The Gaza Bombshell
by David Rose April 2008
Vanity Fair

After failing to anticipate Hamas’s victory over Fatah in the 2006 Palestinian election, the White House cooked up yet another scandalously covert and self-defeating Middle East debacle: part Iran-contra, part Bay of Pigs. With confidential documents, corroborated by outraged former and current U.S. officials, David Rose reveals how President Bush, Condoleezza Rice, and Deputy National-Security Adviser Elliott Abrams backed an armed force under Fatah strongman Muhammad Dahlan, touching off a bloody civil war in Gaza and leaving Hamas stronger than ever…. (Continue)

A must read — Qifa Nabki writes: "This expose is massively worth reading… shocking if it's true."

'Dreams and Shadows' By ROBIN WRIGHT
Reviewed by PATRICK COCKBURN in New York Times Sunday Book Review

Dreams and Shadows: The Future of the Middle East by Robin Wright $17.79

….Robin Wright argues that there is “a budding culture of change” in the Middle East — and she sets out to document it in this fluent and intelligent book about the future of the region….

She writes, “Islamic extremism is no longer the most important, interesting or dynamic force in the Middle East.”…

It would be good if this were true, but in general the stories Wright relates of brave reformers battling for human and civil rights show them as having had depressingly small influence. She claims there is “a budding culture of change” represented by “defiant judges in Cairo, rebel clerics in Tehran, satellite television station owners in Dubai, imaginative feminists in Rabat and the first female candidates in Kuwait, young techies in Jeddah, daring journalists in Beirut and Casablanca, and brave writers and businessmen in Damascus.” Sadly, her own research largely contradicts this thesis. Of the many opponents of the status quo she writes about, the only ones to have achieved a measure of success are religious movements: Hamas in Gaza and the West Bank and Hezbollah in Lebanon. She does not cover Pakistan, but the assassination of Benazir Bhutto in Rawalpindi in December shows that suicide bombers retain their deadly ability to shape events.

Why have moderate reformers failed so uniformly across the Middle East? Not because of lack of courage. Wright describes how in Syria, Riad al Turk, first arrested for opposing a military government in 1952, spent almost 18 years in solitary confinement in an underground cell the length of his body. He kept himself sane by making pictures on the floor out of thousands of hard and inedible grains he had taken out of the prison soup during his years of confinement. Wright also writes of heroes and heroines in a more minor, but still impressive, key, like Noha al Zeiny, a leading official in the prosecutor’s office of the Egyptian Ministry of Justice, who was so disgusted by blatant official ballot rigging in an election she was supervising that she publicly denounced it in one of the few Cairo newspapers that dared to print her testimony.

Autocratic regimes in the Middle East may be sclerotic, corrupt and detested by their own people, but they are very difficult to remove. Governments in Egypt, Syria and Libya that came to power by military coups in the distant past have learned how to protect themselves against their own armies and security forces. In each of those countries the Mubarak, Assad and Qaddafi families are establishing new political dynasties. President Hosni Mubarak, jokingly known to Egyptians as the last pharaoh, has, according to Wright, now held power longer than all but two other leaders in Egypt’s 6,000-year history, and is grooming his son Gamal to replace him. Political reforms have been purely cosmetic. Osama Harb, the editor of a moderate foreign policy journal, International Affairs, denounced Egypt’s supposed reform efforts as a sham but found he could not withdraw from the government’s inner circle without endangering himself. “It should be easy to resign, to say no,” he observed. “But not here. This is Egypt.”

Just one long-established regime in the Arab world has been kicked out by voters in a closely monitored election. It happened on Jan. 25, 2006, when Hamas won a victory over Fatah, Yasir Arafat’s very corrupt nationalist movement. It was the first time, Wright says, that an Arab electorate ousted an autocratic leadership in a free and fair election — a message that resonated throughout the region. The immediate response of the international community was to boycott Hamas. “The United States is like the prince in search of Cinderella,” the Hamas leader Osama Hamdan told Wright. “The Americans have the shoe, and they want to find the kind of people who fit the shoe. If the people who are elected don’t fit into the American shoe, then the Americans will reject them for democracy.” Fatah was encouraged by the United States, Israel and the Western Europeans to ignore the results of the election and build up its military strength. An armed clash became inevitable, leading to the takeover of Gaza by Hamas gunmen in June 2007.

Wright has long been one of the best-informed American journalists covering the Middle East, and her reputation is borne out here. She is refreshingly skeptical of conventional wisdom about what is happening in the region, and her book will be essential reading for anybody who wants to know where it is heading.

She is particularly good on the moribund nature of the regimes that now hold power and know they are too unpopular to allow any open expression of popular will (though some innovations, like satellite television and the Internet, have prized open their control of information). Both the Algerian election in 1992 and the Palestinian poll in 2006 showed that the West will not accept an election won by its enemies. But since the invasion of Iraq it is difficult to imagine a fair poll having any other result.

Why I Have New Hope for The Mideast Robin Wright writes about her own book: B01 (Post) Article | 03/02/2008

… Riad al-Turk is the Nelson Mandela of Syria. He was locked in a windowless underground cell about the length of his body without furniture or a toilet for 18 years. He kept from going mad by using uncooked grains of rice from his evening soup to etch geometric designs on the floor. "You must accept hell as a price to pay for remaining faithful to your convictions," he later reflected.

After his release in 1998, Turk went at it again, lashing out at the Assad dynasty in Damascus for "relying on terror" and demanding that it move "from despotism to democracy." In 2001, he was arrested a fourth time. Freed in 2005 at age 75, the reformed Marxist refused to be silent, even while acknowledging that he was only a starting point.

"The regime will eventually collapse on its own, due to isolation internally and internationally," he told me. "That's what happened in the Soviet Union and Czechoslovakia. That's what will happen here." …

Not all of the Middle East's new actors will succeed. For all the signs of promise, the region is still full of shadows.

Democracy is about differences, which are bound to explode once disparate sides of society are free to speak and make demands. Opening new space also does not guarantee who or what will fill it. And all the factors contributing to change make the region susceptible to greater turmoil.

Yet what I found most inspiring in my travels was not the dreams that the outside world has for the people of the Middle East. It was the lofty goals they have set for themselves, and begun — only begun — to act on.

