Analysis

Sanctions: The Politics and the Reality

Haid Haid, Lina Khatib, Assaad al-Achi
August 2017

Haid Haid and Lina Khatib speak with Assaad al-Achi, executive director of civil society organization Baytna Syria, about the impact of sanctions on NGOs and ordinary Syrians – and how the regime circumvents them.

Haid Haid: Can you explain the different types of sanctions imposed on Syria?

Assaad al-Achi: There are several kinds of sanctions that we have to face today in Syria and in neighbouring countries. First, you have the sanctions imposed on the Syrian regime.

These are of two types. First are sanctions that are targeted – against individuals who are designated as rogue elements, terrorist elements, etc. These have targeted a lot of the officials in the Syrian government, starting with the head of the regime and going all the way down to some of the scientists within the science research centre that has developed the chemical weapons. All government ministers today are sanctioned. Most, or if not all, of the heads of the different intelligence services are sanctioned too, as well as the chief of staff and head of the army.

What the sanctions do not cover fully yet are the heads of the different militias that are supporting the Syrian government. These can be of different kinds, whether local militias – i.e. Syrian militias – or foreign militias. There are sanctions against Hezbollah, but these are not related to Syria. They’re older than Syria, and Hezbollah is designated as a terrorist entity according to the EU, the US and the UK.

The second kind are sanctions that have been imposed not by the UN but by different states on Syrian organizations or on state structures. There are no UN sanctions on Syria today, but you have member state sanctions, either US, EU, or UK.

These are the main sanction programmes that exist today, and they attempt to mimic one another. Sometimes it’s the US that designates first, and then the UK and the EU follow, or vice versa. The trouble is it doesn’t always follow a certain pattern; it can move from one to the other.

When we look at sanctions imposed on state institutions, for example, we can see that the Central Bank of Syria is sanctioned, the Commercial Bank of Syria is sanctioned, along with some other minor state institutions. Obviously, the main scientific research centre is sanctioned, and some other smaller entities within the state structure that have contributed directly to the killing over the past six or seven years.

The only industrial-level sanction that was imposed was on the oil and gas industry. These sanctions were imposed, again, by the US, the UK and the EU. They were first imposed on the maintenance of Syrian crude oil facilities (except for major safety problems), so they started with the banning of the procurement of spare parts to the fields. Then they banned the purchase of Syrian crude oil, so it became very difficult for the government to sell its crude oil around the world.

The third level of sanctions imposed on the oil and gas industry was on the transportation of Syrian crude oil, so a lot of transportation companies started being hesitant to transport Syrian crude oil – for example from Syria to Iran, or to Russia, or any other country that would be willing to buy the crude oil.

There is a second layer, or a completely different layer, of sanctions that apply to Syria, which are the antiterrorism sanctions. These are at the UN level. The UN maintains a list called the ‘Al-Qaida and Daesh List'. It lists all the entities that are subject to UN sanctions – i.e. all member states should basically comply with these sanctions.

In the case of Syria, these sanctions target Jabhat al-Nusra and all its affiliates, and all its designations – so whether it’s Jabhat al-Nusra, or Hayat Tahrir al-Sham or Hayat Fateh al-Sham, these are just considered aliases to the original name, which is ANF or al-Nusra Front. And they target ISIS as well.

These are the only entities today that are listed at the UN Security Council level, but then you start looking at state-imposed sanctions, and there it’s a bit different. The UAE, for example, has published its own terrorist list, and on it you have, for example, the Muslim Brotherhood, you have Al-Tawhid Brigade, Jaish al-Mujahideen, you have Jabhat al-Shamiya. The list includes many of what are otherwise considered today as moderate opposition armed groups.

The Turkish government has developed its own list of terrorist entities as well, on which, obviously, it lists Jabhat al-Nusra and ISIS but adds to it the [Kurdish] PYD. As of the summer of last year, the PYD has been officially listed as a terrorist entity per Turkish law.

Haid Haid: How have sanctions, whether the anti-regime sanctions or the antiterrorism sanctions, impacted the conflict in Syria?

Assaad al-Achi: The original idea behind the sanctions was to make it very hard, whether for the regime or for the different terrorist elements, to be able to access financial resources. Obviously, this target has not been met. The Syrian regime has been able to bypass a lot of these sanctions through help from the Russians and the Iranians.

For the terrorist elements, they were able to bypass a lot of these sanctions by underselling the crude oil that they had. When you look at Daesh, for example, from 2014 until the summer of 2016, its main source of income was the sale of Syrian crude oil. Most of this crude oil was being sold to the Syrian regime itself, through the now-famous George Hassouani, way below market prices.

During that period, Syrian crude oil was valued at around $20 to $22 per barrel, and they were selling it at something between $10 to $12 per barrel. As they did not incur any initial investment burden, all of these initial expenses are for them sunk costs. They only incurred maintenance and operational costs. That’s why they were able to sell at very low prices but still lose, as the operation cost per barrel produced is around $16.

