In Syria, try banks before bombs

August 29, 2013

As President Barack Obama weighs the U.S. response to chemical weapons attacks against Syrian civilians, one soft power option should still be at top of his to-do list: cutting off access to the U.S. financial system to those doing business with Syria’s Bashar al-Assad.

Russian banks and others are reported to be helping the Assad regime circumvent U.S. and EU sanctions by holding Syrian money while continuing to do business, legally, in the Europe Union and the United States. With a more aggressive and coordinated approach to financial sanctions, Obama could inflict serious capital damage on Assad’s enablers — without collateral damage in the form of slain or injured civilians.

Aggressive sanctions could be more effective than bombing in hastening the end of the Syrian civil war by imposing substantial financial costs on those who are propping up Assad — without enraging the Arab street.

Iran probably won’t abandon Assad. But if Russia is forced to choose between its banks and a regime that has become a global pariah, Moscow could opt to stop arming the Syrian government.

This banks-before-bombs strategy would require buy-in from the European Union and diplomatic heft. But it wouldn’t require a United Nations Security Council resolution against Syria — which Russia already said it would veto. It would also send an immediate message about the civilized world’s resolve to punish chemical weapons use, without invoking or precluding military action.

The United States and the European Union already have stiff sanctions that bar Syrian banks from directly doing business in Western capital markets, with cutaways that have allowed the Syrian opposition to open bank accounts. But at least three Russian banks have enabled the Assad regime to dodge those sanctions by opening accounts in Moscow.

The Central Bank of Syria, according to publicly available information, has opened euro and ruble accounts at VTB Bank, which is 75 percent 60.9 percent owned by the Russian state. Vnesheconombank (VEB) is reportedly still doing business in Syria. Gazprombank (GPB) was operating last year but now claims to have stopped.

All three banks have normal relationships with U.S. financial institutions. They borrow from U.S. banks and other financial institutions, borrow and invest in Europe and are heavily dependent on Western capital.

Washington can’t control these Russian banks — just as it hasn’t been able to stop Moscow from selling Assad the arms used to kill Syrian civilians. But Obama can force the banks to choose between business with Assad and business as usual in the United States.

Access to Western financial institutions is vital to almost every bank and corporation around the world. Will red-lining those doing business with Syria do more damage to the Assad regime than a U.S. or NATO missile strike — which will likely be followed by claims of civilian deaths, whether real or fabricated? We don’t know. Because the sanctions-on-steroids option has never been tried.

So why not try it? By executive order, the administration could require all U.S. banks and other U.S.-domiciled financial institutions to cut off customers who are also doing business with Syrian government entities.

To be sure, the United States would be accused of using its financial preeminence to dictate policy to other nations. It should plead guilty. Other nations should also deploy their commercial power to demonstrate their repugnance for chemical attacks.

This scheme would only work if the European Union adopted nearly identical restrictions — preventing rogue financiers in any country from continuing their end-run around the sanctions.

It’s no secret that such a move would likely enrage Russian President Vladimir Putin. Sadly, Putin, who prosecuted a brutal war that killed tens of thousands of Chechens and is now providing logistical and diplomatic cover for Assad, doesn’t appear enraged by the reported use of chemical weapons to kill civilians.

At a press conference in Moscow this week, Russian Foreign Minister Sergey Lavrov notably did not condemn the chemical attack. He instead reserved his fire for the West’s “hysteria” and said the United States, the United Kingdom and France hadn’t produced proof that Assad’s regime was behind the attack.

Lavrov may be correct in warning that a U.S. military strike on Syria wouldn’t end the civil war. Yet there is no need to prove that Moscow has been Assad’s key weapons supplier. In March, Human Rights First published a disturbing letter from the Syrian military to Rosoboronexport, Russia’s official arms exporter, requesting new supplies. The letter reads like a shopping list for an urban atrocities campaign.

Financial sanctions are no substitute for direct punishment of the people who ordered or carried out a chemical weapons attack. But it’s crucial that the world’s response include steps against those who enable atrocities — not only those who commit them.