Books: 'Dreams and Shadows: The Future of the Middle East' Discussion | 03/06/2008
Washington Post diplomatic correspondent Robin Wright takes questions on her new book, "Dreams and Shadows"

The Saudi Arabian embassy in Beirut has called on its nationals to leave Lebanon
a day after a US warship was positioned off the country's coast. 
SATURDAY, MARCH 01, 2008
19:16 MECCA TIME, 16:16 GMT

U.S.-Saudi Effort Seeks to End Syrian Interference in Lebanon
By Robin Wright
Washington Post Staff Writer
Saturday, March 1, 2008; A10

The United States and Saudi Arabia have launched a joint campaign to pressure Syria to end its political interference in Lebanon, including the U.S. deployment of the USS Cole and two other warships off the Lebanese coast, according to U.S. and Arab officials.

The new military, economic and diplomatic steps include the toughest actions taken by the Bush administration against the regime of President Bashar Assad, such as a recent presidential executive order allowing sanctions against Syrian officials meddling in Lebanon and a member of Assad’s family. Saudi Arabia is withdrawing its ambassador from Damascus and pressed for an Arab League meeting, to be held next week, to discuss the political vacuum in Lebanon brought on by its inability to elect a new president since November, U.S. officials said.

The Lebanese parliament has not elected a new president because of an enduring standoff that pits the Syrian-backed Shiite movement Hezbollah and its Christian allies against a coalition gathered around the government, which is backed by the United States, Saudi Arabia and France.

President Bush and King Abdullah first discussed a joint effort on Syria during the president’s trip to Riyadh, Saudi Arabia, in January. Saudi Foreign Minister Saud al-Faisal then discussed details at a White House meeting on Feb. 15 attended by Bush, Vice President Cheney, Secretary of State Condoleezza Rice and national security adviser Stephen J. Hadley, according to U.S. and Arab officials.

The proposal led to serious debate within the administration, which held back its plan from key European and Arab allies, the officials said.

“It’s likely the Syrians will see this in the context of measures we are taking in order to discourage their unhelpful behavior in Lebanon,” said a senior administration official, speaking anonymously because of the sensitive diplomacy.

Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, said Thursday that the USS Cole, a guided missile destroyer, and two other ships will remain in the eastern Mediterranean “for a while.” He added: “It does signal that we’re engaged, we’re going to be in the vicinity and that’s a very, very important part of the world.”

But Lebanese Prime Minister Fouad Siniora said yesterday that his government had not requested a U.S. naval presence off its coast, and summoned Ambassador Michele J. Sison to ask for clarification of U.S. intentions.

The presence of the three warships has also sparked anger from militant groups and suspicions in the Lebanese media about long-term U.S. plans, even though the State Department said the ships are about 60 miles offshore — well beyond the 12-mile limit of Lebanese territorial waters.

“The American move threatens the stability of Lebanon and the region and is an attempt to spark tension,” Hassan Fadlallah, a Hezbollah member of parliament, told Reuters. “The administration has used the policy of sending warships to support its allies in Lebanon before, and that experiment failed.”

The deployment of U.S. warships off the Lebanese coast dates to 1983, when Navy ships opened fire on Muslim militias. Retaliation included the suicide bombing of the Marine compound in Beirut and the death of 241 U.S. military personnel, which eventually led to the Marines’ withdrawal.

“U.S. gunboat diplomacy in Lebanon did not, does not and will never work. If there is one way how not to help your allies, this is it,” said Bilal Y. Saab of the Brookings Institution’s Saban Center.

Some Middle East experts and both European and Arab allies doubt that the U.S.-Saudi effort will have serious impact on Damascus. “The Syrian regime is playing for time, and reasons that a new administration will be forced to jettison the current policy of isolation,” said Emile el-Hokayem of the Henry L. Stimson Center, a defense think tank.

U.S. "muscle flexing" won't work in Lebanon: Syria
Mar 1, 2008 2:43pm EST
By Khaled Yacoub Oweis

DAMASCUS (Reuters) – Syria on Saturday accused the United States of prolonging a crisis in Lebanon by deploying a warship off the country's coast and said that Washington could not impose a solution by "flexing its muscles".

In the first reaction by the Damascus government to Washington's announcement on Thursday of the deployment of the USS Cole, Foreign Minister Walid al-Moualem said force was not the answer to Lebanon's political problems.

"We have been saying that the United States was obstructing the political solution in Lebanon and the existence of this ship affirms this," Moualem said after meeting Amr Moussa, the secretary general of the Arab League.

"Those Lebanese who are betting on the United States flexing its muscles will be disappointed. Washington cannot impose the solution it wants. The way out has to be based on a Lebanese consensus," Moualem told reporters.

Lebanon's 15-month power struggle has turned into a test of wills between the pro-Western government and Hezbollah-led opposition. Syria and Iran support the Shi'ite movement.

The United States had suggested that the Lebanese parliament majority it backs could elect a president on their own. The post has been vacant since November.

ARAB INITIATIVE

Moualem said this would be counter to an Arab initiative for a comprehensive solution to the crisis.

"I cannot predict the intentions of the United States but I can say that this show of force will lead nowhere," he said.

A Western diplomat, however, said the deployment could help deter escalation in regional tension after the assassination of a Hezbollah commander in Damascus last month.

Hezbollah said Israel was behind the killing of Imad Moughniyah and welcomed "open war" if Israel wanted one.

A U.S. defense official said the USS Cole, which was attacked by Islamist militants in the Yemeni port of Aden in 2000, would not be visible from the Lebanese coast.

U.S. forces are already deployed on Syria's border with Iraq, another point of tension between Damascus and Washington.

He said the deployment was to signal U.S. concern over Lebanon's political crisis, which Washington blames on what it describes as Syrian interference.

Syria said achieving political stability in Lebanon was in its national interest and that it was still hopeful the crisis would be solved in time for a summit of Arab leaders in Damascus on March 29-30.

Hezbollah said on Saturday the warship's deployment "prevents the Lebanese from agreement, hinders initiatives and incites groups against each other."

Fadlallah says Arab initiative was doomed from the start
By Nafez Qawas
Daily Star correspondent
Saturday, March 01, 2008

BEIRUT: Senior Shiite cleric Sayyed Mohammed Hussein Fadlallah said on Friday that the Arab initiative failed to broker an agreement among feuding Lebanese groups "because it was born dead." "The initiative did not offer a clear-cut and well-defined plan of action to solve the political deadlock in Lebanon and thus it is as if it was born dead," Fadlallah said during the Friday sermon at the Imam Hassanayn Mosque in Haret Hreik.

