SANCTIONS: REACTION TO THE SHAWKAT DESIGNATION

C O N F I D E N T I A L SECTION 01 OF 02 DAMASCUS 000276

SIPDIS

SIPDIS

NEA/ELA
NSC FOR ABRAMS/DORAN/SINGH
TREASURY FOR GLASER/LEBENSON
EB/ESC/TFS FOR SALOOM

E.O. 12958: DECL: 01/24/2015
TAGS: ECON EINV ETTC PGOV SANC SY
SUBJECT: SANCTIONS: REACTION TO THE SHAWKAT DESIGNATION


Classified By: CDA Stephen Seche for reasons 1.5 b/d.


1. (C) Summary. The Treasury Department,s designation of
President Asad,s brother-in-law, Asif Shawkat, received
considerable regional press coverage and stirred some
internal discussion in Damascus. The move was quietly
welcomed by most groups, including the Sunni business
community, though many questioned the timing. Our European
colleagues say they lack the legal tools to take similar
unilateral action, but are prepared to designate anyone
identified by the UN sanctions committee as complicit in the
assassination of former Lebanese PM Hariri. Asif Shawkat
himself is reportedly unfazed by the designation and prepared
to discuss ways to improve relations with the US. End
summary.


2. (C) Like the previous designation of deceased Interior
Minister Ghazi Kanaan E.O. 13338, the January 18 Treasury
Department order to freeze any assets belonging to Asif
Shawkat, and prohibiting US individuals from conducting
transactions with him, received significant regional media
coverage though it wasn't reported in the local,
state-controlled press. Syrians we,ve talked to have
quietly applauded the designation, though unsure of what
practical effect the sanctions may have. Dr. Abdul Rahman
Attar, the head of one of the most important Sunni business
families in Damascus, commented to us that the designation
was a positive step and wondered aloud when there would be
others. He drew a hopeful parallel between Asif Shawkat and
the deceased former Interior Minister Ghazi Kanaan, who was
designated under the same Executive Order in June of 2005 and
ended up dead by what was officially deemed a suicide some
four months later. According to Attar, the Damascus rumor
mill is actively speculating on the health of Shawkat,s
relations with President Asad following the designation.

The Europeans
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3. (C) The EU mission in Damascus, which was unaware of any
of our previous 18 designations of individuals and entities,
did take notice of Shawkat,s designation. Loic Lallemand
Zeller, EU pol/econ counselor, commented to us that the
designation triggered an internal discussion within the EU in
Brussels and among his colleagues at other European missions
in Damascus. According to Zeller, the EU has no legal
mechanism similar to the US International Emergency Economic
Powers Act (IEEPA),or consequently E.O. 13338, for placing
financial sanctions on individuals or entities outside of a
UNSCR. Zeller said that it has taken months of discussion
between the European Commission and the European Parliament
to create a mechanism to implement UNSCR 1636, which calls
for financial sanctions on individuals named as suspects in
the Hariri assassination. Parliamentary action is necessary
for each new UNSCR, according to Zeller. Zeller expressed
confidence, however, that within days the EU, and all member
states, would be in a position to take immediate action to
place financial sanctions on any Syrian named by the UN
sanctions committee.

Timing
--------------

4. (C) All our interlocutors of the last week looked for
significance in the timing of the Shawkat designation. Abdel
Kader Husrieh, informal economic advisor to Deputy Prime
Minister Abdullah Dardari, commented to us that the
designation came at a time when the SARG felt a slackening in
the international pressure it faced, with the local
impression being it has found a way to manage the UNIIIC
investigation into the Hariri assasination. As proof,
Husrieh echoed a sentiment we have heard from others, that
there has been a perceptible softening of US rhetoric against
the regime since before the release of the second Mehlis
report. According to Husrieh, the SARG was therefore in a
relatively strong position to be able to shrug off any
incremental pressure, domestic or otherwise, resulting from
one of its key pillars being sanctioned.

Shawkat,s Reaction

DAMASCUS 00000276 002 OF 002


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5. (C) Shawkat,s business partner and Member of Parliament,
Hashem Akkad, insisted to us that the designation did not
worry Shawkat and would not influence his reported
willingness to collaborate with the USG in the future
(septel). Akkad said he saw Shawkat on the day following the
designation and Shawkat's mood was light. Akkad said he
pointed out to Shawkat that the USG action had no teeth but
would instead be viewed as a badge of honor by the Arab
street. Akkad also questioned the timing but was otherwise
dismissive of the significance of the USG action.


6. (C) Comment. The level of the regional media coverage
and resultant Syrian awareness of the Shawkat designation is
a positive improvement over earlier anouncements and is
likely attributable to both the subject's prominence and the
number and level of official USG statements emanating from
Washington on the designation. Similar future designations
will likely continue to be welcomed by the Damascene elite,
but having the EU follow suit would greatly amplify the
sanction's effect. It is encouraging that the EU will soon
have a mechanism in place to designate anyone identified as a
suspect in the Hariri investigation (of whom Shawkat should
be one) but it still requires action by the UN sanctions
committee to trigger the EU designation.
SECHE