Posted by Joshua on Friday, February 29th, 2008
Analysis by Joshua Landis:
Is the Bush administration serious about Syria? Or is it just baring its teeth in a final show of strength for its allies before it bows out?
The U.S. Navy is sending three ships to the eastern Mediterranean Sea to show its strength to Syria over Lebanon. The US has also announced that it is sanctioning an additional four Syrians for "helping with the flow of money, weapons, terrorists and other resources from Syria into Iraq." The US and Israel have kept up a steady drum beat of pressure on Syria over the Lebanon presidency. Beginning with the Israeli bombing of a military facility along the Euphrates, the imposition of sanctions against Syrians undermining democracy in Lebanon, against those engaged in public corruption, and just today against those "helping terrorists into Iraq." We must not forget the car bomb that dispatched Mughniya. Now we have US navy vessels tacking towards Tartus.
What are we to make of this? Could it be that Washington has finally decided to take its gloves off? Is it prepared for regime change?
I think we have to conclude that it has no such power or resolve. The Bush administration is furious over the Lebanon debacle. It has failed to convince or cajole Syria and the Lebanese opposition into relinquishing control of the country despite bombast about the "freedom agenda," "new realities," and forcing Bashar into a "Qadhafi-like about face."
Some may even be tempted to think that Washington is displacing its anger – and is preparing to smite Syria because it cannot dispatch Iran. But this is also fanciful. Washington is in no position to pluck even the "low hanging fruit" of Damascus. It has had its one chance at regime change. There is no well thought out endgame to these threats.
WASHINGTON — The Bush administration on Thursday announced it was imposing economic sanctions on four individuals it accused of helping with the flow of money, weapons, terrorists and other resources from Syria into Iraq.
It marked the administration's latest attempt to block efforts by groups in Syria from undermining the government of Iraq.
The action will freeze any assets the four individuals have under U.S. jurisdiction and prohibit Americans and U.S. firms from engaging in business transactions with the four men.
"Since the fall of Saddam Hussein's regime, Syria has become a transit station for al-Qaida foreign terrorists on their way to Iraq," Stuart Levey, the administration's point person on terrorist financing, said in a statement.
Levey, Treasury's undersecretary of terrorism and financial intelligence, said that a network in Syria was "going to great lengths to facilitate the flow through Syria of money, weapons, and terrorists intent on killing U.S. and coalition forces and innocent Iraqis."
A Treasury fact sheet identified the four individuals being targeted for economic sanctions as Badran Turki Hishan al-Mazidih, Ghazy Fezza Hishan al-Mazidih, Akram Turki Hishan al-Mazidih and Saddah Jaylut al-Marsumi. Treasury said each of the four individuals also use other names.
President Bush earlier this month signed an economic order that expanded penalties against senior government officials in Syria and their associates who are judged to have benefited from public corruption.
Last week, Treasury announced that it was freezing any assets held in the United States by Rami Makluf, one of the most powerful and influential businessmen in Syria, who controls the country's mobile phone network as well as other lucrative enterprises. He is also the first cousin of Syrian President Syrian President Bashar Assad.
Gulf firms unveil Syria projects, shrug of sanctions
Wed Feb 27, 2008 3:39pm EST
By Khaled Yacoub Oweis
Syria tycoon Makhlouf defiant after sanctions
Tue Feb 26, 2008 1:57pm EST
By Khaled Yacoub Oweis
DAMASCUS (Reuters) – Syrian tycoon Rami Makhlouf said on Tuesday U.S. sanctions would not stop him expanding his business empire and announced he was in talks to sell a majority stake in Syrian's leading mobile operator Syriatel to Turkish counterpart Turkcell.
"A deal between Turkcell and Syriatel would cement relations between the two countries," Makhlouf told Reuters in an interview.
"I cannot say, however, that we will reach an agreement. The negotiations are ongoing," he said.
"I should thank (U.S.) President George W. Bush because the sanctions have raised the level of my support in Syria. I am no hit and run businessman. My companies employ 6,000 Syrians, mostly young qualified professionals."
Makhlouf, Syria's most powerful businessman said he was considering selling between 51 percent of Syriatel or more. Turkcell said in November it was looking at bidding for a controlling stake.
The 39 year-old executive is the cousin of President Bashar al-Assad. He owns 69 percent of Syriatel. Gulf investors and Syrian shareholders own the rest of the company, which controls HITS-Unitel, a Yemeni cellphone operator.
Members of the Saudi royal family also have a stake in HITS-Unitel.
