Lebanese banks in focus to cut Syrian financial lifeline

The US and its allies are shifting their efforts to constrict Syrian President Bashar Al Assad's few remaining financial lifelines, focusing on ties to Lebanon banks as they increasingly voice confidence that economic malaise ultimately will force the regime from power. Syria's economy will contract by as much as 8 per cent this year, some independent economists project, due to cuts in oil exports and the collapse of the tourism industry on Al Assad's eight-month military crackdown on dissent. Syrians say business in the capital Damascus is suffering and residents in the second-largest city, Aleppo, have reported shortages of petrol, diesel and cooking gas. Meanwhile, Syria's central bank has been forced to limit foreign-exchange transactions to protect the country's reserves, which US officials believe have fallen below the $18 billion (Dh66.1 billion) officially claimed by Damascus. Article continues below In the newest economic assault on the Al Assad regime, the US Treasury Department and its partners in Europe and the Middle East have targeted what they believe are its principal financing channels now that its links to Europe's banking centres have been cut off. A principal focus in this campaign, according to these officials, is Lebanon. This month the Treasury sent its assistant secretary focused on illicit financing, Daniel Glaser, to Beirut to meet monetary authorities. Glaser warned the Leban-ese that their banks risked being blacklisted if they aid Syrian efforts to evade international sanctions, US officials said. The US Treasury has been focused on more than a dozen Lebanese banks with branches in Damascus, US officials have said. "We were clear that we're worried that Beirut could be a main conduit for the Syrians," said a US official who was briefed on Glaser's trip. Warning Earlier this year, the Treasury Department sanctioned one Beirut institution, the Lebanese Canadian Bank, for allegedly helping Hezbollah move hundreds of millions of dollars through the international financial system. Hezbollah, which the US designates as a terrorist organisation, has denied the charges. The banks' owners at the time denied wrongdoing; it has since been sold. US officials said the action served as a warning to Lebanese authorities that its banking system remained at risk if it is seen aiding Hezbollah, Syria or Iran. Glaser also visited Jordan and Russia during his trip, countries the US believes could help Damascus conduct business. Syria also does business with Iran, but Iranian aid to Syria is limited by Tehran's own economic difficulties. The squeeze on Syria also will tighten as a result of pledges by Turkey and the Arab League to impose their own sanctions on Damascus. Meanwhile, US and European officials are blacklisting an increasing number of businessmen, bankers and relatives of Al Assad who have allegedly helped the regime do business in recent years. Last week, the EU named 18 people who are now barred from doing business in the EU.