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By Root 534 0

Department’s designation of CBS—the depository for the lion’s share of Syria’s estimated eighteen to twenty billion dollars in foreign-currency reserves—as a “primary money-laundering concern” under the USA Patriot Act led all US banks, as well as a number of European ones, to close their correspondent accounts. In anticipation of the move, Damascus switched state foreign-currency transactions from dollars to euros. Since oil, the regime’s lifeline, is denominated in dollars, the switch complicated the regime’s ability to fund itself. In addition, the designation scared businessmen away from CBS and toward the country’s new private-sector banks, which operate under less regime control, effectively reducing the amount of cash the regime could access.

Executive orders freezing the US assets of Syrian officials likewise made global banks and investors wary of doing business with Syrian officials and regime businessmen. In May 2008, two American executives of Gulfsands Petroleum—a company contracted to boost crude output in eastern Syria—resigned, and the company moved its headquarters from the United States to the United Kingdom after one of the company’s partners, business tycoon and President Assad’s cousin, Rami Makhlouf, was targeted by an executive order focusing on public corruption in Syria.

Later, Washington successfully pressured the Turkish mobile-phone provider Turkcell to abandon its bid to buy Syriatel, another Makhlouf-owned business. The US move was hailed by Syria’s business community, which views Makhlouf, according to a 2009 International Crisis Group report, as “a symbol of crony capitalism, resented by many colleagues for having bullied them into forced partnerships or out of lucrative deals.”

By late summer 2009, rumors swirled around Washington and the Middle East that the White House was preparing to turn a new page with Damascus. The first test of this new relationship would be over the issue that caused the breakdown in US-Syrian relations more than six years before: the flow of jihadi militants from Syria to Iraq. A CENTCOMled delegation visited Damascus and concluded a tentative agreement with Syria on a “technical assessment of Iraqi-Syrian border posts.”

Iraqi prime minister Nouri al-Maliki, miffed at being initially left out of these promising talks, visited Damascus on August 18 to seal the tripartite deal. The string of bomb blasts that greeted him upon his return to Baghdad the next day—the bloodiest in more than eighteen months and later claimed by an al-Qaeda affiliate—led Iraq to demand that Syria expel Iraqi Baathists and jihadi militants from its soil and recall its ambassador. Damascus responded in kind, effectively blowing up Washington’s initiative on the launch pad.10 The jihadi issue proved so explosive that even when Damascus had wanted to show its ability to turn a new page with the United States, it was unable to deliver. A month later, deputy foreign minister Faisal Mekdad arrived in Washington for talks that dealt almost exclusively with US sanctions and how they could be lifted.

Mekdad’s visit signaled the end of the cold war between Washington and Damascus. It was replaced with a cold détente to solve the pile of bilateral issues between the two countries and achieve the Obama administration’s goal of fostering “comprehensive Middle East peace.” Damascus might have expected that negotiations with Israel would solve other outstanding issues between the United States and Syria, but with Israel and Syria unable to even come to terms on returning to talks, it was unclear when this would happen. Perhaps the best summary of the Obama administration’s position on Syria came in an interview on December 1, 2009, by the left-of-center think tank, the Center for American Progress (CAP) with Middle East peace envoy George Mitchell. After answering numerous questions on the administration’s failed efforts to get Israeli-Palestinian talks off the ground, Mitchell turned his attention to Syria in the final question:

Question: What is the prospect of resuming talks on the Syrian track?