But Makhlouf's conglomerate, which stretches from telecoms to banks and an airline, does the majority of its business in Syria. He has ventured into heavy industry and property development as local real estate prices spiked.
Makhlouf pointed to a $100 million joint venture between his Cham Holding company and Dubai Emaar Properties due to signed on Wednesday as evidence of an undiminished appetite to do business with companies he has stakes in.
"This venture will develop areas in Damascus that turned chaotic because of illegal housing. We are talking about first-rate urban projects," Makhlouf said.
He said Syria Pearl airline, in which he owns a major stake through Cham Holding, was seeking to buy a fleet of planes made by Canadian company Bombardier.
The airline, in which state-owned Syrianair was granted a 25 percent stake, aims to regain market share lost by the national carrier to foreign airlines.
"Syrianair has six aircraft, which is unacceptable for a country the size of Syria," he said.
Syria's airline sector opened to private companies last year as part of limited economic liberalization measures ordered by Bashar al-Assad.
However sanctions imposed by the United States on Syria in 2004 have undermined efforts by the government to attract investment, although billions of dollars of Gulf capital is estimated to have been committed to projects in Syria in the last few years.
The United States froze the assets of Makhlouf on Thursday under new economic sanctions aimed at stepping up pressure against Damascus, saying Makhlouf benefited from corruption in the Syrian government.
The Treasury Department designated Makhlouf under an expansion of U.S. economic sanctions against Syria announced February 13 by President Bush. The designation freezes Makhlouf's assets under U.S. jurisdiction and forbids U.S. citizens or entities from doing business with him.
Makhlouf said he "did not have a penny" invested in the United States.
Fransabank takes plunge into Syria, plays down effect of US pressure
Chairman says move is 'part of our general expansion policy'
By Osama Habib
Thursday, February 28, 2008
BEIRUT: Fransabank on Wednesday became the fifth Lebanese bank to enter Syria, which is endeavoring to break US attempts to isolate the country politically and economically. The announcement came during a press conference in Damascus attended by the chairman of Fransabank, Adnan Kassar, and key government officials and bankers from Syria.
"We hope to start fully operating in Syria in June or July of this year and our goal is to set up branches in all major cities in the country in the coming few years," Kassar told The Daily Star. Fransabank-Syria, which will have a capital of $36 million, will provide all types of retail banking services.
Kassar said 48 percent of the bank would be controlled by Frasabank Lebanon, 1 percent by his brother Adel and the rest would be owned by Syrian partners. He added that the bank had already sold 15 percent of the original 51 percent of shares originally earmarked for Syrian nationals.
"The rest of the 36 percent of the shares will be sold in the Syrian market," Kassar said. BLOM, Audi, Byblos Bank and BEMO have established footholds in the Syrian market in recent years. Kassar said that he was not too concerned by talk of US pressure on Syria.
"We have entered Syria because we saw a good opportunity in this market," he said.
Syrian Economy to Grow at Least 6.5%, Deputy PM Says
By Massoud A. Derhally
Jan. 23 (Bloomberg)
Syria's economic growth will probably accelerate to at least 6.5 percent this year, driven by infrastructure projects and foreign direct investment, the country's deputy prime minister said.
Expansion will quicken from 6.2 percent last year, Deputy Prime Minister for Economic Affairs Abdallah Dardari said in a telephone interview from Damascus today.
Foreign direct investment in Syria will increase as much as 4.3 percent to $2.4 billion this year as oil-rich Arab nations put money into real estate, banking and tourism, ignoring U.S. sanctions, Dardari said. The Middle East will have a surplus in trade and services of $327 billion this year, Deutsche Bank AG has estimated, some of which will be invested within the region.
“We will start to see projects that were licensed materialize this year and we are also launching a number of large infrastructure projects, like the development of Damascus Airport, water pipelines from the Euphrates, and refinery projects,'' Dardari said.
Emaar Properties PJSC, the Middle East's largest developer, said in 2005 that will invest $4 billion in real estate projects in Syria. National Bank of Kuwait, the Gulf state's biggest lender by market value, has said it wants to operate a joint venture in the country.
Qatar National Bank SAQ, the Persian Gulf nation's largest lender, also said last year it planned to open a bank in Syria with three partners.
The impact of a potential recession in the U.S. will be “rather minimal'' on Syrian growth because of an increase in trade with Turkey, India, Malaysia, China and other Arab nations, Dardari said. The Federal Reserve slashed its key interest rate by three-quarters of a percentage point yesterday to avert a recession.
“We have noticed an increase in the inflow of money,'' into tourism, Dardari said. “We project that Gulf money will focus on that sector.''