The Arab League's three-point initiative to end the deadlock calls for the election of the commander of the Lebanese Armed Forces, General Michel Suleiman, as the new head of state, the formation of a national unity government and the drafting of a new electoral law. The sayyed added that all Arab efforts to solve tension in Palestine, Iraq and Lebanon "have all failed so far and this has alarming connotations."

Fadlallah slammed Arab states for their stance against Israel and described it as "all talk and no action." "Their stand concerning the resistance in Lebanon clearly reflects their overall policy concerning Israel," he added. Fadlallah said a solution to Lebanon's 15-month-old political deadlock was not an "imminent" one, adding that regional as well as international "tensions and struggles reflect on the situation in Lebanon."

Top official says US anti-Syria sanctions to continue

Analysis by Joshua Landis: 

Is the Bush administration serious about Syria? Or is it just baring its teeth in a final show of strength for its allies before it bows out?

The U.S. Navy is sending three ships to the eastern Mediterranean Sea to show its strength to Syria over Lebanon. The US has also announced that it is sanctioning an additional four Syrians for "helping with the flow of money, weapons, terrorists and other resources from Syria into Iraq." The US and Israel have kept up a steady drum beat of pressure on Syria over the Lebanon presidency. Beginning with the Israeli bombing of a military facility along the Euphrates, the imposition of sanctions against Syrians undermining democracy in Lebanon, against those engaged in public corruption, and just today against those "helping terrorists into Iraq." We must not forget the car bomb that dispatched Mughniya. Now we have US navy vessels tacking towards Tartus. 

What are we to make of this? Could it be that Washington has finally decided to take its gloves off? Is it prepared for regime change?

I think we have to conclude that it has no such power or resolve. The Bush administration is furious over the Lebanon debacle. It has failed to convince or cajole Syria and the Lebanese opposition into relinquishing control of the country despite bombast about the "freedom agenda," "new realities," and forcing Bashar into a "Qadhafi-like about face."

Some may even be tempted to think that Washington is displacing its anger – and is preparing to smite Syria because it cannot dispatch Iran. But this is also fanciful. Washington is in no position to pluck even the "low hanging fruit" of Damascus. It has had its one chance at regime change. There is no well thought out endgame to these threats.

WASHINGTON — The Bush administration on Thursday announced it was imposing economic sanctions on four individuals it accused of helping with the flow of money, weapons, terrorists and other resources from Syria into Iraq.

It marked the administration's latest attempt to block efforts by groups in Syria from undermining the government of Iraq.

The action will freeze any assets the four individuals have under U.S. jurisdiction and prohibit Americans and U.S. firms from engaging in business transactions with the four men.

"Since the fall of Saddam Hussein's regime, Syria has become a transit station for al-Qaida foreign terrorists on their way to Iraq," Stuart Levey, the administration's point person on terrorist financing, said in a statement.

Levey, Treasury's undersecretary of terrorism and financial intelligence, said that a network in Syria was "going to great lengths to facilitate the flow through Syria of money, weapons, and terrorists intent on killing U.S. and coalition forces and innocent Iraqis."

A Treasury fact sheet identified the four individuals being targeted for economic sanctions as Badran Turki Hishan al-Mazidih, Ghazy Fezza Hishan al-Mazidih, Akram Turki Hishan al-Mazidih and Saddah Jaylut al-Marsumi. Treasury said each of the four individuals also use other names.

President Bush earlier this month signed an economic order that expanded penalties against senior government officials in Syria and their associates who are judged to have benefited from public corruption.

Last week, Treasury announced that it was freezing any assets held in the United States by Rami Makluf, one of the most powerful and influential businessmen in Syria, who controls the country's mobile phone network as well as other lucrative enterprises. He is also the first cousin of Syrian President Syrian President Bashar Assad.

Gulf firms unveil Syria projects, shrug of sanctions
Wed Feb 27, 2008 3:39pm EST
By Khaled Yacoub Oweis

DAMASCUS, Feb 27 (Reuters) – Two large Gulf property companies plan to invest $450 million in Syria as part of their expansion in emerging markets, executives said on Wednesday.

The projects were announced as Washington expanded economic sanctions on Syria to raise pressure on the Damascus government for supporting anti-U.S. groups in the Middle East.

Qatar's state-owned Diar will build a $350 million resort on the Syrian coast while Emaar Properties EMAR.DU of the United Arab Emirates signed for a $100 million venture with Cham Holding, which is controlled by Syrian tycoon Rami Makhlouf, on Wednesday.

Makhlouf, who was personally targeted by the new U.S. sanctions, said the project will have the support of the authorities to reorganize areas where illegal buildings are rampant in the Syrian capital.

"Good housing will be provided for inhabitants of these chaotic areas. Historic sites will be preserved," Makhlouf, who is the cousin of President Bashar al-Assad, told Reuters.

Diar's Chief Executive Officer Ghanim al-Saad said expanded U.S. sanctions on Syria would not delay his company's project on a 244,000 square-meter beachfront plot.

"Syria is a brotherly country," Saad said.

He did not give a start date but said construction would take three years to complete. Diar has issued a tender for building marine works for the resort near the city of Latakia…

Gulf investors have announced a number of megaprojects in Syria in the last three years that have not started as the 2006 Israeli invasion of southern Lebanon and a 2007 strike on Syria has raised the level of political uncertainty in the region.

Emaar laid the foundation stone in June 2006 for a $500 million residential complex near Damascus but construction has not begun. UAE construction company Arabtec was awarded a contract in January of this year to build part of the project.

Investors have also struggled to clear regulations and bureaucratic hurdles in Syria, although the government has relaxed laws restricting private investment and property prices have risen sharply….

Lebanon has been traditionally the primary magnet for Gulf investment in the Middle East, with the late premier Rafik al-Hariri establishing a private company to rebuild the center of Beirut from the 1975-1990 civil war.

But a 15-month political crisis in Lebanon and armed conflict with Israel, as well as a boom in oil prices, have helped turn investors' eyes to real estate projects elsewhere in the region.

Syria tycoon Makhlouf defiant after sanctions
Tue Feb 26, 2008 1:57pm EST
By Khaled Yacoub Oweis

DAMASCUS (Reuters) – Syrian tycoon Rami Makhlouf said on Tuesday U.S. sanctions would not stop him expanding his business empire and announced he was in talks to sell a majority stake in Syrian's leading mobile operator Syriatel to Turkish counterpart Turkcell.

"A deal between Turkcell and Syriatel would cement relations between the two countries," Makhlouf told Reuters in an interview.

