Kimberly Ann Elliott and Owen Barder of CGDEV write this short note on the topic.
They say trade sanctions are not enough to pressurise Syria’s despot. A new tool is needed which says that all new contracts with the Assad regime are illegitimate and need not be honored by a legitimate successor government:
It’s time to try a new tool that would strengthen existing measures: preemptive contract sanctions. This would take the form of a declaration that any new contracts with the Assad regime are illegitimate and need not be honored by a legitimate successor government. Such a declaration would discourage new contracts with or loans to the regime because of the increased risk that that they would be repudiated by a successor government.
Discouraging new contracts would make it harder for the regime to sustain itself. It could encourage senior officials or military officers to abandon the regime and cause outsiders considering doing business with the regime to drive a harder bargain. If contracts are signed despite such a declaration, it would lessen the burden on a legitimate successor government, which could repudiate such contracts without endangering access to international credit markets.
They say unlike trade sanctions which are worked upon, contract sanctions will be difficult to get by:
How would this work? Suppose the United States and the United Kingdom, which are home to the world’s leading financial centers, acting with support of the European Union and the Arab League, announced that any new contracts signed with the Assad regime are illegitimate. How would governments and firms considering doing business with Assad respond? Would Russians continue to sell weapons, knowing they might not get paid and that their contract could not be enforced? Would China and other countries risk investing in Syria’s oil sector, knowing that the contract—and promised oil deliveries—could be repudiated if the Assad regime falls?
Will this work? I mean how difficult is it to work on contract sanctions just like the trade sanctions. I don’t think any of these sanctions can really work unless the whole world decides not to do any business with Syria…
But a nice thought. Needs to expanded further using eco perspective..