The government aims to boost economic growth to 7 percent by 2010 by reducing bureaucracy, easing state controls and attracting more investors, Dardari has said.
“Syria is in a reasonably comfortable position at the moment economically and politically,'' said Caroline Bain, an economist at the Economist Intelligence Unit in London, who forecasts growth of 4.1 percent this year. “It is obviously very reliant on Gulf money because investment from elsewhere is minimal apart from some interest from Asia.''
Here is what Derhally writes only a few days ago.
Syrian Central Bank Chief Says Dropping Dollar Peg Successful
By Massoud A. Derhally
Feb. 21 (Bloomberg) — Syrian Central Bank Governor Adib Mayaleh said his country's moves to attract foreign investment and ts decision to end the currency peg to the dollar have helped `rop up' the pound.
Foreign currency reserves in Syria, the second Arab country to end its dollar peg, rose 11 percent last year to $20 billion while the pound has appreciated, Mayaleh said in a telephone interview from Damascus today.
“We have about $20 billion in reserves from about $18 billion in 2006,'' he said.
The Syrian pound has strengthened 9.3 percent since the country on June 4 announced that it would follow Kuwait and link the pound to a basket of currencies including the dollar, euro, yen and British pound to curb rising import costs and inflation.
Syria is pressing to attract foreign investment and in January of last year introduced a law allowing foreign investors to own or rent land and take profits out of the country in any currency.
Foreign direct investment in Syria will increase as much as 4.3 percent to $2.4 billion this year as oil-rich Arab nations put money into real estate, banking and tourism, ignoring U.S. sanctions against the country, Deputy Prime Minister for Economic Affairs Abdallah Dardari said in an interview on Jan. 23.
Mayaleh said that 10 banks in the Gulf, Lebanon and Jordan have applied to operate in Syria. Economic growth will probably celerate to at least 6.5 percent this year, Dardari said. The government aims to boost economic growth to 7 percent by 2010.
Annual remittances from Syrians living abroad are about $2 billion, Mayaleh said. The ruling Baath Party, which came to power in 1963, began moving toward a market economy in the 1990s, allowing private banks and insurance companies to operate for the first time. The U.S. imposed sanctions on Syria in May 2004, including a ban on trade transactions with the Commercial Bank of Syria, the country's largest bank. The U.S. government has accused Syria of aiding Iraqi militants and pursuing weapons of mass destruction.
Last summer, Brookings’s Bilal Y. Saab ran an editorial in the Lebanese Al Safir newspaper in which he argued that the next US administration will have a different strategy and approach in the Middle East. He said: “…rarely have more profound changes in American foreign policy been called for in Washington than today. Democratization as the essence of America’s approach in the Middle East has failed, and global respect for American power has dwindled.”Saab then went on to say that “a new US global and regional strategy will however have to wait until G. W. Bush and Dick Cheney are out of office. For those in the Middle East who are betting their money on the assumption that change is near will still have to grapple with one formidable challenge: that of outliving the Bush administration and its unilateral and militant approach to foreign policy.”
Given its timeliness and the impact it has had on the Lebanese political scene, it is worth resurrecting that article.
The United States has presented to South Korea a video of a Syrian nuclear reactor believed to have been built with North Korea's help, a Seoul daily reported Friday.
Top U.S. nuclear negotiator Christopher Hill showed the video to Kim Byung Kook, senior secretary for foreign and security affairs for President-elect Lee Myung Bak on Wednesday, the Munhwa Ilbo said, quoting an unidentified South Korean government official.
U.S. Urges Monitoring Flow of Nuclear Materials By: Nicholas Kralev | The Washington Times
The United States wants six-nation talks aimed at ending North Korea's nuclear programs to begin monitoring transfers of nuclear materials and technology from the North to other countries, U.S. officials said yesterday.
A high-ranking Israeli defense official told The Jerusalem Post that Israel had indications Spain was considering withdrawing its forces from Lebanon. Spanish peacekeepers have come under repeated attacks by terrorist groups in southern Lebanon and in July, six members of the Spanish contingent were killed in an attack on their convoy near the village of el-Hiyam.
The official said that due to the attacks, Spain was under growing pressure to withdraw its troops from Lebanon, in the same way it pulled out of Iraq in 2004 following the Madrid terrorist bombings earlier that year. The official said the outcome of the national elections in Spain next month could determine whether the country would continue to participate in UNIFIL. "There are signs that Spain might be on its way out," one official said. "The combination of the attacks and the political pressure back home makes it difficult to see the country staying in Lebanon past the end of the year."
