Facing Backlash, Syria Revokes Week-Old Ban on Imports of Consumer Goods – NADA BAKRI

By NADA BAKRI

Published: October 4, 2011

BEIRUT, Lebanon — The Syrian government on Tuesday revoked a recent decision to ban imports of most consumer goods, a move that had sent prices soaring and provoked outrage among a business elite that has until now backed the leadership of President Bashar al-Assadin his nearly seven-month contest with anti-government activists.

The revocation was just one in a string of developments on a tumultuous day for Syria. The United Nations Security Council voted Tuesday on a resolution calling for an end to violence there and suggesting the possibility of sanctions; the resolution failed after Russia and China vetoed it.

Meanwhile, Turkey said it would begin military maneuvers along its border with Syria this week. Though previously announced, the location of the exercise near the border seemed a move by an increasingly assertive Turkey to bring more pressure on Damascus.

“Now they’re really banging the gavel,” an Obama administration official said of the Turkish announcement. “They’re suddenly moving very fast.”

Analysts said that the ban imposed last week on imported merchandise, which included cars, household appliances and even food items, underscored a deep sense of anxiety among the authorities as Syria faces some of its most dangerous political unrest in four decades of dictatorship. Officials said it was needed to protect foreign currency reserves.

Analysts said the ban had been ordered without any study of the potential effects on the Syrian market or on Syria’s trade agreements with neighboring countries. Some economists in Syria said the import ban and its reversal were indicators that the Syrian leadership remained uncertain in the face of the uprising and its ramifications for the Syrian economy.

“The ruling caused a domestic uproar that was very important,” said Nabil Sukkar, a former senior economist at the World Bank who now leads the Syrian Consulting Bureau for Development and Investment, based in Damascus. “They realized that they can’t do that because it will lead to soaring prices, smuggling, unemployment and harm the credibility of the reforms.”

The United States and the European Union have imposed strict economic sanctions on Syria, including an embargo on its crude oil, over its brutal crackdown on pro-democracy protests, in which 2,700 people have been killed, according to the United Nations.

The uprising, which started in mid-March, has devastated Syria’s economy. The International Monetary Fund predicted that growth might shrink by 2 percent this year, given a decline in investment and losses in tourism which, with oil, provide Syria with much of its foreign currency.

“There is no work, no customers,” said a salesman at an art gallery in Bab Touma, a Christian neighborhood in Damascus. “It has been a really bad season.”

Analysts said the Syrian government would now take other steps to protect its foreign reserves, which Finance Minister Mohammad al-Jleilati recently estimated at $18 billion — enough to cover the country’s imports for two years. Some economists dismissed that figure as inflated.

It was not immediately clear why Syria would impose such a ban if it had two years’ worth of reserves on hand. The measure was announced by the economy minister, Mohammad Nidal al-Shaar, on Sept. 26. He said that it was temporary and precautionary, but that it was necessary to protect foreign currency reserves, a main indicator of the government’s stability.

The Obama administration official, speaking on the condition of anonymity following diplomatic protocol, contended that despite the reversal, “the damage has already been done.” The official said inflation had tripled and smuggling had surged since the decision was made, unsettling the business elite in Syria, which has largely sided with the government.

The “well-to-do are completely dismayed with Assad,” the American official said. “They don’t think he knows what he’s doing. Inflation has gone up. He can’t fix it.”

Turkey remains a wild card in the developments in Syria. Prime Minister Recep Tayyip Erdogan, once one of Mr. Assad’s closest allies, has said he will no longer communicate with the Syrian president, after Mr. Assad repeatedly misled Mr. Erdogan and other Turkish officials about his intentions. Turkish officials have said they will impose sanctions soon, possibly by this week, potentially deepening Syria’s economic woes. Particularly in Aleppo, near the Turkish border, Turkey has fostered economic ties.

At the Security Council, nine nations, including the United States and its Western allies, voted for the measure condemning Syria, while Brazil, India, South Africa and Lebanon abstained. Russia, whose main ally in the Middle East is Syria, had said that it would not accept a resolution that included even a hint of sanctions.

The American ambassador, Susan E. Rice, accused opponents of the resolution of seeking to continue arms sales to Syria. “During this season of change, the people of the Middle East can now see clearly which nations have chosen to ignore their calls for democracy and instead prop up desperate, cruel dictators,” Ms. Rice said.