Economic sanctions against Syria agreed last night by the Arab League are expected to plunge the country deeper into crisis and cut off commercial ties to its Middle East neighbours.
Syria:
Sanctions Arab League sanctions will affect every area of industry in the beleaguered nation. Read all the stories in The National's special report Learn more
Tourism and oil, both pillars of the economy before this year, are likely to further crumble and the country's attempts to expand its fledgling banking, property and retail industries are set to be hit.
"We are already seeing the effect on the Syrian economy from the US and the EU sanctions and if the Arab League joins the effort it will undoubtedly add to the extent of the overall pressure on the Syrian government," said David Cohen, the US undersecretary for terrorism and financial intelligence on a visit to the UAE yesterday.
Almost all Arab foreign ministers meeting in Cairo yesterday agreed to impose a range of sanctions against Syria including a ban on Syrian officials visiting any foreign Arab country and the freezing of government assets, said Sheikh Hamad bin Jassim bin Jabr Al Thani, Qatar's prime minister and foreign minister. In all, 19 of the 22 foreign ministers approved the move.
Links with Syria's central bank would be ended, under the measures aimed at forcing Bashar Al Assad, the president, to end a violent crackdown on the uprising against his rule.
Arab officials also agreed to stop government investment in projects in the country and end trade between Syria and the Middle East, an important export market for Syrian oil and other goods.
As much as US$5.5 billion (Dh20.2bn) of exports were shipped to the Arab world in 2009, about half of total exports.
"[More] sanctions will be harmful. Syrian companies that export to the Gulf will be harmed and companies in the Gulf exporting to Syria will also face problems," said Marwan Al Zaiem, the vice chairman of the Syrian Business Council in Dubai and the Northern Emirates and the chairman of Al Marwan General Contracting in Sharjah.
More than eight months of violence and tightening global sanctions have already led to a severe downturn in Syria.
Its economy will contract by 2 per cent this year, the IMF said in September, down from its previous estimate of 3 per cent growth.
The Damascus Securities Exchange Index has tumbled 43 per cent since March 15. The rapid slide in the stock market contrasts with the start of the year when it was the second-best performer in the region after Iraq as recent financial reforms lured investors.
Tourist activity has also dropped 24 per cent in the first five months of the year compared with the same period last year, according to figures from the World Tourism Organisation.
The worsening outlook for the economy follow international measures enforced earlier this year in response to the unrest. Washington and Brussels imposed sanctions including the vital oil sector, for Syria's handling of the anti-regime uprising.
Fresh sanctions are also likely to force Gulf investors and businesses to review their ties to Syria.
With the likes of companies such as Rotana Hotels and the Jumeriah Group in the hotel industry and Qatar National Bank and Bahrain's Al Baraka Banking Group in the financial sector, the Gulf has had a strong presence in Syria.
Only months before the unrest started in January, the UAE Government signed an agreement with Damascus to boost exports and consumer protection.
Worsening instability has already caused some Gulf firms to suspend their business deals. Both Dubai Aluminium and Emirates Aluminium earlier this year stopped shipments to Syria, an important centre for re-export of the metal in the region.
Clinging to the Mediterranean cost, Syria's geographic position has helped it to become an important re-export market from Europe into the Levant and beyond. But its re-export status has been threatened by the heightened unrest.
* with news wires
[ halsayegh@thenational.ae ]
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