History shows that it takes more than a few murderous leaders to execute thousands. The supply chains of death require weapons, ammunition and transportation, fuel, financial services and telecommunications.

Together, nations concerned by Iran’s nuclear transgressions have managed to hurt Iranian oil sales, punish some of Tehran’s financiers, dent the value of the Iranian currency and perhaps contribute to its new president’s eagerness to reopen talks. But financial sanctions against Assad — and Iran — will never be fully effective until the United States and Europe agree to target enablers as well as perpetrators, and are braced to endure Russian displeasure.

Obama has already snubbed Putin by cancelling their planned summit meeting next month. By tightening financial sanctions against Syria’s enablers, he can make Putin’s choice to back Assad’s regime more politically costly.

While he’s at it, Obama needs to scrutinize the U.S. government’s own dealings with atrocities enablers. He could start by cancelling the Pentagon’s $1.1 billion no-bid contract to buy Russian helicopters for Afghanistan.

The Pentagon is buying the choppers from Rosoboronexport, which is supplying Assad. Worse, the 2011 contract stipulates that payment — U.S. tax dollars — be sent to Rosoboronexport’s account at VTB Bank in Moscow. This is the very bank where Assad is reputed to have stashed his own funds.

If we want to stop the use of chemical weapons, let’s start by not enriching atrocity enablers.

Correction: This article has been updated to reflect the fact that the Russian state now holds 60.9 percent of VTB Bank, not 75 percent as originally stated. A new link has been added, reporting on the change in government holdings in May.


PHOTO: A man walks in front of a burning building after a Syrian Air force air strike in Ain Tarma neighbourhood of Damascus, January  27, 2013. REUTERS/Goran Tomasevic/Files

PHOTO (Insert): Forces loyal to Syria’s President Bashar al-Assad carry the national flag as they ride on motorcycles in Qusair, after the Syrian army took control from rebel fighters, June 5, 2013. REUTERS/Mohammed Azakir


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YES !!!

Finally someone with a bright idea.

Send all the bankers in the US to Syria.
And include those running Fannie and Freddie too both before and after the crisis.

Make sure you send this guy

Darryl Layne Woods, the former CEO of a Missouri bank, admitted in court yesterday to using financial crisis bailout funds to purchase a luxury waterfront condo in Florida, Dealbook’s Peter Lattman reports.

Throw in Bernake, everyone at Goldman Sachs,

And don’t forget Franklin Delano “Frank” Raines
Civil charges were filed against Raines and two other former executives by the OFHEO in which the OFHEO sought $110 million in penalties and $115 million in returned bonuses from the three accused
An editorial in The Wall Street Journal called it a “paltry settlement” which allowed Raines and the other two executives to “keep the bulk of their riches.”[9] In 2003 alone, Raines’s compensation was over $20 million.

Finally a good idea.


Posted by Alexaisback | Report as abusive

An excellent option.

Posted by JL4 | Report as abusive

Iraq All Over Again

Why are the Syrian people held hostage to violance when there is available political process, one in which the country has seen three elections and a new constituion in 2012

It is difficult to appreciate how the US propose to engage with peace efforts without negotiating with the opposition? The US are repeatedly condemned for failing to denounce acts of terror in Syria which spark outrage as an endorsement of terrorism. Democracy delivered at the point of the sword, ‘sabre rattling’ to the detriment of innocent civilians can be said to be an undemocratic means to enforce democracy. A bombs & bullets democracy. The consensus that the Syrian people are the only ones who can decide on the future of the Syrian Arab Republic, including the fate of its leaders, is clearly stated in the Geneva declaration adopted on June 30.

Repeated initiatives for violence on the part of the rebels ( a quarter of which are known to be al-Qaida), despite a new constitution, multi-party elections and an amnesty contend any vehicle for peace is prejudicial without a commitment to desist from any activity that could provoke violence. The result of this rebel initiative for violence and threats have forced more than 10,000 Iraqi refugees in Syria to flee the country over the past week despite security concerns in Iraq.

I feel for the Syrian refugees. I can only imagine what it must be like, fleeing one war torn country after another as poor refugees, a lost generation.

