VZCZCXRO5052
OO RUEHBC RUEHDE RUEHKUK RUEHMOS
DE RUEHDM #0605/01 0441427
ZNY CCCCC ZZH
O 131427Z FEB 06
FM AMEMBASSY DAMASCUS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7103
INFO RUEHEE/ARAB LEAGUE COLLECTIVE IMMEDIATE
RUEHLO/AMEMBASSY LONDON IMMEDIATE 0319
RUEHNY/AMEMBASSY OSLO IMMEDIATE 0081
RUEHFR/AMEMBASSY PARIS IMMEDIATE 0340
RUEHSM/AMEMBASSY STOCKHOLM IMMEDIATE 0066
RUEHTV/AMEMBASSY TEL AVIV IMMEDIATE 0788
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RHMFISS/HQ USCENTCOM MACDILL AFB FL IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
RUCNDT/USMISSION USUN NEW YORK IMMEDIATE 0061
RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 03 DAMASCUS 000605 
 
SIPDIS 
 
SIPDIS 
 
NEA/ELA 
TREASURY FOR GLASER/SZUBIN/LEBENSON 
NSC FOR ABRAMS/DORAN/SINGH 
EB/ESC/TFS FOR SALOOM 
 
E.O. 12958: DECL: 02/07/2016 
TAGS: EFIN ECON ETTC SY SANC
SUBJECT: ASSESSMENT OF TARGETED FINANCIAL SANCTIONS AGAINST 
SARG OFFICIALS 
 
REF: A. DMS 5567 
     ¶B. DMS 0276 
     ¶C. DMS 0068 
     ¶D. DMS 0003 
     ¶E. DMS 6224 
 
Classified By: Charge d'Affaires Stephen Seche, reasons 1.4 b/d 
 
¶1. (C) Summary: Post offers the following observations based 
on its experience thus far with targeted financial sanctions 
against SARG officials and other Syrian entities.  First, 
maximizing media coverage of the designation increases the 
"name and shame" effect.  The designation of Asif Shawkat 
under Executive Order (EO) 13338 received the most positive 
reception in Syria due to Shawkat's high domestic profile, 
the various public statements made in Washington on the day 
of the designation, and the broad coverage the designation 
and statements received in regional media.  Second, 
multilateral sanctions increase our chances of seizing pools 
of assets.  Although the EU seems most willing to impose 
targeted sanctions against individuals implicated in the 
UNIIIC investigation, the recent violence in Damascus against 
the missions of several EU member states may make the EU more 
amenable to targeted sanctions outside the rubric of a UNSCR. 
 Third, using the designations to highlight regime corruption 
would undermine popular support for the SARG.  End summary. 
 
 
HIGH-LEVEL ANNOUNCEMENTS MOBILIZE COVERAGE IN REGIONAL MEDIA 
 
¶2. (C) Most contacts with whom Post interfaces consider 
targeted financial sanctions as the most legitimate 
international tool for pressuring the SARG (ref A).  However, 
to date, unilateral USG designations against SARG officials 
and other Syrian entities have had an uneven effect.  The 
designations of Rustum Ghazali, Ghazi Kanaan and Asif Shawkat 
under EO 13338, which specifically addresses SARG behavior 
toward Iraq, Lebanon, support for terrorism and development 
of WMD, have garnered the most attention.  Of those, 
Shawkat's received the most notice domestically for a number 
of reasons (ref B).  The White House and the departments of 
State and Treasury made public statements on the day of the 
designation, which were covered by regional print and 
television media, including Sharq al-Awsat, al-Hayat and 
al-Arabiya.  This ensured that a range of Syrians from the 
business elite to the street knew about Shawkat's designation 
immediately. 
 
¶3. (C) Additionally, Shawkat was the best known of all the 
designees and the closest to the Asad family itself.  Even 
though Ghazali and Kanaan were influential members of the 
regime, contacts contend that average Syrians were relatively 
unaware of their names or level of influence at the time of 
the designations.  Contacts say that Shawkat's designation 
suggested to the average Syrian that the US was beginning to 
go after members of the family and pillars of the regime. 
 
¶4. (C) Previous designations under EO's 13315 (targeting 
Iraqi FRE's and their supporters), 13224 (targeting members 
and associates of al Qaida, the Taliban and Usama bin Laden), 
and 13382 (targeting WMD proliferators) have had less of an 
isolating and limiting effect on Syrian designees.  Most 
Syrians and members of the Western diplomatic community with 
whom Post has spoken were unaware that the US had designated 
Syrian entities under those EO's (ref C).  One reason is that 
Syria is not mentioned specifically in the EO language. 
Therefore, Syrians and Western diplomats have been less 
likely to tie these EO's to the behavior of SARG officials 
and other Syrian entities.  Another reason is that these 
designations received almost no local or regional media 
coverage, partially, we suspect, because of the absence of 
USG statements that might have drawn attention to them. 
 