"I cannot say, however, that we will reach an agreement. The negotiations are ongoing," he said.

"I should thank (U.S.) President George W. Bush because the sanctions have raised the level of my support in Syria. I am no hit and run businessman. My companies employ 6,000 Syrians, mostly young qualified professionals."

Makhlouf, Syria's most powerful businessman said he was considering selling between 51 percent of Syriatel or more. Turkcell said in November it was looking at bidding for a controlling stake.

The 39 year-old executive is the cousin of President Bashar al-Assad. He owns 69 percent of Syriatel. Gulf investors and Syrian shareholders own the rest of the company, which controls HITS-Unitel, a Yemeni cellphone operator.

Members of the Saudi royal family also have a stake in HITS-Unitel.

But Makhlouf's conglomerate, which stretches from telecoms to banks and an airline, does the majority of its business in Syria. He has ventured into heavy industry and property development as local real estate prices spiked.

Makhlouf pointed to a $100 million joint venture between his Cham Holding company and Dubai Emaar Properties due to signed on Wednesday as evidence of an undiminished appetite to do business with companies he has stakes in.

"This venture will develop areas in Damascus that turned chaotic because of illegal housing. We are talking about first-rate urban projects," Makhlouf said.

He said Syria Pearl airline, in which he owns a major stake through Cham Holding, was seeking to buy a fleet of planes made by Canadian company Bombardier.

The airline, in which state-owned Syrianair was granted a 25 percent stake, aims to regain market share lost by the national carrier to foreign airlines.

"Syrianair has six aircraft, which is unacceptable for a country the size of Syria," he said.

Syria's airline sector opened to private companies last year as part of limited economic liberalization measures ordered by Bashar al-Assad.

However sanctions imposed by the United States on Syria in 2004 have undermined efforts by the government to attract investment, although billions of dollars of Gulf capital is estimated to have been committed to projects in Syria in the last few years.

The United States froze the assets of Makhlouf on Thursday under new economic sanctions aimed at stepping up pressure against Damascus, saying Makhlouf benefited from corruption in the Syrian government.

The Treasury Department designated Makhlouf under an expansion of U.S. economic sanctions against Syria announced February 13 by President Bush. The designation freezes Makhlouf's assets under U.S. jurisdiction and forbids U.S. citizens or entities from doing business with him.

Makhlouf said he "did not have a penny" invested in the United States.

Fransabank takes plunge into Syria, plays down effect of US pressure
Chairman says move is 'part of our general expansion policy'
By Osama Habib
Daily Star staff
Thursday, February 28, 2008

BEIRUT: Fransabank on Wednesday became the fifth Lebanese bank to enter Syria, which is endeavoring to break US attempts to isolate the country politically and economically. The announcement came during a press conference in Damascus attended by the chairman of Fransabank, Adnan Kassar, and key government officials and bankers from Syria.

"We hope to start fully operating in Syria in June or July of this year and our goal is to set up branches in all major cities in the country in the coming few years," Kassar told The Daily Star. Fransabank-Syria, which will have a capital of $36 million, will provide all types of retail banking services.

Kassar said 48 percent of the bank would be controlled by Frasabank Lebanon, 1 percent by his brother Adel and the rest would be owned by Syrian partners. He added that the bank had already sold 15 percent of the original 51 percent of shares originally earmarked for Syrian nationals.

"The rest of the 36 percent of the shares will be sold in the Syrian market," Kassar said. BLOM, Audi, Byblos Bank and BEMO have established footholds in the Syrian market in recent years. Kassar said that he was not too concerned by talk of US pressure on Syria.

"We have entered Syria because we saw a good opportunity in this market," he said.

Syrian Economy to Grow at Least 6.5%, Deputy PM Says
By Massoud A. Derhally
Jan. 23 (Bloomberg)

Syria's economic growth will probably accelerate to at least 6.5 percent this year, driven by infrastructure projects and foreign direct investment, the country's deputy prime minister said.

Expansion will quicken from 6.2 percent last year, Deputy Prime Minister for Economic Affairs Abdallah Dardari said in a telephone interview from Damascus today.

Foreign direct investment in Syria will increase as much as 4.3 percent to $2.4 billion this year as oil-rich Arab nations put money into real estate, banking and tourism, ignoring U.S. sanctions, Dardari said. The Middle East will have a surplus in trade and services of $327 billion this year, Deutsche Bank AG has estimated, some of which will be invested within the region.

“We will start to see projects that were licensed materialize this year and we are also launching a number of large infrastructure projects, like the development of Damascus Airport, water pipelines from the Euphrates, and refinery projects,'' Dardari said.

Emaar Properties PJSC, the Middle East's largest developer, said in 2005 that will invest $4 billion in real estate projects in Syria. National Bank of Kuwait, the Gulf state's biggest lender by market value, has said it wants to operate a joint venture in the country.

Qatar National Bank SAQ, the Persian Gulf nation's largest lender, also said last year it planned to open a bank in Syria with three partners.

Tourism

The impact of a potential recession in the U.S. will be “rather minimal'' on Syrian growth because of an increase in trade with Turkey, India, Malaysia, China and other Arab nations, Dardari said. The Federal Reserve slashed its key interest rate by three-quarters of a percentage point yesterday to avert a recession.

“We have noticed an increase in the inflow of money,'' into tourism, Dardari said. “We project that Gulf money will focus on that sector.''

The government aims to boost economic growth to 7 percent by 2010 by reducing bureaucracy, easing state controls and attracting more investors, Dardari has said.

“Syria is in a reasonably comfortable position at the moment economically and politically,'' said Caroline Bain, an economist at the Economist Intelligence Unit in London, who forecasts growth of 4.1 percent this year. “It is obviously very reliant on Gulf money because investment from elsewhere is minimal apart from some interest from Asia.''

Here is what Derhally writes only a few days ago.

Syrian Central Bank Chief Says Dropping Dollar Peg Successful
By Massoud A. Derhally

Feb. 21 (Bloomberg) — Syrian Central Bank Governor Adib Mayaleh said his country's moves to attract foreign investment and ts decision to end the currency peg to the dollar have helped  `rop up' the pound.

Foreign currency reserves in Syria, the second Arab country to end its dollar peg, rose 11 percent last year to $20 billion while the pound has appreciated, Mayaleh said in a telephone interview from Damascus today.

“We have about $20 billion in reserves from about $18 billion in 2006,'' he said.

The Syrian pound has strengthened 9.3 percent since the country on June 4 announced that it would follow Kuwait and link the pound to a basket of currencies including the dollar, euro, yen and British pound to curb rising import costs and inflation.

