A US push to ease the Captagon crisis in the Middle East will include co-ordination with partner countries in the region and new financial weapons, a State Department official said on Thursday.
Under the Captagon Act, which was passed last year, President Joe Biden's administration has until next month to update Congress on its plans to counter the Syria-linked drug trade.
Ethan Goldrich, deputy assistant secretary of state, told the New Lines Institute's annual Captagon conference that the strategy would include policing support, international co-ordination, economic sanctions and other financial tools.
Mr Goldrich said Washington was "particularly focused" on helping Jordan and Lebanon to battle the trafficking of Captagon and other drugs.
"We believe continued co-ordination on sanctions with our partners will help prevent elements of the Assad regime and designated terrorist organisations from using the US and international financial systems to launder drug proceeds," he said.
The highly addictive drug, which ISIS sold to fund their so-called caliphate and gave to its fighters across Iraq and Syria, has become such an important source of funding for Syrian President Bashar Al Assad's regime that experts say the country has become a narco-state.
Trade in the drug had an estimated value of $3.46 billion in 2020. Based on large-scale confiscations alone, the value of the retail trade appeared to rapidly rise in 2021 to an estimated $5.7 billion.
Mr Goldrich said recent joint sanctions imposed by the US and UK on Syrian and Lebanese Captagon producers and traffickers showed what the strategy could deliver.
Among those with sanctions imposed were two cousins of Mr Al Assad and others over their suspected role in the production or export of Captagon.
The measures were also imposed on two Lebanese men and highlight how drug traffickers – some of whom have ties to Hezbollah – enable the export of Captagon, the US Treasury Department's Office of Foreign Assets Control said.
Karam Shaar, a political economist who focuses on Syria and has led data collection efforts on the Captagon trade, argued that sanctions would have little impact on Captagon’s trade, but that the “the only way” the US can have a positive impact is “to get consumer countries on board with their strategy”.
He said it was a “top priority” for the US to work with Saudi Arabia and the UAE to make sure any response is co-ordinated among the countries.
Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
Strait of Hormuz
Fujairah is a crucial hub for fuel storage and is just outside the Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond.
The strait is 33 km wide at its narrowest point, but the shipping lane is just three km wide in either direction. Almost a fifth of oil consumed across the world passes through the strait.
Iran has repeatedly threatened to close the strait, a move that would risk inviting geopolitical and economic turmoil.
Last month, Iran issued a new warning that it would block the strait, if it was prevented from using the waterway following a US decision to end exemptions from sanctions for major Iranian oil importers.
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Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Innotech Profile
Date started: 2013
Founder/CEO: Othman Al Mandhari
Based: Muscat, Oman
Sector: Additive manufacturing, 3D printing technologies
Size: 15 full-time employees
Stage: Seed stage and seeking Series A round of financing
Investors: Oman Technology Fund from 2017 to 2019, exited through an agreement with a new investor to secure new funding that it under negotiation right now.