As many observers had expected, Russia and China used their veto privileges to block the latest attempt by members of the United Nations Security Council to take concrete measures to stop the bloodshed in Syria.
Activists reported earlier on Monday that another twelve civilians had been killed in the city of Homs, and residents reported an explosion at an oilpipeline feeding a local refinery.
Both Russia and China enjoy economic interests in the country, with the former being a key arms supplier over the years. But economic arguments are not the ones cited for the joint opposition to the move.
The People’s Daily, the newspaper of the ruling party in China, made reference to previous attempts of forced regime changes, pointing to Libya, Afghanistan and Iraq as examples of why such an approach simply does not work.
China’s foreign ministry spokesman was also quick to reject US accusations it was responsible for protecting the Syrian regime. And Russia’s Foreign Minister Sergei Lavrov went as far as to condemn the Western reaction to its veto use as “hysterical”.
The diplomatic stalemate and continued violence in cities across Syria also means its economy will continue to suffer. Foreign direct investment (FDI), trade and tourism are crucial sources of foreign currency that have dwindled since the beginning of the uprising a year ago.
That has taken its toll on the local currency, the Syrian Pound, which now officially trades at 57.9 against the dollar ; it has depreciated by a third on the black market. At the end of last month, the Governor of the Central Bank of Syria (CBS) announced that a partially managed float for its currency would be implemented. No figures have been made available when it comes to the country’s foreign currency reserves, which were close to $17 billion before the unrest.
It’s a similarly gloomy picture on the Damascus Securities Exchange (DMX), which has lost close to 50 percent in value over the last year according to its website. The overall state of the economy is all if not impossible to accurately assess, with growth estimates varying significantly for 2011 and 2012 from organizations such as the IIF and IMF to official government sources.
It’s a tightening economic clamp further exacerbated by falling oil production, down some 31 percent to 220,000 barrels per day in the fourth quarter of last year compared to a quarter earlier, data in the latest report by the International Energy Agency (IEA) showed.
Most crude exports had gone to the European Union, until a ban was instated in September of last year. Yet the sale of refined fuel products from Europe to Syria was omitted due to concerns it would hit Syria’s population more than its current government. The move followed similar US measures to isolate the Syrian regime.
The country is a small oil producer, and a domestic situation spiraling out of control will not disconcert traders due to the prospect of further losses in output, but because of the possibility of unpredictable regional implications.
Iran’s Foreign Minister Ali Akhbar Salehi warned on Al-Manar Television that any military intervention would “blow up the entire region”. Israel, Lebanon, Turkey, Jordan and Iraq share a border with Syria, and have varying cross-border ethnic and religious ties.