In a Corner

In a Corner
Even with little to show, Obama still hasn't given up engaging America's foes. In Syria, it might just work.

By Andrew J. Tabler

Newsweek Web Exclusive
Feb 17, 2010

Khaled Al-Hariri / Reuters-Landov
As the White House was naming the new ambassador in Washington, Under Secretary of State William Burns was meeting President Bashar al-Assad in Damascus.


This week, President Obama named Robert S. Ford as his ambassador to Syria—meaning that he still intends to engage America's foes. (Ford would be the first U.S. ambassador there since the 2005 assassination of Lebanese prime minister Rafik Hariri.) And while the president's record so far against Venezuela, North Korea, and Iran might merit a reconsideration of the "engagement agenda," this time it might be different, because Syria is in a bind. The regime is running record budget deficits, and it is suddenly fanatical about ending U.S. sanctions (which, Damascus has only just admitted for the first time, are truly damaging). Once upon a time, Syria was obsessed by political problems—Lebanon, President Bush, the Golan Heights. Today, the game is more about economics than ever before (including the last time we tried serious engagement with Syria). Which means President Bashar al-Assad may finally be ready to play ball.
The backstory, of course, is sanctions—and how badly they've hit the Assad regime even if they haven't changed its behavior yet. They began in 1979, when the United States added Syria to the list of state sponsors of terrorism for supporting Palestinian terrorist groups, but the screws really tightened after 2003, when Syria allowed jihadist insurgents fighting the U.S. occupation to cross into Iraq. The resulting Syrian Accountability and Lebanese Sovereignty Restoration Act (SALSA), alongside a series of executive orders, banned all U.S. exports except food and medicine, seized the assets of regime officials, and banned U.S. dollar transactions with the state-owned Commercial Bank of Syria. With enforcement overseen by the no-nonsense Commerce Department, it became even harder to trade with Syria than with Iran.
To protect their pride, officials from Damascus had to pretend the sanctions didn't hurt them very much. But the evidence is everywhere. First Syria had to switch from deals in dollars to those in euros to avoid restrictions on dollar-denominated oil sales. Then the regime had to ground most of its civilian air fleet—as well as President Assad's personal jets—because the sanctions forbid the sale of spare parts without an export license. (Sanctions classified anything with more than 10 percent American content as an American product, and since U.S. companies dominate the aerospace industry, even third-party retailers from other parts of the world couldn't sell the parts to Syria.) Worse still, Damascus was compelled to institute rolling electricity blackouts because U.S. sanctions made it very difficult for international companies to build new power stations there. Executive orders by President Bush even held up the sale of a number of lucrative companies owned by Assad's cousin.
The regime's economic woes only made sanctions more effective. Syria's Central Bureau of Statistics (CBS), which supplies official figures used by the International Monetary Fund, claims that the economy grew at 4 percent in 2009. But other data make those numbers appear to be exaggerated: in the past five years, oil production—traditionally the regime's lifeline—has plunged 30 percent, making Syria a net importer and causing Damascus to run record budget deficits upward of 10 percent of GDP. (Deficits are new in Damascus; when Assad's father was president, budgets were always balanced.) Then a massive three-year drought devastated Syrian agriculture, displacing up to 300,000 residents in Syria's northeast. Meanwhile, free-trade agreements between Syria and Turkey undermined Syria's heavily protected market, slamming Syria's manufacturing sector, which contracted some 14 percent in the past two years. Exacerbating these pressures, children born during a baby boom in the 1980s and early 1990s are finally entering the labor market, meaning that the Assad regime has to create more jobs than ever just to keep the official unemployment rate steady at 11 percent. Damascus has never needed a bailout as badly as it does now.
And Washington has the means, but its checkout list is long. In the short term, the United States wants the regime to return to talks with Israel and cut off the flow of jihadists into Iraq. In the long term, Washington wants Damascus to sign a treaty with Israel (which would return the Golan Heights) and end its support for Hizbullah and the Palestinian party Hamas (whose military leadership is based in Damascus). This, the thinking goes, would create tension between Sunni Syria and Shia Iran, with which Assad has a close military relationship and several sweetheart investment and assistance deals. (Iran also sends arms to—and trains militants from—Hizbullah and Hamas.)
That's why Washington is looking for creative ways to turn sticks (sanctions) into carrots (cash). Syria clearly wants the Obama team to dump trade sanctions, banking restrictions, and a spate of executive orders from the Bush years that make life difficult for the regime. For its part, Washington has already eased export-license restrictions on aircraft repairs for the state-owned Syrian Arab Airways. It is also considering more scholarships (for Syrians to study in the United States), cultural and business exchanges, lifting its block of Syria's WTO application, and repairs to more Syrian aircraft—in return for incremental changes in Assad's behavior.
It's true that we've been down this road before, which is why there are plenty of doubters in Washington—those who think that, even if we bankrolled Syria's entire government, it wouldn't change Assad's behavior. After the October 1973 War, the United States extended $534 million in assistance to Damascus, hoping to lure it from the Soviet orbit and into a peace treaty with Israel. Instead, Syria became a leading critic of the 1979 Camp David accords (between Israel and Egypt), earned the label of state-sponsor of terrorism, and was cut off from U.S. assistance. When Washington reengaged Damascus in the 1990s, American diplomats circumvented the ban on foreign aid by enticing U.S. companies to invest in Syria's energy sector, including a $430 million gas deal with ConocoPhillips. The down payment came to nothing when Assad's father, Hafez, turned down President Clinton's March 2000 Syria-Israel peace treaty in Geneva.
This time, though, it's different. During those previous overtures, the Syrian regime was economically viable. Today, it badly needs Western technology to squeeze every last drop out of its declining oil fields and irrigation projects and foreign investment to create enough jobs for youth entering the labor market. The best way for the regime to do this is to get Washington to end sanctions, which, it hopes, would make Syria seem like a safe investment opportunity for businesses—a tough sell considering the nation has technically been at war with Israel for 62 years, spawning the inevitable corruption that comes with indefinite martial law. (Syria is ranked 126 out of 180 on Transparency International's list.)
That's why President Obama may be tempted to ease Syria's pain—by rewriting the executive orders girding the sanctions regime due to be renewed next May—with some expectation that he'll get something in return. He shouldn't. Since Syria won't abandon support for terrorist groups tomorrow, Washington should start small, with selective adjustment of sanctions rather than their outright cancellation. As Senate Foreign Relations Committee chairman John Kerry said last year, "Sanctions can always be tightened if Syria backtracks" from any deal with American negotiators. Those small steps (like Ford's appointment, for example) are exactly the thing Syria is looking to respond to.
Tabler is Next Generation Fellow at the Washington Institute for Near East Policy and author of the forthcoming In the Lion’s Den: Inside America’s Cold War With Asad’s Syria .
© 2010

Solomon's Baby in the Middle East

By Andrew J. Tabler
ForeignPolicy.com
February 2, 2010

To view maps accompanying this article, click here.

