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Sanctions against Syria finding unintended targets

Syrian Kurds wearing Syrian opposition flags chant slogans and carry placards during a sit-in in front of the United Nations headquarters in Beirut, in solidarity with anti-government protesters in Syria, April 29, 2012.

Cynthia Karam/Reuters/Cynthia Karam/Reuters

At Salman al-Dimashki's computer shop in the centre of the Syrian capital, Chinese-made desktop machines are piled high outside the door.

Asked if the machines were to replace western goods he could no longer obtain, Mr Dimashki said he had no problem getting hold of laptops made by western companies in spite of international sanctions on Syria.

"We get our way," he said in his cramped upstairs office. "Syrian people – nobody stops them."

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Mr. Dimashki's claim chimes with anecdotal evidence that Syrians have been able to get around some of the punitive financial actions against them through means ranging from creative importing practices to sourcing more goods from non-hostile countries such as China.

It is part of a murky broader picture suggesting that while some sanctions are hurting the regime of Bashar al-Assad, the president, and its alleged associates, they are also hurting ordinary Syrians without spurring opposition to the government.

David Butter, a Middle East economic expert, said: "If it's a scrap for limited resources, the regime is still in a position to get the first rights, whether fuel or cash or food. It [the sanctions regime]hurts them but to really cripple them is going to take a long time."

The sanctions, introduced in stages by the U.S., Japan, the European Union and some Arab states over the past year of Syria's uprising, include an oil export embargo, curbs on international financial transactions and travel bans on individuals linked to the Assad regime.

While the impact of the measures is hard to disentangle from the wider effect of the crisis on the economy, many Syrians and outside observers hold sanctions at least partly responsible for the Syrian pound's decline in value by a third and for inflation that has seen the cost of some basic goods double.

It was "the people, to the first degree" who are suffering from the measures, said a man surveying the cigarette section of the duty-free shop in Damascus airport, where brands such as Marlboro, Gitanes and Lucky Strike have vanished from the shelves. "This has been going on for a year and there is no solution yet."

The most significant sanctions are on the oil industry, estimated by the International Monetary Fund to have accounted for almost a fifth of gross domestic product in 2010. Analysts estimate that they helped contribute to a contraction of 2 per cent to 10 per cent to Syria's economy last year.

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Measures against individuals have also had an impact. Issam Anbouba, an agro-industrialist from the city of Homs, said he had launched a legal challenge against EU sanctions on the grounds he was not close to the Assad regime. "They ruined our banking relationships, they forced me to resign from several companies where I was on the board and they labelled me as anti-people," he said.

An industrial equipment importer, who is not under sanction, said he lost more than €2-million ($2.65-million U.S.) of confirmed deals when the oil embargo came into force last year. Small orders for spare parts costing a few thousand euros now took two or three weeks of paperwork rather than two days.

"I know the European mentality is that 'we can drive the business community to a point of frustration where it will erupt against the government,' " he said. "But at the end of the day we are paying the price: the government is not."

For all Syria's grim economic indicators and suggestions by western officials of dwindling foreign exchange reserves, there are also signals that do not appear to suggest imminent collapse. The pound has settled over the past fortnight at about 70 to the dollar on the black market (the official rate remains about 57 Syrian pounds to the dollar).

Syrians appear to be finding ways around the sanctions with the help of porous borders and old allies. Iranian state television aired a report at the weekend of what it said was a Syrian trade expo in Tehran, where 300 Syrian businesses displayed wares ranging from door handles to medical equipment.

In a Damascus clothes store, an assistant wistfully caressed the last of his stock of $95 (U.S.) German dark wool jackets, which had been replaced with a lower-quality and 40-per-cent cheaper Chinese alternative. Sanctions were doing a good job of making Syrians feel isolated and deprived, he suggested, but not yet of turning them into revolutionaries.

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"Nobody is coming here from the outside," he added. "Now we are working only for the Syrian people."

Copyright The Financial Times Ltd. All rights reserved.

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