Syria is pressing to attract foreign investment and in January of last year introduced a law allowing foreign investors to own or rent land and take profits out of the country in any currency.

Foreign direct investment in Syria will increase as much as 4.3 percent to $2.4 billion this year as oil-rich Arab nations put money into real estate, banking and tourism, ignoring U.S. sanctions against the country, Deputy Prime Minister for Economic Affairs Abdallah Dardari said in an interview on Jan. 23.

Mayaleh said that 10 banks in the Gulf, Lebanon and Jordan have applied to operate in Syria. Economic growth will probably celerate to at least 6.5 percent this year, Dardari said. The government aims to boost economic growth to 7 percent by 2010.

Annual remittances from Syrians living abroad are about $2 billion, Mayaleh said. The ruling Baath Party, which came to power in 1963, began moving toward a market economy in the 1990s, allowing private banks and insurance companies to operate for the first time. The U.S. imposed sanctions on Syria in May 2004, including a ban on trade transactions with the Commercial Bank of Syria, the country's largest bank. The U.S. government has accused Syria of aiding Iraqi militants and pursuing weapons of mass destruction.

A New US Mideast Strategy. But Not Yet (Arabic)

Last summer, Brookings’s Bilal Y. Saab ran an editorial in the Lebanese Al Safir newspaper in which he argued that the next US administration will have a different strategy and approach in the Middle East. He said: “…rarely have more profound changes in American foreign policy been called for in Washington than today. Democratization as the essence of America’s approach in the Middle East has failed, and global respect for American power has dwindled.”Saab then went on to say that “a new US global and regional strategy will however have to wait until G. W. Bush and Dick Cheney are out of office. For those in the Middle East who are betting their money on the assumption that change is near will still have to grapple with one formidable challenge: that of outliving the Bush administration and its unilateral and militant approach to foreign policy.”

Given its timeliness and the impact it has had on the Lebanese political scene, it is worth resurrecting that article.

U.S. shows video of Syrian reactor with possible link to N. Korea 

The United States has presented to South Korea a video of a Syrian nuclear reactor believed to have been built with North Korea's help, a Seoul daily reported Friday.
     Top U.S. nuclear negotiator Christopher Hill showed the video to Kim Byung Kook, senior secretary for foreign and security affairs for President-elect Lee Myung Bak on Wednesday, the Munhwa Ilbo said, quoting an unidentified South Korean government official.

U.S. Urges Monitoring Flow of Nuclear Materials By: Nicholas Kralev | The Washington Times

The United States wants six-nation talks aimed at ending North Korea's nuclear programs to begin monitoring transfers of nuclear materials and technology from the North to other countries, U.S. officials said yesterday.

Jerusalem-Post

A high-ranking Israeli defense official told The Jerusalem Post that Israel had indications Spain was considering withdrawing its forces from Lebanon. Spanish peacekeepers have come under repeated attacks by terrorist groups in southern Lebanon and in July, six members of the Spanish contingent were killed in an attack on their convoy near the village of el-Hiyam.

The official said that due to the attacks, Spain was under growing pressure to withdraw its troops from Lebanon, in the same way it pulled out of Iraq in 2004 following the Madrid terrorist bombings earlier that year. The official said the outcome of the national elections in Spain next month could determine whether the country would continue to participate in UNIFIL. "There are signs that Spain might be on its way out," one official said. "The combination of the attacks and the political pressure back home makes it difficult to see the country staying in Lebanon past the end of the year."

"Once one country pulls out the rest of the contributors will also start to rethink their participation, and it could ultimately lead to the breakdown of the entire force," the defense official said.

Syria has been having signal success over the past few years in attracting foreign investment, with Saudi Arabia, Turkey and Iran all making headlines due to the capital they are pouring into the Syrian economy. Though garnering less media coverage, Kuwait is fast becoming one of the main sources of overseas investment in Syria, having just taken over third place on the rankings.

According to the state's official news agency, Kuwaiti investments in Syria now total $6bn, with bilateral trade jumping 30% last year to $350m.

The latest Kuwaiti foray into the Syrian market came with the signing of an agreement on February 11 between Syria's Al Sham Holding Company and three firms from Kuwait – the Al Kharafi Group, the Kuwaiti Syrian Holding Company and the Kuwait Privatisation Project Holding Company.

The partners announced plans to set up a joint company with a capital of $100m to engage in major infrastructure projects in Syria, especially in the energy, electricity and wastewater sectors.

The deal was struck during a visit by Kuwaiti Prime Minister Sheikh Nasser Al Mohammed Al Ahmad Al Sabah to Damascus, a trip which saw the two countries move to further strengthen trade and financial ties. This included a proposal to establish a joint Syrian-Kuwaiti bank and talk of increasing investments.

Allaw made his comments during a meeting of energy ministers from Syria, Jordan, Egypt, Lebanon and Turkey in Damascus dedicated to discuss the progress in the Arab Gas Pipeline Project.

The project was signed in 2001 to supply Egypt's natural gas to Jordan, Syria and Lebanon for 30 years. The first phase that links Egypt with the Jordanian Red Sea port of Aqaba was finished in 2003 while the second stage linking Aqaba with the town of Rihab north of the Jordanian capital of Amman was completed two years later.

The project's cost more than US$1.2 billion (€809 million) and it will eventually run from the Egyptian Mediterranean city of El-Arish city through Jordan and Syria to the Turkish border with a total length of 1,200 kilometers, (750 miles).

At an Arab League meeting in March in Syria, the leaders plan to reiterate support for an initiative that promised Israel normalization with the 22 members of the league in return for the creation of a Palestinian state.

Israeli officials have dismissed as "a storm in a teacup" reports from Arab League officials that the organization may withdraw its 2002 peace plan unless Israel explicitly accepts the initiative.

Commentary by Joshua Landis 

The situation in Lebanon becomes ever more dire as word circulates that Saudi Arabia is withdrawing its ambassador from Syria. The stalemate in Lebanon over the presidency threatens Lebanon's economy. Lebanese authorities are asking Saudi Arabia to plug the holes in the country's economic dike by upping its deposits in Lebanese banks and helping to subsidize the public debt, which cannot be refinanced.

The Syrian government and Lebanese opposition parties insist that for the Presidential crisis to be solved, the Lebanese government must concede an "enabling" third of the cabinet to the opposition.

