For months the U.S. has quietly insisted that Damascus give up the funds. Secretary of State Colin Powell met with Syrian President Bashar Assad in May and made that unpublicized demand. Top Syrian officials have been given the names of at least two suspect banks and provided with account numbers.
Syria's private responsethat unspecified accounts were being frozenwas judged woefully inadequate. Publicly, Syria denies there is any Iraqi money in the country. But just over two weeks ago, the U.S. sent two American financial experts and two representatives of the Iraqi Central Bank to Syria to comb through records. U.S. officials now assert that Damascus has given them only "limited cooperation."
In the run-up to the war, Syria was among Iraq's principal trading partners, buying more than $1 billion worth of cheap oil annually in violation of U.N. sanctions. Since the war, U.S.-Syrian relations have deteriorated sharply. A congressional bill, which President Bush has signaled he won't veto, accuses Syria of sponsoring terrorism, seeking weapons of mass destruction and occupying Lebanon. It was approved by a House committee last week, three days after Israel attacked an alleged Palestinian terrorist camp outside Damascusan act Bush, notably, did not condemn. Syria may also be courting economic isolation: its banks could face Bush-imposed sanctions under the Patriot Act, which would effectively bar them from world capital markets. Warns the senior official: "We have made it plain that if access to records and cooperation continue to be restricted, we reserve the right to impose economic counter-measures."