Airlines, and a review initiated of the activities of Syrian diplomatic and consular missions.

However, Theodore Pangalos, Greece's chief representative to the EEC meeting, said that the package comprised "three symbolic measures that mean nothing and one important one," the ban on arms sales.

These EEC measures, it is important to note, were far more modest than those first proposed by Britain when it broke diplomatic ties with Syria on October 24. Britain scaled down its expectations of united European action after it emerged empty-handed from an EEC meeting in Luxembourg last September.

Again, as with the US sanctions, it is unclear how the EEC measures will adversely affect Syria. The French and Germans are well aware that, since the end of 1985, Syrian chambers of commerce have been looking to Western Europe for project financing, credit facilities, and joint ventures, rather than to their usual commercial partners in Eastern Europe. Although the bulk of Syrian exports traditionally have gone to the communist countries, mainly in the form of barter deals, over one-third of Syrian imports come from the EEC, with West Germany accounting for the largest share. EEC exports of chemicals, pharmaceuticals, machinery, and transport equipment to Syria have been growing significantly over the past few years.

EEC officials admit that their sanctions package will have little impact on European relations with Syria. Greece and France maintain that Syria should not be isolated from European peace efforts because of the crucial role Syria plays in Middle East politics. They point out that the EEC intends to continue negotiating a new aid package for Syria and, as the recent release of French hostages held in Lebanon indicates, France intends to maintain diplomatic contacts with Damascus.

The Christian Science Monitor, arguing for a more measured US approach to its relations with Syria, stated in a November 20 article: "The United States should be careful not to isolate Syria totally, despite the disclosure of Syrian involvement in the attempted El Al bombing in London." It continued: "Many analysts and advisors may still clamor to sever ties with Syria—or do more. This move disregards long-term US interests. The possibility of a future Middle East settlement is sold out to the overriding emotions of the present. Once again, American options in the Middle East are reactive rather than proactive."

Given the revelations concerning shipments of US arms to Tehran, compounded by Deputy Secretary of State John C. Whitehead's testimony to the House Foreign Affairs Committee that Iranian links to terrorism include "association" with those who abducted three Americans in Beirut this fall and "financial, logistical, and material" backing for terrorists in the Persian Gulf, Lebanon, and elsewhere, the Reagan administration can be accused of both inconsistency and short-sightedness in its contrasting reactions to the allegations of Syrian and Iranian support for terrorism.

John T. Haldane is a specialist in Middle East affairs who has served as a Foreign Service Officer in Baghdad, Cairo, and Beirut, and as an international economist for the Departments of Commerce and Treasury.