"Over our dead bodies!" Najib Khatib shouted in Arabic as I stepped out of our car in Ghajar, a picturesque village cut in two by the boundary between the Israeli-controlled Golan Heights and Lebanon. "Nobody tells us anything!" he said, his arms flailing in the air like a referee signaling a dramatic touchdown.

Khatib, Ghajar's spokesperson, can be forgiven for the awkward greeting. Israel, which administers the village with its approximately 2,000 residents as a military area, doesn't normally let foreigners in. I've arrived -- with an escort of a group of Israeli analysts and U.N. officers as well as a squad of IDF soldiers -- to discuss an issue weighing heavily on Khatib's mind: Ghajar's nightmare of boundaries and territorial ambiguity. Khatib's anger stems from the introduction of a U.N. plan to resolve the mess by placing the northern neighborhood of Ghajar under Lebanese, not Syrian, sovereignty. For Ghajar residents, whose loyalties rest strongly with their Syrian cousins, there is little satisfaction in trading Israel's Star of David for Lebanon's cedar flag.

Israel occupied Ghajar in July 1967, a month after it captured the Golan Heights from Syria. Unlike most of the Golan's Druze communities, Ghajar residents accepted Israeli citizenship when the Knesset voted to annex the Golan in 1981, but continued to insist their village was rightfully a part of Syria.

When Israel withdrew its troops from Lebanon in 2000, U.N. cartographers -- who were unable to enter Ghajar due to tensions between Israeli forces and Hezbollah -- drew the temporary demarcation between the states, called the "Blue Line," through the village. After the Israel Defense Forces (IDF) withdrew south of the Blue Line, they left the boundary in the village unbarricaded so as not to affect daily life. Instead, they constructed a security fence south of the village with a gate for residents to cross into Israeli-controlled areas of the Golan Heights. For a time, life in Ghajar was good: Free to re-establish some degree of normalcy after the long-running guerrilla war between Hezbollah and Israel in South Lebanon, many residents fixed up their homes and bought new cars.

Then, in the most audacious attack since the Israeli withdrawal, Hezbollah launched in November 2005 an unsuccessful raid into Ghajar to kidnap Israeli soldiers. For the Israelis, this confirmed that Ghajar was the weakest link in their defenses along the border with Lebanon.

When the "Party of God" successfully abducted three Israeli soldiers elsewhere along the Blue Line and sparked a war in July 2006, Israel occupied all of Ghajar, blew up a Hezbollah command post on the northeast corner of the village, and reinstituted the security fence some 500 meters north of the Blue Line, along the northern edge of the village. Israeli forces have remained in what is now referred to as the "northern neighborhood" of Ghajar ever since. Although this solves Israel's security concerns, it places Israel in violation of U.N. Security Council Resolution 1701, the diplomatic agreement that ended the 2006 Israel-Lebanon War, which calls for a withdrawal of all foreign forces from Lebanon.

According to the United Nations Interim Force in Lebanon (UNIFIL) plan, Israel would hand the pocket of Ghajar between the Blue Line and the northern security fence to U.N. administration. Lebanon's liaison officer to UNIFIL would hoist Lebanon's flag over the "northern neighborhood," allowing Lebanon to claim sovereignty over the disputed territory until its ultimate disposition can be negotiated between Beirut and Damascus. But this essentially means an indefinite wait: With the Golan Heights still under Israeli control, Israeli-Syrian peace negotiations are still needed to negotiate the terms for the return of the Golan to Syria. As Syria and Israel are not on speaking terms, it could be some time before Ghajar even shares a border with Syrian territory.

Although the UNIFIL plan is relatively straightforward, most other things in Ghajar are not. Khatib and his fellow villagers in Ghajar are Alawites, the obscure offshoot of Shiite Islam that dominates Syria's Assad regime. Speaking with Khatib, I notice he has his Syrian brethren's stunning bluish-green speckled eyes -- but his Arabic accent is totally different. When I mention this fact, Khatib's motionless stare reveals another motivation behind the village's unstinting loyalty to Syria: fear. Any sign of ambivalence about Ghajar's ultimate ambition for reintegration into Syria would undoubtedly be punished if Syrian authorities eventually do assume control over the village.

Ghajar is also focused on keeping its Israeli presence because of more immediate interests. Designation as a Syrian village in the Golan Heights means Ghajar's residents can continue to benefit from the services that accompany Israeli citizenship while still allowing for the possibility that the Golan, and the residents of Ghajar, will someday be returned to the Syrian fold.

Meanwhile, Israelis remain skeptical of their neighbors in Ghajar. It is well known that, before 2006, Hezbollah moved narcotics through Ghajar into Israel. But what the Israelis in my convoy are reluctant to discuss are media reports that Israeli drug dealers -- mostly from Israel's Arab community -- paid Hezbollah with vital intelligence on Israeli military and civilian sites. This detail made Israelis suspicious that the funding for the new cars and home improvements in Ghajar was coming from Hezbollah.

The Israelis also have reason to feel queasy about the precedent set by their withdrawal. Although placing the disputed territory in UNIFIL trusteeship seems pragmatic, it has serious implications: For the first time, Israeli citizens will be placed under U.N. administration -- a precedent that could be applied in the West Bank and Golan Heights.

