Global Insider: Syria’s WTO Status

Last week, Syria obtained observer status in the WTO, an initial step toward full membership, in part because the U.S., EU and Israel abstained from the vote, but also due to vocal support from Egypt. The U.S. abstention came simultaneously with President Barack Obama’s decision to renew economic sanctions against Syria. In an e-mail interview, Joshua Landis, associate professor at the Middle East Center in the University of Oklahoma’s School of International and Area Studies, explained the significance of the two developments.

WPR: What are the concrete effects of the U.S. sanctions on Syria’s economy? What are the concrete benefits of WTO observer status for Syria?

Landis: There are several concrete effects of the U.S. sanctions on Syria’s economy. It is illegal for U.S. companies to trade with Syria outside of food and medical necessities, but even medical necessities can be subject to long delays and red tape. Medical clinics complain that spare parts for MRIs and other sophisticated U.S. machinery can take months for approval, causing major impairments in delivery of services. Syrian Air Lines has been all but grounded by the sanctions. Spare parts for its aging Boeing jets are sanctioned, and the U.S. has refused France permission to sell Airbuses to Syria on the grpunds that over 10 percent of their content is U.S. manufactured.

The most important effect of the sanctions, however, is moral and not technical. Sanctions create a dark cloud over the investment climate in Syria, limiting levels of foreign investment. Foreign direct investment in Syria jumped to $2.1 billion in 2008 from $400 million in 2004, according to the IMF. But even among the non-oil-producing countries, Syria still languishes toward the bottom of the list, outstripped in 2008 by Lebanon ($3.6 billion), Tunisia ($2.8 billion) and Morocco ($2.4 billion).

Syria’s accession to observer status at the WTO will not transform investor climate in Syria, although it is a promising sign.

WPR: Does this demonstrate an incoherence in the Obama administration’s engagement policy toward Syria? Or is it a balanced approach?

Landis: In contrast to President George W. Bush, who sought to use only sticks in disciplining Syria, President Obama has taken a more conciliatory approach. He wants to use carrots as well as sticks. This explains the permission he has given for Syria’s new status at the WTO even as he renews economic sanctions. (It also explains why Israel did not block Syria’s accession.)

Although there are divisions within the U.S. administration over how far to go in engaging Syria, the sanctions are subject as much to the clashing interests of Congress and the executive branch. Congress, and not the president, holds the key to sanctions imposed by the Syria Accountability Act. In order to end the sanctions regime, Syria will have to prove that it does not provide support to groups that Washington has designated as terrorists, does not interfere in Lebanon, does not support resistance in Iraq, and is not developing weapons of mass destruction. Even if Obama wanted to ease sanctions on Syria, Congress could easily challenge him.

WPR: What is the significance of Egypt’s vocal support for Syria’s WTO candidacy?

Landis: Egypt’s support for Syria’s accession to observer status costs Cairo nothing. It is a way to support U.S. policy in the region as well as to offer an olive branch to Syria. Egyptian-Syria relations became very strained during the 2006 Israeli war in Lebanon, and even more so during the Gaza Campaign in 2008-2009, when Syria attacked President Hosni Mubarak for refusing to come to Gaza’s aid. Mubarak has supported the PLO over Hamas and, like the U.S., is hoping that Syria will do nothing to hinder the proximity talks that Washington is encouraging between Israel and the PLO.