"Once one country pulls out the rest of the contributors will also start to rethink their participation, and it could ultimately lead to the breakdown of the entire force," the defense official said.
20.02.2008, Oxford Business Group
Syria has been having signal success over the past few years in attracting foreign investment, with Saudi Arabia, Turkey and Iran all making headlines due to the capital they are pouring into the Syrian economy. Though garnering less media coverage, Kuwait is fast becoming one of the main sources of overseas investment in Syria, having just taken over third place on the rankings.
According to the state's official news agency, Kuwaiti investments in Syria now total $6bn, with bilateral trade jumping 30% last year to $350m.
The latest Kuwaiti foray into the Syrian market came with the signing of an agreement on February 11 between Syria's Al Sham Holding Company and three firms from Kuwait – the Al Kharafi Group, the Kuwaiti Syrian Holding Company and the Kuwait Privatisation Project Holding Company.
The partners announced plans to set up a joint company with a capital of $100m to engage in major infrastructure projects in Syria, especially in the energy, electricity and wastewater sectors.
The deal was struck during a visit by Kuwaiti Prime Minister Sheikh Nasser Al Mohammed Al Ahmad Al Sabah to Damascus, a trip which saw the two countries move to further strengthen trade and financial ties. This included a proposal to establish a joint Syrian-Kuwaiti bank and talk of increasing investments.
Allaw made his comments during a meeting of energy ministers from Syria, Jordan, Egypt, Lebanon and Turkey in Damascus dedicated to discuss the progress in the Arab Gas Pipeline Project.
The project was signed in 2001 to supply Egypt's natural gas to Jordan, Syria and Lebanon for 30 years. The first phase that links Egypt with the Jordanian Red Sea port of Aqaba was finished in 2003 while the second stage linking Aqaba with the town of Rihab north of the Jordanian capital of Amman was completed two years later.
The project's cost more than US$1.2 billion (€809 million) and it will eventually run from the Egyptian Mediterranean city of El-Arish city through Jordan and Syria to the Turkish border with a total length of 1,200 kilometers, (750 miles).
By MICHAEL SLACKMAN
At an Arab League meeting in March in Syria, the leaders plan to reiterate support for an initiative that promised Israel normalization with the 22 members of the league in return for the creation of a Palestinian state.
Israeli officials have dismissed as "a storm in a teacup" reports from Arab League officials that the organization may withdraw its 2002 peace plan unless Israel explicitly accepts the initiative.
by Steven Emerson
February 4, 2008
At the urging of a subordinate, Deputy Secretary of Defense Gordon England scheduled at least two meetings with foreign emissaries in direct contradiction of U.S. policy at the time. The meetings date back to 2005. They involved a Lebanese ambassador considered a proxy for the Syrian government and a leading member of Syria's Muslim Brotherhood.
U.S. policy at the time was not to engage in talks with either man, because they represent groups with whom the United States was not to communicate. The meetings were organized by England's special assistant for international affairs, Hesham Islam.
An invitation to Muslim Brotherhood official Husam al-Dairi was canceled in late 2005 after a senior State Department official heard about it and insisted it not take place. That official, J. Scott Carpenter, told IPT News he was shocked that such an invitation was issued, let alone that it was done without anyone consulting the State Department.
Carpenter was Deputy Assistant Secretary of State for Near East Affairs at the time and knew the meeting went against U.S. policy toward the Muslim Brotherhood.
"I said, ‘what are you talking about?'" he remembered in an interview last week. "It was a bad idea."
Without due deliberation, it is easy to send the wrong message "broad and near," Carpenter said. "If something like that were to come up and be blindsided … it's not just a procedural foul up. It could unwittingly create bigger problems for the United States government."
"When you have somebody who has a controversial background," Carpenter added, "you don't want to give the impression that the United States government is standing behind them."
Two discussions should have taken place, he said. One would debate whether the meeting should take place at all. If it was agreed it should, the next question should determine the level of government appropriate to meet someone from the Brotherhood. Deputy Defense Secretary is far too high, Carpenter said.
After Carpenter relayed his concerns to England's office, a staff member called back. She told him it would be "a huge hassle to postpone it" and if that happened, England's office would make it clear this was the result of the State Department "putting its foot down and [saying] the meeting should not take place."
Carpenter said that was fine by him. The episode, including the serendipitous way he learned about it, made him wonder whether other meetings like that took place without State Department consultation, he said.
"When the United States is meeting with dissidents, it is important to know who those dissidents are and what message we send by meeting with them. It is incredibly important that the wrong signal not be sent," Carpenter said.