Making this even more complicated is that nobody seems to know where the border should be. The French, during their "mandate" over Lebanon and Syria in the period between the two world wars, didn't demarcate the Lebanese-Syrian border, leaving a territorial ambiguity that continues to this day. U.N. cartographers drew the Blue Line from a point northeast of Ghajar to a point on the bend on the Hasbani River just south of the Wazzani Springs, Ghajar's water source. Then, more recently, Israeli cartographer Asher Kaufman argued that the line should be drawn to a point somewhere north of the Wazzani Springs, meaning far less of Ghajar could lie in nominally Lebanese territory.

To prove the village's case, Khatib takes us on a tour. As our caravan of cars and trucks begins to move through the town, I notice that, just like in Alawite villages on the Syrian coast, Ghajar holds none of the standard signs of Islam in the Arab world -- mosques, madrassa, or veiled women. "We have crossed the line!" Khatib exclaims at one point, apparently at random. In the eyes of the international community, we are now in Lebanon.

Nearly jumping out of his car seat, Khatib shouted "There!" and pointed over my shoulder at what were clearly pre-1967 black basalt stone houses. He confirms what Lebanese in neighboring villages told me the previous week: Sheikh Muhammed, a local notable and Khatib's grandfather, built the structures in the mid-1950s and registered them in the Syrian Ministry of Interior. He holds this out as proof of Syrian sovereignty over the land prior to 1967. According to Khatib, the border should be 500 meters north of the current security fence.

The details of the UNIFIL plan to take control of the village are being hammered out in trilateral meetings between UNIFIL, Israel, and Lebanon -- the only point of contact between the two countries' governments since the end of the 2006 war. The proposed withdrawal has opened up a Pandora's box of potential legal questions: Can Israel supply a part of Lebanon with electricity? What happens if a villager in the north has a medical emergency and needs treatment in Israel? What legal rights do the northern residents have in Israeli courts?

The success of the Israeli withdrawal will depend greatly on the reaction of the Lebanese political elite. According to some Lebanese politicians, a return of Ghajar will show that diplomacy with Israel works, undermining Hezbollah's resistance narrative. But when Israel leaked that it was preparing to withdraw from Ghajar ahead of Lebanon's June 7, 2009, parliamentary election, in a bid to support the March 14 bloc led by Lebanese Prime Minister Saad Hariri, Hezbollah and its allies accused Israel of meddling in Lebanese domestic politics. Will Hariri, who now leads a government that includes Hezbollah, hail an Israeli withdrawal as a victory for "the resistance" or merely talk about "liberation"?

Washington hopes the withdrawal will also be a small step to help pull U.S. President Barack Obama's administration out of another twilight zone: the Middle East peace process. Diplomacy on Ghajar could provide momentum to the trilateral talks, leading to a resurrection of the Israel-Lebanon Mixed Armistice Commission (ILMAC) -- a body that was designed to monitor the cease-fire following the 1948 Arab-Israeli war, and last met in 1978 to deal with Israel's invasion of South Lebanon. Even Hezbollah's ally, Lebanese Gen. Michel Aoun, is in favor, with the caveat that the armistice be "temporary, maybe even for 10 years." A revived ILMAC could be a good venue to resolve the status of the remaining territorial disputes between Israel and Lebanon, which are used by Hezbollah to justify retaining its weapons.

After 30 minutes in Ghajar, the IDF soldiers signaled that our caravan had attracted far too much attention and it was time to go. Khatib's hands trembled as he shook mine. "Remember, over our dead bodies," he said. As we headed for the security gate, young children with light hair and eyes like Khatib's piled out of the village school, which rested where the Blue Line should be. When our car slowed to let them pass, their carefree smiles quickly melted into frowns. In this border hamlet where things are seldom as they seem, they seemed to know that the bodies Khatib offered up could very well be theirs.

Andrew J. Tabler is Next Generation fellow at the Washington Institute for Near East Policy and author of the forthcoming book In the Lion's Den: Inside America's Cold War with Asad of Syria.

Syria Clenches Its Fist

Assad to Obama: Thanks but no thanks.
Foreign Policy.com
BY ANDREW J. TABLER
AUGUST 28, 2009