Haid Haid: So that didn’t have any impact on the regime at all?

Assaad al-Achi: The sanctions definitely had a minor impact. They made it more difficult for the regime to access financial resources. But when you have countries like Russia and Iran, who are willing to loan and give credit to the regime, the impact is limited, especially when these are state sanctions and they’re not UN-level sanctions.

Haid Haid: The regime is also using humanitarian aid, especially the aid that has been provided by different humanitarian agencies inside Syria, to overcome the sanctions and the financial difficulties it’s facing.

Assaad al-Achi: Yes, this is happening through procurement processes. The sanctions on the regime – like on defence – include the prohibition of procurement. So the regime couldn’t procure a lot of the things that it needed – let’s say, to repair some of the electrical stations or pumping stations. The Syrian regime is trying to maximize the benefit of the presence of UN agencies on its soil to be able to procure everything that it could not procure because it’s under sanctions.

In order to bypass the different sanctions, the regime is relying on the UN and the International Committee of the Red Cross (ICRC) to do the procurement themselves. The agencies are not subject to sanctions, so the World Food Programme (WFP) could go and procure whatever it wanted, even if the use would be in Syria. The ICRC could do the same, the WHO could do the same, and so on and so forth. The regime benefited from the presence of the UN, the different UN agencies, and ICRC, including the different Red Crosses, which opened offices in Damascus. The regime did this to bypass the sanctions and be able to procure whatever it needed to function.

There is a clear example of a violation of these sanctions, which was the procurement of some sophisticated equipment to the blood bank in Damascus. Unlike in a lot of countries, the blood bank in Damascus is managed by the Ministry of Defence and not by the Ministry of Health. Most of the equipment there belongs to the Ministry of Defence and is at the service of the Ministry of Defence.

The Syrian state needed some sophisticated equipment – I think for lab analysis, etc. It couldn’t get it, because the Ministry of Defence is sanctioned, so they went through the blood bank and they asked the blood bank to procure that. The blood bank asked the WHO to do the procurement on its behalf, and the WHO did it.

The regime actually signed an agreement between the WHO and the blood bank, which is a clear violation of all sanction programmes, as the head of the blood bank is actually an army general. The documents approving this transaction are available. They were published last year when the Syrian Campaign ran a campaign on UN aid and its impact on the Syrian conflict.

Haid Haid: Then there is also the money the regime is receiving directly through the NGOs that are affiliated with the regime, like al-Bustan, which was established by Rami Makhlouf, Bashar al-Assad's cousin, but which is still receiving UN funds. It’s one of the implementers for UN agencies in terms of providing humanitarian aid to different groups. Then the regime determines where to distribute aid and who to distribute it to.

Assaad al-Achi:That’s absolutely right. Not only that – it goes beyond that. If you look at, for example, where all of the UN staff are headquartered or are staying, most of them are staying at the Four Seasons Hotel in Damascus. The Four Seasons is owned by the Ministry of Tourism, which is under sanctions as well, but the UN managed to pay the Four Seasons $9.5 billion in 2015 for accommodation costs. Forty per cent of that money goes directly to the Ministry of Tourism – and, therefore, to the Syrian state or Syrian regime.

As for al-Bustan, it actually has a paramilitary arm to it, as it manages a group of Shabiha [state-sponsored militias]. It does have a humanitarian arm, but also a paramilitary arm. But still UNICEF managed to give al-Bustan about €250,000 for a psychosocial support project in in the Homs suburbs. Imagine, you are giving money to a Shabiha group that runs a paramilitary structure – to do psychosocial support!

There are other examples. All local hiring at UN agencies has to be cleared by the Syrian secret services, the Mukhabarat. If someone wants to work for the WFP in Damascus or the WHO, or for the UN Development Programme or any other UN agency, they have to be cleared by the Syrian Mukhabarat to be able to work there.

Not only that, but recruitment has to happen solely through the Syrian Arab Red Crescent. You have two layers of control for the Mukhabarat, to make sure that the people who manage to get into these agencies – at the local level, obviously – are people who are loyal to the regime.

Last but not least is how the regime uses the issue of access. The regime has been using policies of besiegement and starvation for years: in eastern Ghouta right now, but before that in Madaya, in Zabadani, in Moadamiya, in Daraya, etc., where it used to besiege a town and limit or completely prohibit access. The UN couldn’t do anything about it, because of fear that visas for its staff would be revoked and they wouldn’t be allowed in Damascus again.

The abuse of the sovereignty principle by the regime led to its benefiting from the presence of the UN. Those who annoy the regime have their visas revoked and asked to leave, like what happened to Khawla Matar.

Lina Khatib: What is the relationship between the regime and the pro-regime NGOs that have been set up by the different militias that now exist in regime areas? How is that relationship regulated?

Assaad al-Achi: There are two levels of regulation. You have the national-level regulation, which is managed by the Ministry of Social Affairs and Labour. The Ministry of Social Affairs and Labour has the authority to register different associations. There is a process through which they can apply for a permit to exist, but it doesn’t give the right to access foreign funding. In order to access foreign funding, NGOs have to go through a separate vetting process through the different intelligence services and intelligence branches in Damascus.