Syrian authorities argue, "Lebanon is no longer a card that Syria can play in the region. It is a card that is being used against us. We have no choice but to neutralizing it." For this reason Syria believes its allies must have a third share of cabinet seats in the next government. This will ensure that the US cannot use Lebanon to threaten Syrian interests through international tribunals, Security Council resolutions, or by disarming or attacking Hizbullah and its allies in Lebanon.

Syrians claim that the US and its March 14th allies treat Lebanese politics as a zero-sum game. They insist on dominating the political scene. Syria and allies call the third representation that they seek in the cabinet an "enabling third," rather than a "blocking third," as March 14 calls it. This is because they insist that only through power-sharing will the Lebanese enable a new government to come into existence and end the present crisis.

"Syria has no interest in hurting Lebanon or 'burning' it, as some claim," one Syrian official told me. "It is in Syria's interest to have a prosperous Lebanon, as we demonstrated in the 1990s. We want regional growth and prosperity, because then all ships will rise, but we cannot allow Lebanon to be used to undermine us and destabilize Syria. What is so horrifying about allowing the Lebanese opposition one third of the cabinet to protect itself and veto measures meant to hurt it? Why must the US and March 14th insist on a zero-sum game? It is not Syria that is the spoiler in Lebanon, it is March 14th and its allies in Washington who refuse to compromise. They have become stubborn and intransigent."

Syria and its Lebanese allies have no intention of abandoning the Lebanese government to Saad Hariri, Jumblat, and Geagea. They believe that they have the better position from which to wage the economic war that will surely decide the fate of both Lebanese and Syrians.

Saudi Arabia Withdraws Ambassador From Syria, Al Watan Reports
2008-02-27 02:01: By Nadim Issa

Feb. 27 (Bloomberg) — Saudi Arabia withdrew its ambassador from Syria as the two countries clash on how to resolve Lebanon's current political crisis, the Syrian daily Al Watan newspaper reported, citing unidentified diplomats. The kingdom will move its official to Qatar where it hasn't had an ambassador for some 5 years as the two neighboring countries disagreed over content broadcast on Qatar-based al Jazeera television, the report said.

Syria: 'Important results' in Mugniyah murder probe Ynetnews, Israel – 9 hours ago

Sources say probe points to involvement of Arab country in killing Syria has reached "important results" in its investigation of the assassination of …

Egypt's Mubarak says Syria part of Lebanon crisis Reuters South Africa

"The summit will be held in Syria and Syria is linked to the Lebanese problem. Therefore I hope that Syria would solve the problem," Mubarak said in remarks aired on Al Arabiya television on Tuesday. "We should not be (in Damascus) resolving a problem that Syria is a party to," Mubarak said during a visit to Bahrain as part of tour of Gulf Arab countries aimed at unifying positions ahead of the annual Arab League summit.

Arabiya said Mubarak's remarks, among his most explicit comments regarding Syria's role in the crisis over electing a new president in Lebanon, were originally broadcast by Bahraini television.

Lebanese Prime Minister Fouad Siniora said last week the Arab summit would collapse if Lebanon remained without a president because of a power struggle pitting his Western-and Saudi-backed government against an opposition led by the Shi'ite Hezbollah group, supported by Syria and Iran.

Lebanon Wants Arab States to Loan Funds, Salameh Says
By Massoud A. Derhally

Feb. 27 (Bloomberg) — Lebanon's government wants Arab states to lend it money to finance the fiscal deficit and help maintain its currency peg as a political crisis prevents it from selling new bonds, central bank Governor Riad Salameh said.

The country has had no president since November and the government is unable to push laws through parliament. Its debt totals more than $41 billion, according to the Economist Intelligence Unit, or 190 percent of gross domestic product.

“The objective of the government was to generate deposits from Saudi Arabia and other friendly countries so that the balance sheet of the bank remains strong,'' Salameh said in an interview in Beirut yesterday. The government “cannot issue new debt and therefore meet foreign currency obligations without recourse to the reserves of the central bank.''

Lebanon needs the money to finance a fiscal deficit that reached 10 percent of GDP last year. It also needs to guarantee a currency peg that ensures confidence in the banking system and enables the country to attract billions of dollars from the Lebanese community living abroad. For the moment, all the government can do is roll over its existing debt.

On Feb. 8, Aref al-Abed, spokesman for Prime Minister Fouad Siniora, said in an interview that Saudi Arabia may deposit $1 billion in Lebanon's central bank to shore up the country's financial system. Salameh said Siniora was also talking to Kuwait and the United Arab Emirates about deposits.

Saudi Arabia deposited $1 billion and Kuwait $500 million in Banque du Liban during the 2006 war with Israel, when the country's exchange-rate peg to the dollar came under pressure.

Political Crisis

Lebanon has been without a head of state since Nov. 23, when Syrian-backed Emile Lahoud left office at the end of his term. Lawmakers have failed to elect a new president on 15 occasions.

“The key factor for the resilience of the Lebanese financial and monetary system is the stability of the Lebanese currency,'' said Nassib Ghobril, head of research at Byblos Bank. “Going to the Gulf countries is a preventive measure in case there is any pressure on the currency and it helps the government meet its financing needs in the absence of privatization and a functioning parliament.''

Lebanon has $12.6 billion in foreign currency reserves, Salameh said, compared with the record $13 billion they had in March of last year.

The currency peg helps ensure that many of the 12 million Lebanese living abroad deposit part of their savings in local banks. Deposits grew last year by more than 10 percent, or about $6 billion, Salameh said.

Economic progress in the country has been hurt by the political stalemate between the ruling pro-Western governing coalition and the Syrian-backed opposition.

Last month Lebanon's government postponed the auction of two mobile-phone companies, which it hopes will raise more than $7 billion, because of a political stalemate.

By Ford Prefect 

No.  Not under the current US Administration according to Dr. Alon Liel, Head of the Israel-Syria Peace Society and former Director General of Israel's Ministry of Foreign Affair.  Dr. Liel was speaking at the Middle East Institute in Washington last Thursday to a packed audience. 

Audio recording of Alon's talk.

Liel spoke out of his strong beliefs that the key to peace in the Middle East is to negotiate with Israel's enemies and not its friends or "made-up" friends.

The lecture was, of course, attended by a fun-sized contingent of sworn anti-Syrian Lebanese ideologues trained by the U.S. neocons. While their agonies over the past Syrian hegemony over Lebanon are understood and legitimate, these ideologues continue to undermine otherwise legitimate needs by trying to impose neoconservative ideals that have fizzled and cracked, repeatedly, in Iraq and elsewhere. Luckily, Liel avoided these landmines and presented an eloquent case of how to break the deadlock.