Early last week, nearly seven months to the day after the Barack Obama administration took office and began its careful, critical engagement with the regime of Syrian President Bashar al-Assad, rumors swirled in Washington and the Middle East that the White House was preparing to turn a new page with Damascus. The first test of this new relationship would be over the issue that caused the breakdown in U.S.-Syrian relations more than six years ago: the flow of jihadi militants from Syria to Iraq.
The Obama administration's outreach to Syria had been clear and forthright. It included six high-level visits by U.S. officials to Syria, Washington's announcement that it would return an ambassador to Damascus, a reported letter from President Obama to President Assad, and the facilitation of export licenses for aircraft parts waived under U.S. sanctions against Syria. A Centcom-led delegation visited Damascus two weeks ago and concluded a tentative agreement with Syria on a technical assessment of Iraqi-Syrian border posts. Iraqi Prime Minister Nouri al-Maliki, miffed at being left out of these promising talks, visited Damascus last week to seal the tripartite deal. The string of blasts that greeted him upon his return on Aug. 19 -- the bloodiest in more than 18 months and now claimed by an al Qaeda affiliate -- has led Baghdad to demand that Syria expel Iraqi Baathists and jihadi militants from its soil and recall its ambassador. Damascus responded in kind, effectively blowing up Washington's initiative on the launchpad.
Until last week, talks over Iraq-related regional security issues appeared to be a glimmer of hope in an otherwise bleak U.S.-Syrian engagement process. Washington has quietly asked Damascus over the last seven months to use its influence to promote reconciliation between Fatah and Hamas. Following the most recent visit to Damascus by U.S. Mideast envoy George Mitchell, Syria, along with Turkey and Egypt, pressed Hamas to allow Fatah members in Gaza to attend their party's conference earlier this month -- an important first step in forming a united Palestinian position. It didn't happen.
Damascus instead took credit for an alternative "breakthrough" -- Hamas' recent announcement that it would accept and respect the 1967 border between Israel and the Palestinians in return for Israel's conceding Palestinians the right of return and allowing the establishment of a Palestinian capital in East Jerusalem. Unfortunately, this position falls dramatically short of the conditions of the "quartet" (comprising the United States, Russia, the European Union, and the United Nations): that parties to the peace process recognize Israel without preconditions, abide by previous agreements between Israel and the Palestinian Authority, and renounce violence as a means of achieving goals. On peace talks with Israel, Damascus continues to demand that Israel commit to withdrawing from the Golan Heights to the line of June 4, 1967, and resume Turkish-sponsored indirect talks from where they left off last December. Israel, which favors direct negotiations without preconditions under U.S. auspices, has refused.
French efforts last year to coax Damascus to open an embassy in Beirut and appoint an ambassador there led many to speculate that Damascus was willing to turn a new page with its western neighbor, Lebanon. But Syria's ambassador to Beirut spends most of his time in Damascus, and statements on Lebanon are put forward by pro-Syrian Lebanese politicians such as Wiam Wahhab who, due to his role in helping Damascus call the shots in Lebanon prior to Syria's 2005 withdrawal, has earned a reputation as one of Syria's last unquestioning proxies in Lebanon. Following the defeat of Syria's allies in Lebanon's June 7 elections (despite intensive Syrian efforts to swing the poll Syria's way), Damascus and its allies have stymied the formation of a government by the pro-independence March 14 block. Meanwhile, an interview Aug. 25 in the Lebanese daily An-Nahar with a senior U.S. official made apparent Washington's frustration with Syria, most notably its smuggling to Hezbollah of increasingly advanced weaponry across the Lebanese-Syrian border, which Damascus still refuses to demarcate despite promising to do so.
Concerning relations with Iran, on Aug. 19 (the same day as the Iraqi attacks) Assad said during his fifth state visit to Tehran that the June re-election of Iranian President Mahmoud Ahmadinejad -- the controversy surrounding which he attributed to "foreign intervention" -- meant that "Iran and Syria must continue the regional policy as in the past." The visit, combined with recent reports of a crash in northern Syria of a short-range missile developed by Syria, Iran, and North Korea, as well as the Assad regime's continued refusal to answer the International Atomic Energy Agency's questions about uranium particles found at not one but two Syrian nuclear sites, shows Damascus remains firmly ensconced in the Iranian-led "resistance axis." As for human rights and domestic reforms, not only is the regime rounding up dissidents as usual, but it is now going after its lawyers and the president of the Syrian Human Rights Organization as well. Damascus clearly feels that it has been let off the hook.
Washington intended the Centcom-led mission as the first step on a long road to reconciliation with Damascus, with the potential for even higher-level engagement by U.S. officials. But last week's battery of negotiations and bombings, as well as the charge of diplomatic distrust it generated, shows just how explosive and uncertain engaging Damascus over Iraqi border security really is. The only way to truly "solve" this issue would be for Damascus to publicly disavow the al Qaeda facilitators within its country and expel the Iraqi Baathists who support them from its soil. Last week's deadly blasts in Iraq clearly show Damascus is unwilling to take such a step.
This is because the actual problem of fighters entering Iraq has less to do with security arrangements along the border and more to do with the Faustian bargain Syria's minority Alawite-dominated regime cut with Sunni-based al Qaeda fighters who regard their hosts as apostates. This agreement, forged during the height of Assad's Cold War with the George W. Bush administration, underlies the al Qaeda facilitators and the "rat lines" of jihadi fighters they operate in and out of Iraq. Syria is unwilling to cut them off over fears of risking domestic attacks. In short, Damascus wants high-level U.S. engagement without making hard sacrifices.
During the 1970s and 1990s, when the United States tried ultimately unsuccessful policies of "constructive engagement" with Damascus, Washington would have allowed Syria to skirt the issue and quietly deal with the issue from "behind the scenes." But last week's blasts and other jihadi attacks originating out of Syria this year show that giving Damascus a pass on the issue allows the Assad regime to keep its hand on the foreign-fighter tap. This leaves the strategic initiative in Damascus' hands to use as leverage as the United States withdraws from Iraq. U.S. support for its Iraqi allies to roll back the fighters are likely to remain Washington's safest bet.
With Syrian-Israeli peace negotiations stalled, the easiest issues to benchmark and verify concern Lebanon, where U.S. officials are still trying to promote the country's sovereignty and independence. The formation of a government, the delineation of the Syrian-Lebanese border, and shutting down the Syrian-dominated PFLP-GC bases are three urgent issues that require U.S.-Syrian cooperation. All three are more useful barometers for gauging Syrian intentions than the Assad regime's murky relationship with al Qaeda and former Iraqi Baathists, as the former can be more easily benchmarked and verified. And most importantly for Washington and Damascus, progress on all three is more likely to lead to tangible improvements in U.S.-Syrian relations in the year to come.


Andrew J. Tabler is a Soref fellow in the Program on Arab Politics at the Washington Institute for Near East Policy.

Rule of Law Is Key to Future Israel-Syria Peacemaking

PolicyWatch #1533
By Andrew J. Tabler
June 11, 2009

Beginning on June 12, U.S. Middle East envoy George Mitchell will make his long anticipated first trip to Damascus. During the two-day visit, Mitchell will focus on reinvigorating Israeli-Syrian peace negotiations and cajoling Damascus to engineer a Fatah-Hamas reconciliation. According to media reports, he will also roll out a roadmap for improved relations between Washington and Damascus. Although it is unclear if U.S. peacemaking can succeed, Syria's current fiscal crisis, combined with questions over its nuclear activities and recent twists in the investigation of former Lebanese prime minister Rafiq Hariri's assassination, may provide a rare opportunity for Washington. A focus on rule of law -- a necessary prerequisite for potential U.S. future investment -- could help the United States tame some of the al-Asad regime's excesses in the short term while building a foundation for cooperation in the long term.

