AMMAN Syria has banned most imports except raw materials and grains, local businessmen said on Saturday, in a move to preserve foreign currency reserves as pressure grows from a popular rebellion and Western sanctions against Syria's rulers.
The government decreed on Thursday that all imports carrying a tariff over 5 percent were banned, according to businessmen and traders in Damascus who were contacted by Reuters.
This means imports of most foreign goods, from electrical goods to cars and luxury items.
The ban suggests that Syria is feeling the effect of foreign sanctions intended to put pressure on President Bashar al-Assad to end a six-month military crackdown that has killed 2,700 people, according to United Nations estimates.
On Saturday, the European Union imposed sanctions on Syria's main mobile phone operator Syriatel and its largest private company, Cham Holding.
The sanctions also targeted a television station, Addounia TV, and three construction and investment firms linked to the Syrian military, according to the EU's Official Journal.
The moves complement an embargo on imports of Syrian crude oil to the bloc -- Syria's main market -- and a ban on EU firms investing in Syria's oil industry, agreed this week with the aim of reducing Assad's access to foreign currency.
Washington has gone further, freezing all Syrian assets in the United States and barring U.S. citizens from making new investments in Syria.
Analysts and traders say Syria's oil exports have almost ground to a halt. In addition, it appears likely to run short of petroleum products for heating, electricity production and transport.
Minister of Economy and Trade Mohammad Nidal al-Shaar was quoted in the local press on Saturday as saying that the import ban was "preventive and temporary."
He said the ban was aimed at "preserving foreign reserves and redirecting (them) to low-income sectors of the population."
"It won't affect the imports of raw materials or foodstuffs and all the essential goods that citizens need in their daily life," Shaar added. Grain bought by the state for local consumption is among items unaffected by the ban.
In the five years prior to the uprising, Syria had relaxed its previous Soviet-style ban on imports.
Despite high import tariffs, there has been huge demand for foreign consumer goods, and especially cars, which began to enter the country for the first time in decades.
Like other foreign media, Reuters is banned from Syria, but traders contacted from abroad said the import ban would stoke inflation and further erode falling business confidence.
Some businessmen said it was a sign that the unrest was beginning to exact a heavier toll than was being acknowledged by authorities, who say Syria's economy has been protected by its lack of debt and insulation from capital markets.
"There is no selling or buying. It's so bad now that traders and businessmen are not selling for cash or credit. Prices of existing foreign imports will now soar," said a car dealer in Damascus's Sabaa Bahrat commercial area who preferred not to give his name.
Along with hurting industrial output, the unrest has dealt a big blow to a tourism industry that used to account for 12 percent of foreign revenue, economists and businesspeople said.
Some businesspeople that, even before the ban, merchants had already reduced letters of credit for imports as demand fell. They said traders and even government agencies were hoarding foreign currency as worries rose that new measures to cushion the economy from sanctions could hit the Syrian pound.
"This move will only worsen the situation and add to the uncertainty," said another businessman in the Halabouni district in the capital.
"(Investors and traders) ... are holding tight and not buying any goods ... but (also) not panicking so far."
Economists and bankers say Syria's foreign reserves have been falling as the central bank sells hard currency to try to stop the Syrian pound falling on the black market.
The official rate is 47.4 Syrian pounds to the dollar, but on the black market a dollar costs 51 pounds or more.
The International Monetary Fund predicted this week that Syria's economy would contract 2 percent this year, overturning a forecast of 3 percent growth issued in April.
(Additional reporting by Justyna Pawlak in Brussels; Editing by Kevin Liffey)