In addition to reciting the intriguing history of the private channel negotiations between Liel and the Syrian-American Abe Soleiman, here are some interesting remarks from Liel's informative lecture.

The cause of the current impasse, or bottleneck, to peace in the
Middle East is, in fact, Washington.  Olmert's government does not want to re-start talks with Syria because such talks will "upset the Americans."

For the first time in Israel's history, there is a sworn enemy (Syria) that wants to talk peace to Israel and Israel is refusing. Liel underscored the fact that Israel negotiated peace in the past with its sworn enemies and not its friends.  Not talking to Israel's enemies, is in fact, a U.S. policy and NOT and Israeli one.

The American attitude of "do not talk to your enemies until they surrender" is not working.  Moreover, the American administration is still dreaming that if they send more money and weapons to Fatah's Mahmoud Abbas, he will eventually prevail.  Liel indicated that Abbas gets weaker with every dollar and every weapon given to him by the U.S. and Israel.

Liel indicated that there is no shortage of people with whom Israel can make peace.  But these people are not really the ones that can deliver peace.  Liel indicated that the Iran/Syria/Hezbollah/Hamas alliance is in fact getting stronger and not weaker.  In his opinion, Syria is the most important part to the survival, or the dissolution, of that alliance.

There were many excellent points made by Liel for those of us who see a resolution of the conflict through peaceful means rather than military ones.  One must stop and admire the courage of Liel and his supporters – who of all places, in Israel, have formed, registered, and received funding for an organization called the Israel-Syria Peace Society.  A Syrian parallel to such a grassroots, policy-influencing movement is now highly desirable.

What is striking about Liel's movement is the rigor he is applying to pursuing peace with Syria.  He is stopping in Washington to appeal to all U.S. presidential candidates to break the deadlock and start negotiating peace with Syria.

Of course, there are those who insist that talking to Syria will only strengthen the regime's intransigence and reward Syria for acts of violence.  Liel correctly disagrees.  If Syria is to be offered a respectable deal – a deal which is based on reclaiming its territorial rights Liel argues that a change of behavior, for the better, is the natural outcome of such a peace deal.

One last note of historical enthrallment:  Liel recited how, in 1983,
Israel found in Lebanon a faction that it liked with which it struck a peace treaty:  the Christian Maronites led by the Gemeyel family.   A peace treaty between Israel and Lebanon was formally signed in 1983.  Liel was the one who received the new Lebanese ambassador in Jerusalem, Pierre Yezbeck.  Yezbeck, with a pocket full of money, wanted to rent a space for the Lebanese embassy in Jerusalem – never mind the fact that even the U.S. was not ready to establish its embassy in Jerusalem.

Yezbeck settled on a nice floor in Jerusalem's Wolfsen Tower, overlooking the Knesset.  Soon thereafter, Liel helped him fly the Lebanese flag high over that building.  Meanwhile, an Israeli embassy was promptly set up in Dbayyeh, outside of Beirut.

Liel was citing this example for historical context:  for peace to last in the Middle East, Israel's enemies must come to the table, and not its friends.  He mentioned a story about Farid Ghadry, who upon visiting Israel last year, asked the Israeli Knesset to refrain from giving the Golan Heights to Assad.  He wanted Israel to give the Golan Heights to him once he became president of Syria!

Liel spoke out of principle that while Israel will never compromise its security; negotiating peace with its enemies is a true Israeli value.  He regretted the impossible deadlock placed by the current U.S. administration while yearning for a true Israeli leader like Rabin who can be courageous enough to put Israel's interest ahead of the narrow-minded one dictated by Washington.

The Carnegie Endowment has published the best short overview of the Middle East situation I have read. Read the entire Pdf file.

"The New Middle East," by Marina Ottaway, Nathan J. Brown, Amr Hamzawy, Karim Sadjadpour, Paul Salem, Carnegie Endowment for International Peace, February 2008 .

Full Text (PDF)

• Lebanon and Syria: The Bush administration narrative that sees Lebanon as the battleground between democracy and autocracy must be replaced by a more accurate perception of a deeply divided country where all factions invite outside intervention. The United States needs to work towards compromise in Lebanon, rather than promote confrontation, and realize that compromise includes accepting an armed Hizbollah and a degree of Syrian influence.

Israel and Hizballah on High Alert
NICHOLAS BLANFORD, Time Magazine

Hizballah believes that Mughniyah's assassination is part of an Israeli plan to decapitate the leadership of militant anti-Israel groups as a precursor for launching a new war against the Shi'ite organization. "Mughniyah was killed in the context of an open and comprehensive war through which Israel is preparing for another war," Nasrallah said at a ceremony Friday marking the beginning of the annual "week of the resistance," in which dead Hizballah leaders are honored.

Nasrallah warned that Hizballah was more than ready to fight another war and threatened Israel that its army would be destroyed if it entered Lebanon. "We will kill you in the fields, we will kill you in the cities, we will fight you like you have never seen before," he said speaking via a large television screen before an audience of tens of thousands of supporters. "Your army will be destroyed in the south and so will your prestige and you will remain without an army. Israel cannot last without an army."

It's the Middle East, Stupid (Argues regional Israeli War could break out easily)
By Michael B. Oren
Wash. Post: Sunday, March 2, 2008; B02

Pakistan: Two conflicting stories about whether Musharraf will step down

Pervez Musharraf 'will exit in days, not months'
By Massoud Ansari in Islamabad (Feb 26, 2008)

Asif says he will seek to work with Musharraf
By Masood Haider in Dawn (Feb 25, 2008)

Syria sees no chance for peace this year

By RAMIT PLUSHNICK-MASTI, Associated Press Writer
Mon Feb 25, 4:33 PM ET

PITTSBURGH – Israel and Palestinians will not reach a peace deal this year, and a recent Mideast peace conference in Annapolis was only "an exercise in public relations," Syria's ambassador to the United States said Monday. 
 
Imad Moustapha said President Bush has no real desire to broker a peace deal and that there are powerful forces within his administration who believe "chaos is constructive" in the Middle East.

"I don't know who he is referring to," responded Tom Casey, a U.S. State Department spokesman. "I certainly know that we have serious and ongoing concerns about Syria's unconstructive role in the region."