Background

Although relaunching peace talks between Israel and Syria might seem easier than those between Israel and the Palestinians, the deep-seated relationship between Syria's longstanding state of war with Israel and the al-Asad regime's thirty-nine-year grip on power complicates matters. Following independence in 1946, Syria was one of the world's most unstable countries, suffering countless coup d'etats. So when Alawite officers loyal to the Baath Party seized power in a military coup in March 1963, they declared a state of emergency to stabilize Syria's domestic scene. This allowed the junta to arrest individuals and hold them indefinitely without charge, putting Syria on the road to becoming one of the Arab world's most repressive countries.

After consolidating power over Baathist opponents in November 1970, the late president Hafiz al-Asad built his regime by placing minority Alawites, Druze, Christians, and Shiites in key positions in the armed forces, security services, and bureaucracy. With the advent of the region's 1973 war, al-Asad quickly switched his justification for the emergency law to the state of war with Israel. The regime also used the threat of war as an excuse to delay passing and implementing legal reforms to accommodate economic, social, and political change in Syria. To clear new endeavors with the regime, citizens were forced to bribe the minority networks that dominate Syria's security services and bureaucracy. This corruption quickly became the mortar that held Syria's minority-led regime together.

Following al-Asad's death in June 2000, his son and successor, Bashar, issued hundreds of pieces of legislation in the name of reform. Unfortunately, however, most of it was simply grafted onto existing laws or never followed up by executive instructions. The regime also ignored reform of Syria's antiquated court system (despite extensive help from the French government), leaving interpretation of the law up to the minority-dominated bureaucracy. Not surprisingly, regime corruption skyrocketed. Over the last five years, Syria has slipped from 66 to 147 on Transparency International's Corruption Perception Index, placing it among the world's top thirty most corrupt countries. According to the World Bank's Investment Climate Assessment, corruption is one of the primary reasons why Syria now has one of the Arab world's poorest investment environments. The countries most willing to invest in this murky climate are Syria's political allies, Qatar and the Islamic Republic of Iran. Last year, the latter claimed it extended $3.5 billion in "technical assistance" to Damascus.

The Regime's Predicament

The good news for U.S. peacemakers is that the al-Asad regime is facing a trilogy of daunting challenges, largely of its own making, and is seeking Western help through talks with Israel.

Finance. For two decades, the al-Asad regime has relied on oil proceeds to finance annual budgets. Production, however, has declined 30 percent in the last five years and domestic demand has increased sharply. In 2006, Damascus announced it had become a net oil importer, nearly five years ahead of analysts' expectations. The Syrian regime insists it has arrested the production decline through new oil discoveries and enhanced recovery from existing wells. But those projects have largely boosted production of heavy oil, which sells for considerably less on the international market than does Syria's standard light sweet crude. As a result, Syria's budget deficit this year is expected to reach $5.2 billion, accounting for approximately 10 percent of GDP and a quarter of Syria's estimated $20 billion hard currency reserves.

This crisis coincides with the flooding of the Syrian job market with record numbers of youth born during the 1980s and 1990s, when Syria was among the fastest growing populations in the world. Unable to invest enough of its own money to create jobs for Syria's demographic wave, the Syrian regime is now actively seeking foreign direct investment (FDI). Due to rampant corruption, however, official FDI inflows in 2008 were only around $1.1 billion. While such amounts are a substantial increase over just a few years ago, Syria is still one of the lowest FDI recipients in the Arab world.

Nuclear activities. During a visit to Syria in June 2008, International Atomic Energy Agency (IAEA) inspectors found traces of uranium and graphite at al-Kibar, the site in eastern Syria bombed by Israel in September 2007 that U.S. officials now believe was a clandestine nuclear reactor. Last week, the IAEA reported that it also found uranium particles "not included in Syria's inventory of declared material" at the country's IAEA-declared research reactor. If Damascus continues to refuse IAEA follow-up inspections, the nuclear watchdog could demand a "special inspection" of the sites, which if refused could lead the IAEA Board of Governors to refer Syria to the UN Security Council for further action, potentially including the use of force under Chapter VII of the UN Charter.

Lebanon. The recently established international tribunal investigating the assassination of former Lebanese prime minister Rafiq Hariri is preparing indictments. Should Syrians be indicted or called to testify and Damascus refuses the tribunal's requests, the matter is likely to be referred to the Security Council. If the tribunal fingers Syria's Lebanese ally Hizballah (as reported in a recent article by Der Spiegel), pressure would mount on Damascus to break ranks with the group -- a choice that would enhance prospects for peace with Israel.

Utilizing U.S. Economic Leverage

Syria's problematic finances and its potential confrontations with the IAEA and the Hariri tribunal provide Washington with leverage that it can incorporate into its diplomacy with Syria to break the status quo. Exploiting pressure from the IAEA and the Hariri tribunal should be easy for Washington, since the pressure is coming from international institutions with established mandates. Utilizing U.S. economic leverage will be trickier, however. The United States has substantial "negative pressures" it can employ from the recently renewed Syrian Accountability and Lebanese Sovereignty Restoration Act (SALSA) and a series of executive and Treasury Department orders targeting Syrian individuals and banks. In terms of positive inducements or "rewards" in the event of peace, however, it is doubtful the United States can entice substantial foreign investment in Syria without addressing the country's worsening corruption problems. On a political level, should Syria conclude a peace treaty with Israel and implement reforms that would facilitate large flows of FDI, the minority networks in the security services and the bureaucracy stand to lose the most. Given Iran and Hizballah's close relationship with Syria's security establishment, the discontent of these networks could be exploited by Tehran to derail implementation of a future peace.

Damascus has thus far refused to address its support for terrorist organizations or domestic issues -- most notably human rights -- in its early dialogue with the Obama administration. No doubt terrorism will be on the agenda if the United States mediates Israeli-Syrian peace talks. But rather than dumping domestic issues -- a common practice in the past -- Washington should add rule of law to its list of priority issues for dialogue with Syria. By encouraging Damascus to promote rule of law, it could help tame the human rights and corruption excesses of the minority system. In the long term, greater rule of law could provide a foundation for future economic and political cooperation between Damascus and Washington in the event of peace. Damascus needs to understand that unlike its current friends in Tehran, the United States needs a strong legal framework for its investments to take root and deliver the peace dividend Damascus hopes for.

Andrew J. Tabler is the Soref fellow at The Washington Institute.

