Peterson Institute research staff
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
RSS News Feed Search

Case Studies in Sanctions and Terrorism: Syria

Case Studies in Sanctions and Terrorism

<< Case Studies Index

Case 86-1
US v. Syria
(1986-: Terrorism)

| Chronology of Key Events | Goals of Sender Country | Response to Target Country |
Attitude of Other Countries | Economic Impact | Assessment | Author's Summary |
Bibliography |

Economic Impact

Observed Economic Statistics

British Foreign Minister Sir Geoffrey Howe announces after October meeting that UK will block extension of EC financial assistance to Syria under agreement that provided $140 million over five years. Extension, which is to expire at end of October, requires unanimous approval of EC members. (Financial Times, 29 October 1986, 1)

Commerce Department issues licenses for exports to Syria worth $16.4 million in first 10 months of 1986, "mostly computers, communications equipment, and video and recording equipment." Value of export licenses approved in 1988 is $11.4 million; that figure drops to $5.6 million in 1989 when $2.8 million worth of licenses are denied. Syria has not bought aircraft from the West since 1981; Syria's airline does not fly to US, nor do US carriers provide direct service to Syria. US investment in Syria is estimated to be "well under" $200 million, most of that by Pecten Syria Petroleum Co., wholly owned subsidiary of Shell US. (Washington Post, 15 November 1986, A1; International Trade Reporter, 19 November 1986, 1382; US Department of Commerce 1990, 17)

In 1988-89, poor harvests "raised the prospect that Syria will require expensive wheat imports," without being eligible for subsidies under US Export Enhancement Program. (New York Times, 16 July 1989)

"The Bureau of Export Administration denied 50 applications for Syria from FY 1991 through FY 1997. These applications had a total value of $29.76 million." (US Department of Commerce 1997, III-202)

Russia erases $9 billion of $10 billion owed by Syria for past arms purchases, and agrees to sell Damascus $500 million in new weaponry. (Arms Transfers News, Issue No. 94/8, 20 May 1994)

In gratitude for its participation in the Gulf War, Arab, European, and Japanese donors gave Syria nearly $5 billion in economic assistance from 1990-1992. (CIA, 1995)

"Syria's economy began to improve in the early 1990s, largely as a result of the government's economic reforms coupled with a substantial increase in oil production, the agricultural sector's recovery from 1989 drought, and renewed access to aid from other Arab states following Syria's participation in the Gulf War coalition against Iraq. From 1990 through 1993, Syria's economy experienced average annual growth rates in the range of 7 to 8 percent. Oil production nearly quadrupled from 150,000 barrels per day in the mid-1980s to almost 580,000 barrels per day toward the end of 1993." (Bureau of Export Administration 1996, III-25)

US export shortfall to Syria due to foreign policy sanctions was "in the neighborhood of $0.2 billion to $0.3 billion annually." (Richardson 1993, 130)

Syria: Selected Imports, 1983-88 (millions of dollars)


   
From US
 
   
 
Year
Total
Total
Chemicals
Cereals
Cereals from EC

1983
4,542
198
8
11
56
1984
4,116
135
6
35
79
1985
3,967
244
8
28
33
1986
2,703
120
3
7
73
1987
2,487
131
2
10
57
1988
2,223
142
6
3
n.a.

n.a. = not available
Source: Organization for Economic Cooperation and Development; International Monetary Fund.

According to the 2003 Terrorist Assets Report of the Treasury Department, Syria has an estimated $85 million in assets in the US, including $65 million in securities held by Syrian individuals and entities. (US Department of Treasury, Terrorist Assets Report, 2003, http://www.ustreas.gov/offices/eotffc/ofac/reports/)

“The U.S. exports about $275 million in total goods to Syria including $110 million in BIS [Commerce Department, Bureau of Industry and Security] licensed goods.” (Inside US Trade, 9 January 2004, 15)

“The sanctions and political pressure have encouraged some American oil companies to pull out or reduce their presence: US oil giant ConocoPhilips withdrew from Syria in 2004 and Devon Energy of Oklahoma City, Okla., exited last year.” (Christian Science Monitor, 17 May 2006)

Syrian trade with US, 1997–2005 (millions of dollars)


 
1997
1998
1999
2000
2001
2002
2003
2004
2005

Imports
180
161
173
226
226
274
214
211
157
Exports
28
46
95
158
159
148
259
268
324
         

Source: United States International Trade Commission, ITC Trade DataWeb, http://dataweb.usitc.gov/default.asp


Calculated Economic Impact (annual cost to target country)

Reduction in chemical imports; welfare loss estimated at 30 percent of reduction in trade from average annual value, 1983-1985
$1 million
   
Loss of US wheat export subsidies; welfare loss estimated at 10 percent of average annual value of trade, 1983-1985
$2 million
   
Reduction in high-technology imports; welfare loss estimated at 30 percent of value of licenses denied, FY1991-1997, annual average cost. [30% of 29.76 value of denied licenses over 7 years]
$1.3 million
   
Total
$4.3 million

Note: Additional sanctions imposed in 2004–06 barring American exports to Syria other than food and medicine, US-Syrian airline flights, and transactions with Syria's state bank have had negligible impact for several reasons: exports have actually risen, Syrian airlines do not fly to the US, and Syria switched its foreign reserves to the euro.