Shaheeb Inayat Sher
Manningham Human Rights

Posted by ShahInayatSher | Report as abusive


The QE Brotherhood v. the Muslim Brotherhood.

. It is a made for Television Battle of the Nitwit Stars.

. On a serious note:

Did you see this Daryl Woods stole more than $ 300,000
and the sentence is ONE YEAR in jail or less. Darryl Layne Woods, 48, of Columbia, Mo., could be sentenced up to a year in prison and may also have to pay a $100,000 fine.

Of course with “good time” he will probably due say 6 months and that will probably be in a Fed prison.

. But a poor black or white youth steals $ 1,000
and they are in jail twice that time. Or if undocumented worker stole, jail and Deported.

This Obama administration speaks out of both sides of the mouth.

They say they protect the poor black, BUT THEY ARE BUILDING MORE PRISONS

And they let the wealthy go — what a shame.

August 27, 2013 (just days ago)

Darryl Layne Woods, the former CEO of a Missouri bank, admitted in court yesterday to using financial crisis bailout funds to purchase a luxury waterfront condo in Florida, Dealbook’s Peter Lattman reports.

. NOW LOOK what Obama and Holder do in Louisiana

To Celebrate Martin Luther King they sue

Holder and Obama sued the state of Louisiana to block its school voucher program largely designed to help minority children. The DOJ sued to stop 34 school district from giving out private-school vouchers, claiming that such vouchers slowed the “desegregation progress.”

A full 90% of the children who benefit from the voucher program are black.

. Well I think it is hypocrisy. And a shame.



Posted by Alexaisback | Report as abusive


The six biggest TBTF ( Too Big to Fail) banks incurred $103 billion in legal costs since the financial crisis – $56 billion in legal fees and litigation expenses and $47 billion to settle with mortgage investors – according to Bloomberg’s calculations.

. And from what I know,

Not a single banker
from any one of the 6 TBTF
are prosecuted and in jail !


. Sue Louisiana for sending kids to school !


Posted by Alexaisback | Report as abusive

Since both sides are dominated by bad guys doing thing Assad does not further US interest. If we want enforce international law without helping jihadists we either strike at Assad’s chemical warriors or give the rebels limited quantities of gas to get vengence wit something in addition if use it up quickly or return it. The last thing we want is for them to a a stock pile to use against us when and if they take over Syria.

There is no major existing side in Syria we want to win. What we need for the bulk of the Syrians to try and get rid both sides, because they are sick of being killed.

Posted by Samrch | Report as abusive

“But it’s crucial that the world’s response include steps against those who enable atrocities — not only those who commit them.”

That could be a somewhat awkward sentiment to espouse, considering the recent revelations of CIA involvement with Saddam’s use of chemical weapons against the Iranians.

Posted by delta5297 | Report as abusive

Let’s do both. Blow him to kingdom come and cut off his funds.

Posted by upinarms | Report as abusive

Dear Sonni.Another similarly bright idea for ‘soft power’ could be simply waiting for Assad, Putin, Obama, China and Iran to die out naturally. At least my idea above will render less casualties, being that it could happen faster then your scheme.

Posted by Nietzschele | Report as abusive

“Washington can’t control these Russian banks…” Doesn’t that just say a lot!?

Posted by duartmc | Report as abusive

Thanks Fiona – good point. For most of us, orienting our lives towards love is a huge change. However, once it takes hold, the economic problems usually fade into the background. I’ll reflect on that for the next book
Thanks Fiona – good point. For most of us, orienting our lives towards love is a huge change. However, once it takes hold, the economic problems usually fade into the background. I’ll reflect on that for the next book

Posted by Aqibarif74 | Report as abusive

TV show hosts lead many different types of television shows in front of live studio audiences. They contribute to the preparation and editing of the content of the show and strive to keep the attention of the live audience as well as people watching the TV show at home

Posted by Aqibarif74 | Report as abusive

What we need for the bulk of the Syrians to try and get rid both sides, because they are sick of being killed.

Posted by sohails234 | Report as abusive