Why Mitchell Bypassed Damascus

PolicyWatch #1506
Will Mitchell's Trip Bypass Damascus?
By Andrew J. Tabler
April 13, 2009
U.S. special envoy to the Middle East George Mitchell is scheduled to visit Israel, the Palestinian territories, Egypt, the Persian Gulf, and North Africa this week. Conspicuously absent from his itinerary is Damascus. Despite a Syrian public relations campaign designed to exploit Washington's opening gestures with Syria as a major policy change, the exclusion of Damascus from the envoy's agenda demonstrates that the Obama administration continues to pursue cautious and critical engagement with the regime of Syrian president Bashar al-Asad.
The Syrian-U.S. Expectations Gap
Following the November 2006 Iraq Study Group's recommendation to engage Syria and Iran, the Asad regime hired a British public relations firm to develop a strategy targeting the international community. In January 2007 Abdulsalam Haykal -- a businessman close to the Syrian regime -- and Syrian historian and political commentator Sami Moubayed launched Forward Magazine (Syria), a monthly English-language glossy periodical that, according to its website, looks at "the bright side of things." The magazine featured a number of articles by or interviews with Syrian ambassador to the United States Imad Moustapha that were intensely critical of U.S. Syria policy.
In the wake of U.S. speaker of the House Nancy Pelosi's April 2007 visit to Damascus, a stark gap in expectations emerged between Damascus and Washington. The Asad regime demanded talks on "the horizon of issues" and a "package deal" on "comprehensive peace" that would solve some bilateral issues at the expense of others. In Washington, however, policymakers sought progress on all issues, most notably Syria's support for terrorism, efforts to undermine Lebanon's sovereignty, an investigation into the murder of former Lebanese premier Rafik al-Hariri, and increasing evidence of extensive Syrian facilitation of foreign fighters into Iraq. Many also doubted that the Bush administration or its successor would conduct immediate high-profile engagement with Damascus, pointing to the poor track record of U.S. officials engaging Asad and Damascus's new and unexpected maximalist demands for engagement.
Moubayed was soon tapped by the regime to serve on the "U.S.-Syria Working Group" -- a "Track Two" dialogue between Syrians and Americans organized by the U.S.-based Search for Common Ground. After Syria announced in May 2008 that it was involved in indirect peace talks with Israel, Moubayed and two other Syrians visited Washington the following July to exchange views with a number of policy think tanks and former U.S. officials with the goal of narrowing the gap between the two positions.
Not only did Syria's expectations remain unrealistically high, but it was clear Damascus anticipated an early visit from the next U.S. president as well. Two days following Barack Obama's election, Moubayed penned the article "Abu Hussein's Invitation to Damascus," which outlined ten things Obama must do by inauguration for Syria to receive him "as a guest of honor in Damascus, the way it did with Jimmy Carter and Bill Clinton." Some of the Syrian points, including appointing a U.S. ambassador to Damascus, helping Syria deal with Iraqi refugees in Syria, and sponsoring Syria's indirect peace talks with Israel, were well known to U.S. officials. Unexpected, however, were further demands that Washington lift U.S. sanctions on Syria, recognize "that no problems can be solved in the Middle East without Syria," and "help Syria combat Islamic fundamentalism." While Moubayed later insisted his article only reflected his own views, journalists and analysts widely regarded them as reflecting those of the Syrian regime.
No Grand Gestures
Following Obama's inauguration on January 20, Syria's public relations campaign stalled. In addition to existing concerns with Damascus, U.S. officials were particularly concerned by Syria's refusal to comply with International Atomic Energy Agency (IAEA) requests for further inspections at al-Kibar -- the clandestine nuclear facility destroyed by Israel in September 2007, where IAEA inspectors found traces of uranium and graphite. So instead of the kind of grand gesture Syria wanted, Secretary of State Hillary Clinton dispatched Assistant Secretary of State for Near East Affairs Jeffrey Feltman on February 26 for talks with Moustapha. In the meeting, Feltman raised the issues of Syria's "support to terrorist groups and networks, acquisition of nuclear and nonconventional weaponry, interference in Lebanon, and worsening human rights situation."
Regime spokesmen immediately attacked Feltman for using the "language of the neocons." Following the meeting, however, both sides labeled the talks "constructive," leading to another round of discussions in Damascus on March 7 between Feltman and National Security Council Middle East director Daniel Shapiro and Syrian foreign minister Walid Mouallem. Following the talks, Feltman announced that both sides had found "a lot of common ground" and that instead of setting "benchmarks" for Damascus, each side was watching the future "choices" of the other.
Two days later, Asad stepped into the fray. In the ensuing twenty-three days, he gave six interviews to international media. But rather than dealing with the issues discussed during Feltman and Shapiro's visit, Asad targeted Israel, offering it only a cold peace, blaming outgoing Israeli prime minister Ehud Olmert for the failure of recent indirect Syrian-Israeli negotiations, and refusing to talk about cutting ties with Hizballah, Hamas, and Tehran. In another interview, Asad implied he had been asked to mediate between Washington and Tehran. Then, in his first-ever email interview with an American journalist, Asad told the New Yorker's Sy Hersh that he not only sought U.S. mediation with Israel, he also wanted direct contact with President Obama.
In the latest installment of the campaign, Moustapha told the Washington Times editorial board on April 7 that the United States had signaled a sea change in its relations with Syria, claiming that relations with Washington are suddenly so amicable that U.S. officials said, "We will never ask you to kick [Hamas politburo leader] Khaled Meshaal out of Damascus." He also predicted that Mitchell would soon visit the Syrian capital.
Washington's Cautious and Critical Approach
Contrary to Moustapha's predictions, no such policy shift has taken place. Instead, Washington continues to utilize a step-by-step pragmatic approach to engaging Damascus. Unlike most other countries on the U.S. State Sponsors of Terrorism list, the United States and Syria have diplomatic relations and functioning embassies. Following the Feltman-Shapiro meeting, Washington is now watching Damascus's choices on the issues discussed. Thus far there has been some diplomatic motion on Lebanon and Iraq. On March 24, Syria officially appointed its first-ever ambassador to Lebanon (who has yet to be posted). Syria's foreign minister, Mouallem, visited Baghdad the following day for talks on border security and committed Syria to "whatever help is necessary" for a successful withdrawal of U.S. forces from Iraq. Washington is now waiting for Syria to follow through on both commitments. On the ground in Damascus, Syria has allowed the reopening of the American Language Center, an English-language institute affiliated with the embassy that was closed along with the embassy's cultural center and the American school following the October 29 U.S. raid on terrorist bases near the eastern Syrian town of al-Soukkariya.
In other areas of U.S. concern, however, progress has yet to be made. Syria continues to refuse IAEA requests for further inspections or to talk about its worsening human rights situation. Finally, Damascus has yet to evince its much-trumpeted ability to rein in weapons smuggling by Hamas or to bring the group into a Palestinian unity government with Fatah.
Dilemmas Reveal Intentions
With Damascus unfortunately more interested in public relations than in addressing outstanding bilateral issues, Washington's step-by-step approach seems set to continue. In the short term, a key test to see if Syria is capable of cooperating with Washington will be Lebanon's June 7 parliamentary elections, which U.S. policymakers are watching closely to see if the poll will take place without Syrian interference or assassinations. Concerning Iraq, Washington is waiting to determine whether Syria can follow through on its promises to stop the flow of jihadi fighters across its borders.
In the long term, however, Washington's biggest challenge will be to devise a strategy that puts the Syrian regime into policy dilemmas that will reveal whether it will eventually conclude and implement a peace treaty with Israel and realign itself away from Iran. By making clear agreements with the United States and implementing them, Asad has the opportunity to rebuild trust with Washington. Only when this is accomplished will grand presidential gestures to Damascus become a viable option in Washington's competitive policy environment.
Andrew J. Tabler, cofounder and former editor-in-chief of Syria Today, is a Soref fellow at The Washington Institute.