If NGOs clear that process, they make it to a list that is maintained by the Ministry of Foreign Affairs. That’s the name of the list – the list of organizations that are allowed to deal with the United Nations and international NGOs. That list is much more restricted than the larger list of all registered NGOs in Syria.

Haid Haid: And what about the impact of the sanctions on civil society in regime areas?

Assaad al-Achi: The impact on civil society in Damascus has been, first of all, the banking issue. Second is the fact that everything is state-controlled and has to go through the state.

NGOs in Damascus are trying to bypass the different layers of state bureaucracy and the state monopoly on foreign funding by opening mirror NGOs in Lebanon, and sending the money there and then smuggling it into Syria.

That worked for a while, but now it’s almost impossible to actually open a bank account in Lebanon to start with. Second, even if one manages to open a bank account, when the banks start seeing that large sums of money are being withdrawn, they close the account immediately. They might even refer it to the anti-money-laundering and antiterrorism section at the Central Bank of Lebanon.

There's now yet another layer of complexity with the shutting down of the banking system in Lebanon and the difficulties there. What NGOs have to rely on is the network of bureaux de change run by the network of Syrian moneychangers that exist across the world. You have to trust the Hawala system, as it’s now officially called, to be able to access the money.

Haid Haid: What about those who are operating outside regime areas?

Asaad al-Achi: When you look at civil society operating in regime-held areas, the biggest impact of the sanctions has been banking restrictions.

It’s very hard to transfer money to Syria today, if not impossible, because the central bank is sanctioned, and the main commercial bank is sanctioned as well. That made access to funding very difficult and 100% state controlled – i.e. you have to go through the UN agencies, and you have to be on the Ministry of Foreign Affairs list to be able to get funding.

But outside regime areas, it is a completely different level of complexity because not only do NGOs have to abide by the sanctions, they also have to abide by the antiterrorism and anti-money-laundering sanctions imposed on the different entities that exist in the areas in which they operate.

I’ll give an example – we in Baytna Syria have a WASH [water, sanitation and hygiene] project in Daraa right now. We couldn’t procure water pumps for that water project, because there are sanctions on the Syrian regime that prohibit the procurement of any item that has more than 10% American technology. Even though the pumping stations are going to be in opposition-held areas, specifically in areas under moderate armed groups’ control, where there is no Jabhat al-Nusra and no ISIS, the sanctions apply to the whole of Syria and are not delineated according to territorial control.

On top of that, NGOs have to go through due diligence to make sure that they are not violating any of the antiterrorism clauses in the different UN Security Council resolutions.

The most famous one is UN Security Council Resolution 2253. That was amended just two weeks ago. I don’t know the number of the new Security Council resolution, but Resolution 2253 details the exact processes and procedures that we have to go through to make sure that the money we’re providing – or the equipment or whatever it is – is not ending up in the hands of the wrong people, and what are the consequences to us, as NGOs, if that money or if this equipment end up in the hands of the wrong people.

You have that layer of difficulty that you have to deal with – that you have to prove that Jabhat al-Nusra, for example, will not benefit from that community centre that you’re opening in Idlib; that there would be no one affiliated or associated with Jabhat al-Nusra who will attend any of the events in the community centre that you’re opening in Idlib.

Now, because our NGO is operating in Turkey, we have to prove that the PYD or SDF [Syrian Democratic Forces] will not benefit from that community centre or whatever it is that we’re opening. That’s why a lot, if not all, of the Syrian NGOs that had operations in Hasakah have dropped those operations, because it became almost impossible to operate in Hasakah from Turkey while being compliant with the different laws.

Unlike what a lot of people think – that it’s actually easier to operate in opposition-held areas compared to regime-held areas – it’s actually 10 times more difficult because in regime-held areas you only have to comply with sanctions on the Syrian regime, whereas in opposition-held areas we have to comply with three or four different sanction mechanisms.

Haid Haid: In conclusion, what are some recommendations you have?

Sanctions are being politically used and politically motivated without taking into consideration the impact of these sanctions on the daily lives of people.

Sanctions are a political tool for applying pressure, but the international community needs to make sure that, when applying this political pressure on whatever body, it is not destroying the livelihoods of thousands, if not millions, of people, like what is happening today in Syria.

I would recommend that we definitely need anti-money-laundering and antiterrorism sanctions. But I think the sanctions need to be revised and modified in order to adapt to the humanitarian catastrophe that we have in Syria today.

When we look at sanctions imposed on the Syrian regime, I definitely am in full support of all sanctions against individuals or organizations that have contributed to the killing and that have contributed to the atrocities and to the massacres that we are seeing today and we’ve seen before in Syria. These sanctions need to be maintained.

There may be sanctions on state institutions, like the Central Bank, that can be revised – not lifted necessarily, but maybe diminished.