¶5. (C) These factors limited the designations' "name and 
shame" effect, and allowed designees like Dhu al Himma 
Shaleesh and his company SES International to successfully 
 
DAMASCUS 00000605  002 OF 003 
 
 
continue soliciting international business even though the 
Shaleeshes are known among Syrian businessmen to be 
furthering the regime's worst policies (ref D).  The 
Economic/Commercial officer at the British Embassy stated 
that a British company had opened contract negotiations with 
SES International without knowing that the US had designated 
the company and its leadership.  The British firm eventually 
decided to end negotiations not because of the potential 
consequences of doing business with a USG designated entity, 
but because of its own negative perceptions of the Shaleesh 
family's business practices. 
 
MULTILATERALIZE TO SEIZE ASSET POOLS 
 
¶6. (C) Seizing large pools of assets from designated 
individuals would be a next step in enhancing the impact of 
targeted financial sanctions.  Both Ghazi Kanaan and Asif 
Shawkat publicly expressed disdain for the USG action and 
brazenly challenged the US to find any of their assets in US 
financial institutions.  Contacts have reported that other 
potential targets already have moved their assets out of the 
US (ref E).  Future sanctions that are implemented 
multilaterally in conjunction with European allies have the 
greatest possibility to identify and freeze assets. 
Previously, developing multilateral sanctions seemed most 
likely through the UN.  Western diplomats based in Damascus 
have told us that European governments are not likely to 
follow the US lead in imposing targeted sanctions against 
SARG officials and entities unless they are implicated in the 
UNIIIC investigation into the assassination of Rafik Hariri. 
 
¶7. (C) However, recent violence in Damascus against the 
missions of several European countries may have created an 
opening in which EU member states would be willing to expand 
their thinking on targeted sanctions against SARG officials 
and other entities outside the UNIIIC track. A diplomat at 
the EU mission in Damascus stated that the mood in Brussels 
now is much less forgiving toward Damascus, and that the EU 
may consider suspending development and technical assistance 
if there are future instances of violence.  There have been 
circumstances in which the EU has imposed targeted- or "smart 
sanctions"- on non-member states without UN mandate, and 
local EU interlocutors have commented that the EU primarily 
has used sanctions to promote regional stability and support 
democracy, as well as to protect EU staff stationed abroad. 
In one case, the EU sanctioned officials of the government of 
Belarus (GOB), arguing that the GOB had violated the Vienna 
Convention for shutting off electricity and water to the 
diplomatic compound. 
 
USE REGIME CORRUPTION TO FRAME DESIGNATIONS 
 
¶8. (C) Syrian interlocutors have asked us to tie targeted 
sanctions to regime corruption in order to amplify the "name 
and shame" effect.  Corruption among regime officials is 
widely recognized and resented.  The Abdel-Halim Khaddam 
interview, in which the former Vice President criticized the 
Bashar government from a lavishly appointed Parisian 
apartment, gave Syrians the most recent excuse to 
rhetorically question how government officials could become 
so rich on their meager salaries.  Syrians are particularly 
frustrated with not having realized any tangible benefit from 
their country's oil exports, even though oil is hovering 
around $60 a barrel.  They complain that a few businessmen 
with ties to the regime, including President Bashar's 
maternal cousin Rami Makhlouf, have grown rich off Syrian oil 
revenues at the economy's expense.  Even though corruption 
alone is insufficient to trigger targeted sanctions under 
current US law, we may be able to prove- as in the case of 
Shaleesh and SES International, which set up a front company 
to funnel arms to Iraq- that the corruption is directly tied 
to activities that are inimical to US interests and security. 
 
 
¶9. (C) Several contacts even have floated the idea of setting 
up a fund for the development of the Syrian economy, modeled 
 
DAMASCUS 00000605  003 OF 003 
 
 
after the DFI, which would be financed by the frozen assets 
of regime officials.  The Syrians with whom Post speaks are 
anxious to see the tangible results of targeted sanctions and 
often question us on whether or not any funds actually have 
been seized.  The publicized seizure of funds belonging to 
Shawkat, Ghazali, or one of the Shaleeshes, combined with 
placing the assets in a fund for the people of Syria, could 
change the nature and tenor of the way Syrians talk about the 
SARG's confrontation with the international community.  Using 
our public statements to highlight the corruption of the 
designees would complicate Bashar's constant use of the 
patriot card to counter external pressure. 
 
¶10. (C) Comment: Based on our experience with targeted 
financial sanctions in the Syrian context, when the USG makes 
a big deal about new designations, coverage in regional media 
correspondingly increases.  This is the easiest way to 
increase the impact of the designations.  In addition, going 
after the main pillars of the regime, like Asif Shawkat but 
including Maher Asad and Rami Makhlouf, and calling attention 
to their corruption, weakens the regime and reminds Syrians 
that it is this regime that is stealing their national 
patrimony.  Further, in the wake of recent violent attacks on 
European embassies in Damascus, now may be an appropriate 
time to revisit targeted sanctions against SARG officials 
with our EU allies in order to improve the effectiveness of 
what has been until now unilateral action. 
SECHE