Talking to Syria: An Important Test for Damascus

Talking to Syria: An Important Test for Damascus
NYTimes.com, March 4, 2009

By Andrew J. Tabler

The New York Times convened an online panel of five Middle East experts to discuss the Obama adminstration's recent decision to send two diplomats to begin "preliminary conversations" with the Syrian government. The following is a contribution by Washington Institute Soref fellow Andrew J. Tabler, the co-founder and former editor of Syria Today. Read the entire discussion on the Times's website.


Secretary of State Hillary Rodham Clinton's decision to dispatch two senior officials to Syria is an important early test to see if engagement will lead Damascus to re-evaluate its policies at home and abroad.

Washington's list of grievances with the Syrian government has never been longer, including its support for Hezbollah, Hamas and jihadis entering Iraq, its efforts to undermine Lebanon's sovereignty and its poor human rights record. Making matters worse, a report last week by the International Atomic Energy Agency all but confirmed suspicions by American officials that a site in eastern Syria bombed by Israel in September 2007 was part of a clandestine nuclear program.

Dispatching Jeffrey Feltman, the acting assistant secretary of state for Near Eastern affairs, sends a signal to the Syrian leadership that discussions will be about the hard issues that divide the two countries. Mr. Feltman is a former United States ambassador to Lebanon whose support for that country's anti-Syrian March 14th alliance -- which leads the current government in Beirut -- openly angered Damascus. In sending Daniel Shapiro, the Middle East chief on the National Security Council and an adviser to the Obama campaign, Washington is showing Damascus that President Obama is listening.

The risks of engagement with Syria are all too apparent to United States officials, as the poor track record of American officials visiting Damascus shows. Its position on Hamas, Hezbollah and jihadi fighters are a tough sell. On the one hand Syrian government officials claim to have influence over these groups, but when confronted they often say the groups are outside their control.

But there are opportunities. Syria's economy is being hit hard by the global economic crisis, declining oil production and a third straight year of drought that has left the government there in a vulnerable position. This explains why more and more Syrian officials are now demanding that Washington lift its sanctions on Syria.

Frank talk combined with "smart sanctions" and political pressure from the Hariri Tribunal, along with the nuclear issue, could spin Damascus out of Tehran's orbit. And this "strategic realignment" is necessary for a significant improvement in relations with Washington -- and a peace treaty with Israel.

Global Economic Crisis Boosts Utility of US Sanctions on Syria

PolicyWatch #1482

Global Economic Crisis Boosts Utility of U.S. Sanctions on Syria

By Andrew J. Tabler
February 26, 2009

On February 9, the Syrian minister of transportation announced that Washington had granted a license allowing Syria to purchase spare parts for two Boeing 747s that have been grounded for years. The announcement touched off intense speculation that the Obama administration would lift U.S. sanctions against Syria that have been in place since 2004. Even as Washington appears to be softening its stance with an eye toward engaging Damascus, sanctions remain an important tool to ensure that engagement achieves U.S. policy goals. Rather than dropping sanctions, Washington should recalibrate them to leverage the economic pressure on Damascus that has been exacerbated by the global economic crisis.
Syria's Economic Woes

Despite U.S. sanctions, the Syrian economy has performed relatively well in recent years. Fueled by high oil prices and increased investment from the Gulf, Syria has posted an average annual economic growth rate of about 5 percent over the past five years. There are, however, big problems: oil production -- proceeds from which account for 27 percent of state revenues -- is declining by about 9 percent per year. And Syrian industry -- accounting for 28 percent of the gross domestic product (GDP) -- is struggling to compete under a flood of imports resulting from Arab and Turkish free trade agreements. Likewise, unemployment hovers around 9 percent, and a record three-year drought has devastated the Syrian agricultural sector (23 percent of GDP).

Since the global economic crisis hit, Syria's economic situation has worsened. The collapse in oil prices forced the state to revise its budget oil price downward to $51 for light crude and $42 for heavy, resulting in a record budget deficit of $4.8 billion, or roughly 10 percent of its GDP. Syria is a net importer of oil, however, and the state earns revenue from exports while the cost of importing petroleum products (largely fuel oil) is borne by consumers. In the past, the government subsidized petroleum products, but it raised prices in 2008 to a point where the government now earns revenue from domestic fuel oil sales. Therefore, a reduction in oil prices still reduces government revenue. With Syrian crude averaging $38 and $32 for light and heavy respectively, the Economist Intelligence Unit now estimates the budget deficit will swell to $5.2 billion.

