Today President Bashar al-Assad will make his third speech since the outbreak of the protest in Syria. This speech can be seen as the reaction to condemnation by Erdogan and the ‘transparent and frank’ discussions with Syrian envoy Hassan Turkmani. But other issues are also influencing both the timing and the content of the speech.
Later today EU foreign ministers gather in Luxembourg to, among others, discuss further sanctions against Syria. This time around EU will look at adding Syrian entities (i.e. companies) that are connected to the regime and bankrolls the crackdown. It is with this in mind, as well as the need to placate protesters in Syria, that Rami Makhlouf made his statement to retire from business. By taking himself out of the picture he might try to be taken off from the EU sanction list, but also to avoid that any of the businessmen that has invested in Cham Holding will be targeted by EU as well as avoiding that the company itself and any and all of the projects/subsidiaries will be added to the sanction list.
Another area that the Syrian regime should fear EU sanctions is Oil. 96% of Syrian Oil exports goes to France, Germany, Italy and the Netherlands giving the regime 7-8 million USD each day. This is the single greatest revenue of foreign cash. The Syrian oil is sour and/or heavy crude which is difficult and costly to refine, which makes it less attractive for countries such as China. A stop of oil import by EU would cause a big hole in the pocket of the Syrian regime and hasten the point where they cannot pay the forces responsible for the crackdown.
The EU sanctions so far have only targeted individuals in the regime. That has had little direct effect on the economy. But indirectly sanctions as such will be a ‘red flag’ for investors – foreign as domestic and foreign companies active in Syria. The Syrian economy is in shambles. IMF projected that the Syrian economy as a result of the crackdown would only grow by 3% this fiscal year as opposed to the projections pre-uprising of 5,5%. A bleaker outlook is a contraction of GDP by 3% projected by International Institute of Finance. Tourism, that last year accounted for 12% of the GDP and brought 8 billion USD has fallen to almost zero.
Another sign of the economic crises in Syria is the run on the Syrian pound that lost as much as 17% on the black market, hitting a five year low compared to USD. According to sources Syrian businessmen loyal to the regime has been buying SYP as a way to support the currency with Rami Makhlouf rumored to have deposited 1 billion USD to stabilize the SYP.
Finally we have the resolution in the United Nations Security Council, the IAEA referral and the USA threat that Bashar al-Assad will be indicted by the International Criminal Court for crimes against humanity.