Relative Magnitudes

Gross indicators of Syrian economy

Syrian GNP (1985)

$ 21.2 billion

Syrian population (1985)

10.3 million
Annual effect of sanctions related to gross indicators

Percentage of GNP

negl.

Per capita

$0.42
Syrian trade with US as percentage of total trade

Exports (1985)

negl.

Imports (1985)

6
Ratio of US GNP (1985: $4,015 billion) to Syrian GNP
189

Assessment

Washington Post
"Assad has sought better ties with Washington for more than a year, but his initiative has acquired added urgency in recent months following the upheaval in Eastern Europe and the reforms in the Soviet Union....Syria has seen its military support from the Soviet Union and Eastern Europe diminish and its once high-level access there curtailed." (Washington Post, 29 April 1990, A24)

Philip Wilcox, State Department counter-terrorism coordinator
Wilcox acknowledges that US pressure against Syria has "not been entirely successful... We do hold Syria responsible for the presence of these terrorist groups in Damascus. The government of Syria has the capability of closing them down and expelling those terrorists. It has not done so." However, he says the US policy "has had some impact" and he considers it "the right mix of diplomatic persuasion and economic sanctions." (Compass Newswire, 25 July 1995)

Steven R. Weisman, New York Times News Service
“Last May, President Bush banned virtually all American exports to Syria, except for food and medicine, and barred flights between Syria and the United States, except for emergencies. The Treasury Department also moved to freeze assets of Syrians with ties to terrorists, lethal weapons or the Lebanon occupation. But these actions were described even in the administration as symbolic.” (Deseret Morning News, 15 February 2005)

Catherine Hunter, senior analyst, Global Insight
The renewal of US sanctions is largely a formality and there are hopes that increasing Syrian co-operation will change US sentiment on the current measures.” (Global Insight Daily Analysis, 6 May 2005)

Author's Summary

Overall assessment
• Policy result, scaled from 1 (failed) to 4 (success)
2
• Sanctions contribution, scaled from 1 (negative) to 4 (significant)
3
• Success score (policy result times sanctions contribution) scaled from 1 (outright failure) to 16 (significant success)
6
   
Political and economic variables
• Companion policies: J (covert), Q (quasi-military), R (regular military)
--
• International cooperation with sender, scaled from 1 (none) to 4 (significant)
2
• International assistance to target: A (if present)  
• Cooperating international organizations
EC
• Sanction period (years)
20+
• Economic health and political stability of target, scaled from 1 (distressed) to 3 (strong)
2
• Pre-sanction relations between sender and target, scaled from 1 (antagonistic) to 3 (cordial)
1
• Regime type of target, scaled from 1 (authoritarian) to 3 (democratic)
1
• Type of sanction: X (export), M (import), F (financial)
X, F
• Cost to sender, scaled from 1 (net gain) to 4 (major loss)
2


Comments

US economic sanctions played a role in Syria’s decision to assist in obtaining the release of Western hostages in Lebanon and to provide the US with intelligence assistance in the war on terror. The scores in the Overall Assessment reflect these achievements. However, Syria continues to allow anti-Israeli groups to operate on its territory and Lebanon, to obstruct the Middle East Peace process and it opposes the US-led war and occupation of Iraq. Syrian support for and complicity with the Iraqi regime has led to a further deterioration of bilateral relations and the threat of additional sanctions.

Bibliography

Congressional Research Service, Library of Congress. 1992. U.S. Economic Sanctions Imposed Against Specific Foreign Countries 1979 to 1992. CRS Report for Congress. 10 August (revised). Washington.

Congressional Research Service, Library of Congress. 2003. Syria: U.S. Relations and Bilateral Issues. CRS Report to Congress. 11 April (Updated). Washington.

Congressional Research Service (CRS). 2006. Syria: U.S. Relations and Bilateral Issues. CRS Issue Brief for Congress. 26 April (Updated). Washington.

Facts on File. 1985.

Flores, David A. 1981. "Export Controls and the US Effort to Combat International Terrorism." 13 Law and Policy in International Business 521–90.

International Monetary Fund. Direction of Trade Statistics. Various issues.

International Monetary Fund. International Financial Statistics. Various issues.

McCollum, Bill, R-FL, testimony before the Senate Committee on Foreign Relations, Subcommittee on African Affairs, 15 May 1997.

Organization for Economic Cooperation and Development. Foreign Trade by Commodities. Various issues.

US Department of Commerce, Bureau of Export Administration. Annual Foreign Policy Report to the Congress. Washington. Various editions.

Banks, Arthur S., Alan J. Day and Thomas C. Muller, ed. 1997. Political Handbook of the World. Binghamton, NY: CSA Publications.

Day, Erin. 1992. Economic Sanctions Imposed by the United States against Specific Countries: 1979-1992. Washington: Congressional Research Service.

International Institute for Strategic Studies, 1995. Strategic Survey 1994-95. Oxford: Oxford University Press.

Richardson, J. David. 1993. Sizing Up US Export Disincentives. Washington: Institute for International Economics.

<< top of page