Although the state usually makes up for budget shortfalls by slashing investment spending -- a line item that accounts for 40 percent of the 2009 budget -- this tactic will be more difficult now. Syrians born in the 1980s and early 1990s, when the country was among the top twenty fastest growing populations in the world, are now flooding the job market. According to Syrian deputy prime minister for economic affairs Abdullah Dardari, Syria will need $14 billion of investment over the next two years to meet the 6-7 percent economic growth targets required to create enough jobs for the growing workforce.

A recent Syrian Economy Ministry report quoted by news agency AFP stated that the crisis would result in an estimated 30 percent drop in foreign investment, which totaled $875 million in 2007. The report also estimated that expatriate remittances, which amounted to $850 million last year, would fall while prices would rise. Last year, the International Monetary Fund estimated Syrian inflation at a record 15 percent, up from 5 percent in 2007.

Impact of Sanctions

The bad economic news explains Damascus's recent shift in focus from the need for Washington to mediate peace talks to a demand for Washington to drop U.S. sanctions. In an interview with Reuters news service this month, Dardari said that "to have normal relations between Syria and the United States, sanctions should be lifted. . . . This is going to be a very important part of any dialogue. . . ." His statements echo those of Sami Moubayed, a member of the U.S.-Syria Working Group (whose Syrian members were handpicked by the Bashar al-Asad regime to participate in Track II dialogue) who first linked lifting U.S. sanctions to dialogue with Syria just two days after the election of Barack Obama.

These statements represent a reversal of the regime's standard rhetoric on sanctions. When the Syrian Accountability and Lebanese Sovereignty Restoration Act (SALSA) was implemented in May 2004, Damascus bragged that the sanctions would have little effect due to historically small amounts of bilateral trade. Many Syria observers questioned the utility of U.S. sanctions over the last few years, as spiraling food commodity and oil prices drove the dollar amounts (but not volumes) of U.S.-Syrian trade to all-time highs.

But there is ample evidence that U.S. sanctions on Damascus are having an increasing impact. SALSA, which bans all U.S. exports to Syria (except food and medicine), has hit Syrian aviation particularly hard. State-owned Syrian Air could not obtain parts for its fleet of American-made Boeing jets or purchase new aircraft from Europe's Airbus, which uses substantial U.S. content in its planes. SALSA also complicated Syrian oil and gas production by denying companies operating in Syria the necessary U.S. technology to increase diminishing Syrian crude output. Indeed, in the summer of 2007, Damascus blamed electricity blackouts on the "knock-on effect" of U.S. sanctions; companies specializing in major high-tech projects shunned operations in Syria for fear of running afoul of U.S. law. (The only legal exceptions to the sanctions were "export licenses" for U.S. goods for certain humanitarian purposes to promote the exchange of information and to help maintain aviation safety. It was under this provision that a license was issued to repair the two Syrian Air 747s last week.)

At the same time, U.S. actions targeting the state-owned Commercial Bank of Syria (CBS) have exacerbated Damascus's financial woes by making it more difficult to repatriate critical oil revenues. The U.S. Department of Treasury's March 2006 designation of CBS -- the depository for the lion's share of Syria's estimated $18-20 billion in foreign currency reserves -- as a "primary money-laundering concern" under the USA Patriot Act led all U.S. and a number of European banks to close their correspondent accounts. In anticipation of the move, Damascus switched state foreign currency transactions from dollars to euros, and since oil, the regime's lifeline, is denominated in dollars, the switch complicates the regime's ability to fund itself. In addition, the designation scared businessmen away from the CBS and toward the country's new private-sector banks, which operate under less regime control, effectively reducing the amount of cash the regime could access.

Executive orders freezing the U.S. assets of Syrian officials have likewise made global banks and investors wary of doing business with Syrian officials and regime businessmen. Last May, two American executives of Gulfsands Petroleum -- a company contracted to boost Syrian crude output -- resigned, and the company moved its headquarters from the United States to London after one of the company's partners, business tycoon and President al-Asad's cousin Rami Makhlouf, was targeted by an Executive Order focusing on public corruption in Syria. Later, Washington successfully pressured the Turkish mobile provider Turkcell to put off its bid to buy Syriatel, another Makhlouf-owned business. The U.S. designation was hailed by Syria's business community, which views Makhlouf, according to a new International Crisis Group report, as "a symbol of crony capitalism, resented by many colleagues for having bullied them into forced partnerships or out of lucrative deals."

Smart Sanctions Key to Success

As the fiscal crisis unfolds in Syria, existing U.S. sanctions could have a powerful negative impact on the Syrian economy, prompting Damascus to reevaluate its policies -- on U.S. designated terrorist groups (Hamas, Islamic Jihad, and Hizballah), Lebanon, Iraq, and weapons of mass destruction -- to obtain relief. This kind of policy review could form the core of future Syrian-U.S. dialogue. To ensure U.S. leverage, Washington should recalibrate sanctions based on a clear understanding of Syria's fiscal problems and changing socioeconomic trends, rather than lift sanctions as Damascus suggests. The resulting "smart sanctions" should be a key element of a comprehensive U.S. strategy to put Damascus into dilemmas in which its choices will clearly signal whether Syria intends to continue fanning the flames of regional militancy or to play a productive role in reinvigorated regional peacemaking.

If these targeted sanctions are effective, Damascus will be forced to choose between continuing its policies and suffering the economic consequences, or concluding clear agreements with Washington to change its policies and gain American assistance to put Syria on the road to prosperity. U.S. sanctions contain sticks and carrots to lead Damascus down this path. In the weeks and months ahead, the challenge before the Obama administration will be to assess which sanctions have been most effective, and to link -- via a process of benchmarking -- the removal of sanctions to discernible and irreversible changes in Syrian policy.

Andrew J. Tabler is a Soref fellow in the Program on Arab Politics at The Washington Institute, where he focuses on how to engage Syria in a way that best advances U.S. interests.