The White House accuses Syria of harboring terrorists, supporting Hezbollah — a Lebanese group classified by the United States as a terrorist organization — and of allowing insurgents to freely cross its border into Iraq. Moustapha said Hezbollah leaders will remain active in Syria despite the mysterious killing earlier this month of one of the group's top commanders, Imad Mughniyeh.

Moustapha represented Syria at the Annapolis, Md., conference in November, and later expressed optimism that the talks could ease tensions between Washington and Damascus.

But in an interview with The Associated Press on Monday, hours before he was scheduled to speak at Carnegie Mellon University in Pittsburgh, Moustapha said the United States only makes positive statements about Syria when it serves a political purpose.

"We believe that the whole Annapolis thing was an exercise in public relations," Moustapha said. The only thing that happened there was "people were smiling and saying 'cheese.'"

Moustapha added, "I don't think there is a unanimous belief among the administration, across the departments of this administration, that peace should be the path forward in the Middle East."

Palestinian officials are also pessimistic, he said, adding that they have told him no progress has been made in one-on-one negotiations with Israel.

Bush announced in Annapolis that Israel and the Palestinians would relaunch long-stalled peace talks with the goal of reaching a deal by the end of this year. Since then, high-level talks have been held, including several meetings between Israeli Prime Minister Ehud Olmert and Palestinian leader Mahmoud Abbas.

No breakthroughs have been reported, and the talks have been overshadowed by increasing violence along the Israel-Gaza border and Israeli construction in areas the Palestinians want for a future state.

Bush is happy with Annapolis' outcome and has no "real enthusiasm" to pursue matters further, Moustapha said.

"They have now their photographs for their memoirs," he said. "The Syrian leadership does not believe that this year will witness any major movement."

He said Syria's investigation into Mughniyeh's killing in a Damascus car bombing is progressing. He said Damascus will allow Hezbollah to remain active because it is popular throughout the Muslim world, viewed by many as successfully resisting Israel.

Many Muslims and Arabs believe Hezbollah's resistance led Israel to end its 18-year occupation of south Lebanon in 2000. Many also believe Hezbollah was victorious in a 2006 war with Israel.

Hezbollah leaders have accused Israel of killing Mughniyeh and have vowed to retaliate. Israel has denied involvement in the Feb. 12 car bombing. Mughniyeh, who helped set up the Shiite guerrilla group, was one of the world's most wanted terror masterminds, accused by the West of killing hundreds in suicide bombings and hijackings in Lebanon and around the world.

Syria demands Israel withdraw from the Golan Heights, a strategic plateau it captured in the 1967 Middle East war, as part of a peace deal.

Moustapha has been Syria's ambassador to the United States since 2004. At times, he has said he is the loneliest ambassador in Washington, because no one in the Bush administration will talk to him.

Posted by Alex 

Sanctions on Businessman Target Syria's Inner Sanctum
U.S. Action Alleges Corruption

By Robin Wright
Washington Post Staff Writer
Friday, February 22, 2008; A18

The Bush administration yesterday froze the U.S. assets and restricted the financial transactions of Syrian businessman Rami Makhluf, a powerful behind-the-scenes middle man for the Syrian government, in a move targeting the political and economic inner sanctum in Damascus.

As a cousin of Syrian President Bashar al-Assad, Makhluf, 38, is a key player in the Assad dynasty and is the force behind Syria's effort to privatize state-owned enterprises. However, his power over vital business monopolies has helped the government retain control over Syria's most important economic assets, according to U.S. officials and outside experts.

"Once you hit Rami Makhluf, you're at war with Syria," said Joshua M. Landis, a former Fulbright scholar in Syria who teaches at the University of Oklahoma. "When you sanction Rami Makhluf, you're also sanctioning all the people who deal with him, including the wealthiest and most powerful people in the country."

The Treasury Department sanctioned Makhluf under an executive order citing Syrians for alleged corruption. "Makhluf has used intimidation and his close ties to the Assad regime to obtain improper business advantages at the expense of ordinary Syrians," said Stuart Levey, undersecretary for terrorism and financial intelligence. "The Assad regime's cronyism and corruption has a corrosive effect, disadvantaging innocent Syrian businessmen and entrenching a regime that pursues oppressive and destabilizing politics, including beyond Syria's borders, in Iraq, Lebanon and the Palestinian territories."

The move freezes any assets Makhluf holds in the United States and restricts his transactions through U.S. financial institutions. The impact, however, may be largely political and psychological, as he is unlikely to have identifiable U.S. holdings, experts said.

The action was taken under a presidential executive order, signed on Feb. 13, which expanded sanctions on Syria — covering support for activities related to terrorism, narcotics and intervention in Lebanon — to include corruption.

The ruling Syrian dynasty was crafted with the marriage of Hafez al-Assad, the longtime president who came from a rural background and was the first in his family to graduate from high school, to Anisah Makhluf, who hailed from a wealthy Syrian family. Since a military coup in 1969, the Assads have controlled politics while the Makhlufs have been big business players. The tradition continues in the next generation, with Bashar al-Assad as president and Rami Makhluf as a leading force in business.

Makhluf is a top player in Syria's telecommunications, commercial, energy and banking sectors, said Matthew Levitt of the Washington Institute for Near East Policy.

"The considerable role the Assad family, their inner circle and the Syrian security services exert over the economy, coupled with the absence of a free judicial system and the lack of transparency, concentrates wealth in the hands of certain classes and individuals," the Treasury Department said in its announcement. "In turn, these classes and individuals depend upon this corrupt system for their success and fortune. Syrians without these connections are unable to improve their economic standing."

The Bush administration has expanded punitive measures against Damascus in recent months, with the Makhluf family coming under scrutiny. In November, the Treasury sanctioned Hafiz Makhluf, Rami's brother, for his connection with efforts to reassert Syrian control over Lebanon. Syria ended its 29-year occupation of Lebanon in 2005, but U.S. officials have charged that Damascus has been linked to subsequent attacks on Lebanese politicians.

"With these moves, the president of the United States is making it clear that the Syrian regime is anathema and unacceptable to him," said Ammar Abdulhamid, a fellow with the Brookings Institution's Saban Center. The U.S. action comes as the Syrian economy is vulnerable. Oil production is falling, and revenue from oil exports has accounted for as much as half of Syria's government budget, Landis said.

"A lot of people think of Makhluf as a highway robber, and in some ways he is. But he is also one of the few people who can work through the system to get things done," said Landis, referring to Rami Makhluf. "All kinds of banks and people and foreign investors who want to join in Syria's development are going to think twice and think 'What's going to happen to me?'