US-Syrian trade on rise despite tensions

American companies circumvent SAA sanctions by not manufacturing their products domestically.

assad 224.88 (photo credit: AP [file])
assad 224.88
(photo credit: AP [file])
Despite American sanctions, in 2007 trade between the US and Syria increased 7.7 percent, mostly as a result of the rise in cereal exports to Syria (from $146m. in 2006 to $256m. the following year). Syria has had a prominent place on the US State Sponsors of Terrorism List since its inception in 1979. The Syria Accountability Act (SAA) of 2004 and the recent US allegations regarding a secret Syrian nuclear reactor, have certainly not improved diplomatic relations between the US and Syria. On the other hand, Syria and Iran are increasingly improving their relations in all fields, much to the dismay of the United States. Interestingly, a glance at the 2007 trade figures between Syria and the US on the one hand, and Syria and Iran on the other, reveals an unexpected reality: while the volume of US-Syrian trade stood at $472 million last year, Syria's trade with Iran in high technology products, is the main concern of the US, simply because we were not in the market for this; whatever we needed was obtainable from other sources," Dr. Rateb Shallah, chairman of the Damascus Chamber of Commerce, told The Media Line. Shallah is highly skeptical of the success that sanctions could have today. "Nowadays - with globalization - sanctions are not really a thing of the present. Governments are no longer looking at sanctions as a tool or a mechanism for affecting policies. This is why I can count quite a few American companies that trade with Syria. General Motors, for example, is doing very well and their sales are exceptionally high in Syria," said Shallah. The mention of General Motors in this respect serves as a good example for how American companies found loopholes in the SAA. General Motors cars that are sold in Syria are manufactured in the company's factories in South Korea. Another major US company, Coca Cola, uses a bottling factory in Syria itself, while Cargill, an American sugar company, has also invested in a large factory, which is about to open soon in Syria. And so, American companies have circumvented the SAA sanctions simply by not manufacturing their products inside the United States. Their sales in Syria are not included in the official bilateral trade figures, which are therefore much higher than the ones mentioned above. "Syria now has more business opportunities to offer, and as such there is no way to ban or stop American businesspeople from participating in this process," Shallah explained. Syrian businesspeople with whom The Media Line spoke said both sides are eager to maintain good relations with one another. "There are no difficulties. US businesspeople are treated like any other investors," says Samir Sultan, a commercial law expert from Aleppo, Syria. Jihad Al-Yazigi, editor-in-chief of the Paris-based Syria Report, has been monitoring and analyzing business trends between the two nations. According to Al-Yajigi, there is a feeling that political developments and bilateral trade are "disconnected." "The fact that trade is largely comprised of agricultural food, makes it not very responsive to political difficulties," Al-Yazigi told The Media Line. But not all are happy with this paradoxical situation. "The increasing trade with Syria runs counter to US government policy and clear Congressional intent to impose ever-increasing sanctions upon the regime, as a result of its support for terrorism," Dr. Rand H. Fishbein, a former professional staff member at the US Senate Appropriations Committee, told The Media Line. Fishbein did not yield when presented with a common claim, according to which trading food and medicine with Syria constitutes humanitarian support to the Syrian people rather than to the regime. "Money is fungible, and to the extent that the US or the world community provide food commodities to Syria, that relieves the Syrian government of the burden of having to provide those goods at a reasonable cost to its own people. "For an economy which is already quite stretched, these benefits are significant," Fishbein explained. He further suggested that food should be included in the list of prohibited items, so that the US would stop to "effectively subsidize the Syrian regime with the sale of food products." Continuing to provide benefits to Syria, said Fishbein, means there is no disincentive for the Syrian regime's behavior. The SAA has nevertheless restrained US-Syrian trade and prevented it from increasing even more. "Had the relationship between Syria and the US been subject to a better atmosphere of bilateral cooperation, the volume of trade would not have doubled but would have tripled or quadrupled," said Shallah of the Damascus Chamber of Commerce. According to Shallah, the US government's sanctions policy has not unduly affected the local business community's relations with its American counterparts. Shallah said, therefore, he had no doubt that with the growth of the national economic program in Syria the volume of trade with the US would increase in the near future.