The Syrian and Lebanese governments criticized a U.S. decision imposing sanctions on Syria as wrong and unfair, but Syria said it still seeks dialogue with President Bush's administration.

Lebanon may prove to be a major loophole in the sanctions — which ban all U.S. exports to Syria except food and medicine — because goods have flowed freely across the border from Lebanon to Syria.

Importers find it much easier to operate in Lebanon's free market economy than in neighboring Syria, where the economy is under tight government control.

Lebanese President Emile Lahoud (search) made clear Wednesday where his country's sympathies lay. The sanctions were "wrong in content and timing" and Syria will be able to withstand the "new injustice," Lahoud said in a statement issued by his office in Beirut.

The United States imposed the sanctions Tuesday as a response to allegations that Syria was supporting terrorism and undermining U.S. efforts in neighboring Iraq. Bush signed the order under a law that Congress passed by overwhelming vote late last year.

"This is an unjust and unjustified decision," Syrian Prime Minister Naji al-Otari (search) told reporters late Tuesday shortly after the announcement was made in Washington.

Al-Otari downplayed the effect of the sanctions. Trade between the two countries amounts to only $300 million a year and there are currently no flights between Syrian and U.S. airports to ban as the sanctions say.

"The leadership and the government of Syria believe in dialogue and have no interest in creating problems with the American administration," al-Otari said.

The sanctions authorize the U.S. Treasury Department (search) to freeze the assets of Syrian nationals and entities involved in terrorism, weapons of mass destruction, the occupation of Lebanon and terrorism in Iraq. They also restrict relations between U.S. banks and the Syrian national bank.

The United States has long complained to Damascus that it is supporting militants such as the Palestinian group Hamas (search) and the Lebanese group Hezbollah (search), and failing to stop guerrillas from crossing the border into Iraq. Syria has been on the U.S. State Department's list of countries that sponsor terrorism.

Syria regards Hamas and Hezbollah as legitimate groups fighting the Israeli occupation of Arab lands. It maintains it is trying to stop fighters from crossing into Iraq but cannot completely control its border with its southeastern neighbor.

Syrians are worried about the political effects of the sanctions. Ahmed Haj Ali, the media adviser to the Syrian information minister, said Tuesday the sanctions' "political effects are much bigger than their economic repercussions."

The U.S. pressure could set back trade and political negotiations between Syria and the European Union, Haj Ali said. The negotiations have already been delayed several months because of concerns of Britain, Germany and the Netherlands about Syria's alleged weapons of mass destruction. Syria denies it is seeking weapons of mass destruction.

A Syrian legislator, Suleiman Haddad, and Lebanon's Lahoud said America had been influenced by Israel in imposing the embargo.

"It is new evidence of the U.S. administration's prejudice and deference to Israeli policies, and it shows this administration's lack of understanding of the nature and makeup of the region," Lahoud said.

Syria maintains thousands of troops in Lebanon and is the dominant power there.

As the executive order was signed by Bush Tuesday, a group of American Jews of Syrian ancestry met with Assad, toured a synagogue and heard from members of the shrinking Jewish community in a rare visit to a country that regards Israel as its archenemy.

The delegation discussed with the president "strengthening historic, cultural and religious values," according to a report by Syria's official news agency.

It said the group was led by Jack Avital, an American Jew of Syrian ancestry.

Assad has met with American Jews and Jewish members of U.S. Congress before, but this was the first time that Syrian Jews received such a welcome in the country of their forefathers.

In 2001, Assad shocked many in the West when, in a speech welcoming Pope John Paul II in Damascus, he used unmistakably anti-Semitic language to attack "those who ... betrayed Jesus Christ and ... tried to betray and kill the prophet Muhammad."