@ Thomas_MAJALLAThomas Alberts
(Reuters) - Businessmen in Syria talk of canceled contracts, disrupted trade and employees being laid off as commercial operations suffer from the violence and uncertainty that have gripped their country for the past eight months.
Mothers complain of a lack of baby milk and shortages are forcing shops in the main Damascus market to put up their shutters early.
Starved of revenues and choked by anti-government unrest in its towns and cities that has already cost 3,500 lives, Syria's crisis-hit economy could be squeezed further by pressures from outside as Washington leans on regional banks to cut ties with Damascus and Arab nations threaten economic sanctions.
Economists are already forecasting that the protests against President Bashar al-Assad, coupled with U.S. and European Union sanctions imposed in response to his crackdown on dissent, mean the economy will contract sharply this year.
Oil exports worth $400 million a month are at a standstill and Syria's tourism industry, which accounted for over 10 percent of GDP last year, has collapsed as the economy "slowly bleeds to death" according to one economist.
The Central Bank has not reported monthly data since it published figures for May several months ago, suggesting either the statistics are too grim to be aired in public or that the unrest has even disrupted basic information collection.
"Even demand for basic foodstuffs has gone down because people are only getting their essential needs," said Husam al-Izz, a merchant in the Salhia district of Damascus. "There is paralysis in sales of luxury items, and real estate too."
Lara, a web site designer in the Syrian capital, said her working hours had already been cut by nearly a half and she expected to be out of work within weeks.
"I will lose my job by the end of the year. The engineering company that I work with told me ... that because of the economic difficulties and political situation, they have to do this," she said.
Others complained of shortages. "Of course there is a lack of some foods such as baby milk, some types of cheese and meat," said Rana, a 33-year-old Damascus mother of three children.
Rana said traders blamed the shortages on the unrest, but she and several other residents also said some suppliers were hoarding or pushing up prices to exploit the situation.
Shops in the capital's Hamidiya market which used to stay open until late evening have cut their hours, Damascenes say, many of them shutting by 6 pm.
U.S. WARNS LEBANESE BANKS
Washington has made clear it does not want to see banks in neighboring countries doing business with Syria.
A U.S. Treasury official told Lebanon last week it should "ensure a transparent and well-regulated financial sector... (and) protect the Lebanese financial sector from potential Syrian attempts to evade U.S. and EU financial sanctions," an embassy statement said.
It gave no details but a diplomat in Damascus said that Treasury Assistant Secretary for Terrorist Financing Daniel Glaser, who later travelled to Jordan, delivered "a clear message to banks about their prospects of future business with the U.S. if they don't implement the sanctions."
However another diplomat in Beirut said the United States appeared satisfied with Lebanon's compliance, adding that no Lebanese bank was under specific scrutiny from Washington.
In Jordan, a senior banker whose compliance officer attended a meeting Glaser had with senior banking executives, said the message delivered to Amman's banking community was "don't do business with Syria."
The United States and European Union have imposed targeted sanctions on dozens of senior Syrian officials, as well as state businesses including the country's biggest lender, Commercial Bank of Syria.
Depositors continued to withdraw hundreds of millions of dollars from private Syrian bank accounts between July and September, figures released earlier this month showed.
But officials and bankers in Lebanon, which has close ties with its neighbor and voted against the Arab League's suspension of Syria, say there is little sign of that money being moved to Lebanese accounts.
The U.S. efforts to tighten the financial noose around Damascus came as the Arab League announced on Wednesday it had asked experts to draft economic sanctions on Syria.
It gave no details of the planned measures, and economists say it is unlikely the 22-member organization would seek to impose a total trade embargo on Syria, which would be hard to implement and would hurt neighboring countries which depend on Syria as a transit route for their exports and imports.
But oil exporting Gulf countries, which have taken the toughest stance in the Arab world against Assad, could choose to impose selective sanctions along the same lines as those announced by Western powers.
In Aleppo, the chamber of industry chairman Faris al-Shihabi said major exporters were seeking to find new markets to offset potential losses of customers in the Gulf and Turkey.
"It will be a headache and incur extra costs but we will cope and adjust and find alternative markets," Al-Shihabi said, adding that raw materials were coming from India, Malaysia, Indonesiaand eastern Europe.
Economy and Trade Minister Mohammad Nidal al-Shaar also said this week Syria would strengthen ties with Asian and African countries to offset the Western sanctions. But the search for find new customers for Syrian crude has yielded few results.
Oil industry sources say oil majors Royal Dutch Shell and Total have slashed production in Syria because storage tanks are full and the Damascus-based diplomat said only one shipment of oil had left Syria since the European Union announced oil sanctions two months ago.
ECONOMY SHRINKS
Economists have repeatedly adjusted their forecasts for Syria downwards as the unrest takes its relentless toll.
The pound has fallen nearly 10 percent on the black market and even the official rate has been allowed to slip to around 49 pounds to the dollar from 47.
Last month the International Institute of Finance predicted the economy will shrink by 6 percent this year and by a further 3 percent next year.
For Assad, who also has to finance a costly military operation to crush the unrest, the loss of state revenues means the state will have to eat into foreign reserves estimated at $18 billion before the unrest erupted in March.
Central Bank governor Adeeb Mayaleh says Syria spent $1.2 billion of those reserves financing investment projects after international financing was withdrawn. Authorities had also spent $3.7 billion financing imports, using money from a fund set up for that purpose, he told Al-Watan newspaper last month.
However the absence of detailed figures has led to speculation that the real cost of the domestic turmoil may have been significantly higher.
Businesses have been hit on several fronts.
"Most companies have canceled or reduced their contracts. I had to lay off more than half of the staff," said Yasser, who runs an Internet shopping site and owns a separate design and advertising company.
The Damascus-based businessman said he also faced difficulties getting supplies, and complained that customers could no longer buy goods online because U.S. banks had frozen their credit cards.
Officials may increasingly point to foreign sanctions for causing the crisis, but Yasser said authorities bore a greater burden of responsibility: "I blame the government," he said.
Increasing economic discontent could spell potential trouble for Assad, who has relied on support from minorities including his own Alawite sect and Christians, as well as wealthy Sunni merchants in Damascus and Aleppo.
"Most people are saying business is appalling," the diplomat in Damascus said. "But they say what's the alternative? So far there is no alternative that satisfies them."
