SYRIAN BANKING & FINANCIAL SERVICES CONFERENCE SPEECHES

 

Panel Session 5: Will US Sanctions Affect Economic Growth

Presentation:
Sir Roger Tomkys
Chairman
Arab-British Chamber of Commerce

 

I do not propose to attempt an economic analysis of the impact of American sanctions on Syria since 2004. Other speakers are much better qualified than I am for that purpose. I shall therefore concentrate more especially on wider consideration of the use of sanctions as an instrument of policy. First however I will say something about my own personal experience and also about my present responsibilities as Chairman of the Arab British Chamber of Commerce.

In June of this year together with my wife and daughter I returned to Syria for the first time since 1986 when I had left Damascus at the breaking of diplomatic relations between the UK and Syria after two years as ambassador here.  The development evident in the Syrian economy in the intervening two decades was remarkable for a visitor whose purpose was simply to revisit favorite places and enjoy some of the pleasures of tourism in a treasure house for anyone with a sense of history and culture. It was an equal pleasure to experience again the warmth of Syrian hospitality among old friends and new acquaintance alike.

As to more objective changes our most striking impressions were of the rapid development of both domestic and foreign investment throughout the country. The hotel in which we now find ourselves meeting is one example among many. Wherever we went, and we revisited much of Syria from Tartous to the Euphrates and from Bab al Hawa to the Jebel Druze, the enormous growth in high quality summer villas together with what had been almost unknown, the presence of very many motor vehicles with Gulf registration numbers, testified to confidence in Syria’s stability and the future. So too did the huge growth in the urban centres of Damascus and Aleppo as well as the novel development of high quality restaurants and hotels within the historic city centres. Whatever has been the impact of American sanctions they have not put back Syrian economic prosperity too where it was in 1986.

Let me now say a word about my responsibilities on behalf of the Arab British Chamber of Commerce. Like all chambers of commerce our interest is in the development of trade and economic prosperity. As a joint chamber we have a particular interest in the mutual advantage that can be derived from trade between Britain and the Arab world. The economic factors operating today are almost wholly positive. The growing wealth of the Arabian gulf countries and Saudi Arabia and the prosperous potential of Syria and Egypt and much of the rest of the Arab world, well used to doing business with Britain encourage great optimism. London, it is said in joke, has succeeded Cairo and Beirut as the capital of the Arab world.

Unfortunately, political factors weight heavily against this optimism.  The unresolved tragedy of Palestine, the continuing turmoil in Iraq, the recent appalling destruction in Lebanon and the instability provoked by international terrorism all overhang what should be the proper business of governments, the furthering of the economic prosperity of their people.  I see the American imposition of sanctions against Syria as a symptom of that political instability. As a Chamber of Commerce, we can only deplore both the imposition of sanctions and the facts, which have brought it about.

Let me now move to the general issue of economic sanctions, their origins and their record of effectiveness.  Now the first matter to be underlined is that it is a fundamental mistake to suppose that economic sanctions are generally imposed with a view to their economic effect on the country against which they are introduced. Here I will quote a study of economic sanctions by a former diplomatic service colleague, now Lord Renwick, undertaken shortly after the constitutional settlement in Zimbabwe following sanctions against Rhodesia.

In general, he writes, in deciding whether to impose economic sanctions, government frequently find themselves responding to an international crisis on the basis of the three broad options: to do nothing, to consider taking some form of military action, or to seek to impose economic penalties. In other words, governments decide to apply sanctions on occasion, on the basis of the old joke about British government and its principles under Harold Wilson: we must do something; this is something; therefore we must do this.

More seriously sanctions derive their modern origins from the foundation of the League of Nations after the Fist World War. At that time great hopes were placed on sanctions as the means of enforcement to preserve from external aggression on the territorial integrity and political independence of the member stages.  These hopes were dashed by the failure of sanctions against Italy over its aggression against Abyssinia in the 1930s. A number of lessons were learned. Sanctions are liable to have perverse effects, both political and economic. The pressure of sanctions can encourage the development of better and more efficient industrialization in the state targeted. They may hurt neighbouring countries more than the sanctioned state and if they do cause damage where it is intended it is usually concentrated on poor and vulnerable sections of the population who were in no position to make their governments modify policies which have given rise to the sanctions in the first place.

The study concludes that sanctions are decided in large measure as a consequence of the lack of feasible alternatives. It goes on to argue that in virtually all cases the purpose of sanctions has also been demonstrative and in many instances the demonstration of disapproval appears to have been the main purpose of applying sanctions. The study does not argue that sanctions always fail in their intended purpose and it assesses that to abandon altogether the idea of recourse to sanctions would be to reduce the choice of response to one between military action and acquiescence, an unattractive choice at the best of times and particularly s in a nuclear age.  Even so the whole analysis points to the fact that sanctions are often a blunt and ineffective weapon, more subject than most political moves to the laws of unintended consequences.
I would sum up the lessons to be learnt from this study as follows;  Economic sanctions are a weapon designed to produce a political result in the form of a change in policy in the targeted state. The economic impact is merely a means to an end. But the likely economic impact is itself uncertain unless sanctions have very wide international backing or the state targeted notably vulnerable. Even then sanctions commonly rally public support behind the targeted regime. The miscalculation by which the British government of the day declared that sanctions would end Rhodesia’s independence in weeks rather than months is notorious but governments imposing sanctions have regularly made excessive claims for their likely efficacy. When sanctions do bite hard they usually affect the vulnerable and the poor and the political results are perverse from the point of view of the sanctioning state.

I leave it t others to judge how far these principles are applicable in assessing the effectiveness of US sanctions against Syria. But my remarks today may encourage you to judge their outcome in political terms; have they served a purpose within the US political agenda, reducing, for example pressure for military action, or have they served to modify Syrian policies as the US may have intended: Finally experience elsewhere over the use of sanctions underlines the need for an exit strategy. If sanctions appear counter productive how can they be terminated without recourse to the other forms of intervention to which sanctions originally seemed to offer less drastic alternative? The answer to that question is of course as dependent on political forces within the imposing state or states as on the state targeted. Certainly this seems to me the situation over the present case of US sanctions against Syria.

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