That may have happened earlier in 2005, when England met with Farid Abboud, a Lebanese ambassador to Washington. Viewed as a proxy for the Syrian government, Abboud was frozen out by U.S. government officials working to isolate Syria, especially as tensions rose following the February 2005 assassination of former Lebanese Prime Minister Rafik Hariri. The attack is widely suspected of having been orchestrated by Syria.
David Schenker, a former adviser in the Secretary of Defense's office on Syria, Lebanon, Jordan, and Palestinian affairs, described Abboud's influence in Washington in an article column published last March in the Weekly Standard. Schenker described Abboud as "unabashedly pro-Syria, pro-Hezbollah" and explained his diplomatic isolation resulted from that perception…
Schenker declined to discuss the controversy in England's office or Hesham Islam. But he confirmed that Islam is the "junior staffer" referenced in his article.
U.S. Rep. Pete Hoekstra, who chairs the House Select Committee on Intelligence, said news of the invitations was a cause for concern.
"Al-Mu'allim States Syria Is Willing To Help US Troops," al-Hayat by Ibrahim Hamidi: translation Mideastwire.com
On February 25, the Saudi-owned newspaper Al-Hayat carried the following report by Ibrahim Humaydi: "The day before yesterday, concurring sources have told Al-Hayat that Syrian Foreign Minister Walid al-Mu'allim addressed Arab and foreign officials and researchers at a closed forum that was held in Damascus on Friday and Sunday. The sources cited Al-Mu'allim as stating that: "Syria is willing to help US troops make an honourable exit from Iraq," and said that he stressed "the need to set a timetable for building the Iraqi Army and security forces on nationalistic bases and for pulling the multinational forces out of Iraq."
"The forum was organized by the German Korber Foundation, under the chairmanship of former German President Richard von Weizsacker, with the participation of: German Foreign Minister Joschka Fischer; Andreas Michaelis, director general for Near and Middle Eastern Affairs at Germany's Federal Foreign Office; and Volker Pritis, head of the German Political Science Association. Al-Hayat was informed that Lodger Siemes, assistant to German Chancellor Angela Merkel for Middle Eastern affairs, turned down the invitation against the background of the Federal Chancery's hard-line position.
"As for the Syrian side, the forum was attended by: Assistant Foreign Minister Abd-al-Fattah Ammurah; Deputy Sulayman Haddad; Syrian Ambassador in Berlin Husayn Imran; and Samir al-Taqi, head of the Damascus Centre for Strategic Studies and his colleagues Sami Mubayyid and Marwan Qablan.
"The sources stated that the forum included an "ideological discussion on achieving security and stability in Iraq." They added that: "some participants talked about an interconnection between the Iraqi, Lebanese, and Palestinian crises, amid disagreement as to whether or not the solutions to these crises also are interconnected."
"Moreover, Al-Hayat was informed that: "On Friday, Syrian Foreign Minister Al-Mu'allim talked about the Syrian stance on the Iraqi crisis, and stressed the need to set a timetable that guarantees the foreign forces an honourable exit from Iraq."
"He added that: "This must coincide with the Iraqi Government building a strong army and security forces on nationalistic rather than sectarian bases, thus encouraging neighbouring states to carry out their duty of supporting Iraq's independence, sovereignty, and territorial integrity." Asked about Syria's willingness to help the multinational forces make an "honourable exit" from Iraq, Al-Mu'allim stated: "Yes; Syria is willing to do that."
"Yesterday, well-informed sources told Al-Hayat that: "These forces will not remain for ever, and an honourable departure is the way to restore Iraq's independence and sovereignty." They added that: "This entails national reconciliation based on amending the Constitution, revising the new law that has replaced the De-Ba'thification or Ba'th Eradication Law, and enabling the Iraqis to build the army and security forces on nationalistic rather than sectarian bases. This is in addition to training and equipping these forces in order for them to fill the vacuum that might emerge as a result of the withdrawal of the multinational forces."
"In the meantime, yesterday official sources announced that Al-Mu'allim received Fischer and discussed with him "the achievement of a just and comprehensive peace in the Middle East, in accordance with the relevant UN resolutions." He stressed the need "that Europe assumes its role by pushing forward the peace process in the region in a manner that guarantees an end to the Israeli occupation of the Golan Heights and all the Arab lands occupied since 1967." The sources added that: "Al-Mu'allim also discussed with Michaelis the reinforcement of mutual relations between both countries in light of the Syrian minister's recent visit to Berlin." – Al-Hayat, United Kingdom