Economic crisis looms as the Syrian pound plummets to an all-time low

An employee of the Central Bank of Syria packages banknotes at its headquarters in Damascus, 25/8/2011 (AFP).

 

By Rohan Advani, Walid Al Nofal

 

November 26, 2019
المقال باللغة العربية

AMMAN — Since the outbreak of the revolution in 2011, the value of the Syrian pound (SYP) has plummeted, weakening confidence in the country’s economy. The Syrian pound, which traded at 47 SYP to the dollar at the beginning of 2011 has now exceeded 700 SYP on the black market.

The pound’s collapse has resulted in rising import costs for basic commodities, widespread currency speculation and hoarding of dollars, a foreign exchange crisis at the Syrian Central Bank, and most concerning, a deterioration in the living conditions for the country’s poorest sections of society.

At a parliamentary session in September, members of the Syrian People’s Assembly explicitly criticized the government for not doing enough to boost the economy, counter corruption and improve living conditions for Syria’s poorest. MP Bassim al-Naaemeh directed his criticism at Syrian Prime Minister, Imad Khamis, saying that the performance of the government has been weak and that economic confusion has led to an unstable exchange rate. Similarly, MP Muhammad Khair al-Akkam said the government was doing little to ensure proper tax collection in the country.

In contrast, the governor of the Central Bank of Syria, Hazem Qarfoul, described the fall in the value of the Syrian pound as part of a “systematic campaign to weaken the lira [pound] and the economy, undermine confidence in the Central Bank, and incite fear among citizens to abandon their national currency.” In a telephone conversation with the state-run Syrian News Channel, he regarded the recent depreciation of the Syrian pound as “illusory,” adding that it has “no economic rationale and basis on the ground.”

This justification, however, was roundly criticized by parliamentary members. Al-Naameh, for example, characterized the governor’s response as “inconsistent with reality.”

What’s behind the recent depreciation of the Syrian pound?

Although the value of the Syrian pound has undergone a steady decrease since 2011, the black market exchange rate plummeted this year in particular, such that government attempts to remedy the situation have largely failed.
According to David Butter, a political and economic analyst at London-based Chatham House institute, the recent depreciation in the Syria pound may have been triggered by “problems in meeting fuel imports earlier in the year,” which forced “government and private traders to look around for dollars.”

In April 2019, fuel shortages in government areas paralyzed economic activity; donkeys and horse-drawn carriages roamed the streets of Damascus while people formed day-long lines outside gas stations. This prompted private and government importers to finance fuel imports through other methods, putting further pressure on the Syrian pound.
The inability to meet fuel demand is intimately linked to Iran’s dwindling capacity to provide energy to Syria. Earlier this year, Iran stopped selling oil to the Syrian government on its “credit line” – a form of financial aid provided by Iran to Syria to purchase basic commodities – and the weight of US sanctions on Iranian oil exports has aggravated the situation. Moreover, following US pressure on countries delivering oil to Syria, importers have had to rely on more expensive smuggling routes.

Another possible explanation behind the recent depreciation of the Syrian pound is the Turkish invasion of northeast Syria in October. Dubbed “Operation Peace Spring,” the Syrian National Army (SNA) with the support of Turkish forces moved into largely Kurdish-held areas in northeast Syria, east of the Euphrates. Though not as significant as fuel shortages, Butter added that the changes in the black market exchange rate “is some kind of indication that maybe the Turkish incursion is having an effect.” However, the US decision to retain Syrian oil fields – even as the Syrian government reasserts control in certain areas – has undercut hopes of generating hard currency from future oil sales.

Another important reason for the rapid decline in the value of the Syrian pound may lie outside Syria’s borders. In neighboring Lebanon, a financial crisis is continuing to unfold, with drastic pressure mounting on the country’s currency peg with the US dollar. Following the outbreak of popular protests in mid-October in response to decades of corruption and financial plunder, Lebanese banks closed for almost two weeks with many fearing a potential run on the banks.

After opening and then closing again for a week, banks reopened on November 19 to large lines of customers seeking withdrawals. However, to avoid capital flight, the Association of Banks in Lebanon (ABL) announced that cash withdrawals would be limited to $1,000 a week.

For Syrian importers, this spells disaster. Beirut continues to be the main dollar market for Syrian importers who use the Lebanese banking system. As Lebanon’s financial health deteriorates and confronts a nation-wide dollar shortage, Syrian importers are finding it increasingly more expensive to buy dollars to finance their imports. As Butter noted, “the fact that you have foreign currency shortages in Lebanon is likely to have a knock-on effect in Syrian markets.”

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Mystery identity of asylum seeker who died trying to swim the Channel unveiled by ITV

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Full article and video here

Investigation by ITV News Correspondent Dan Rivers and Foreign News Editor Jonathan Wald
This report contains images and descriptions some people may find upsetting.
His death made few headlines in Britain in August – another migrant who died trying to cross the Channel.
A photo emerged in the Belgian media, starkly showing the body lying face down having been pulled from the sea.

It was black and white but still harrowing in its portrayal of the man who was wearing a flipper and a homemade buoyancy aid; made from 12 plastic bottles and some crude netting.
He was found in a wind farm 28km off the Beligan coast – but authorities had little else information to work with. Papers he carried suggested his name was Masoud Niknam.

His body was found off the Belgian coast – wrapped in netting and plastic bottles. Credit: ITV News

That led police to think perhaps he was from Iraq.
Weeks later, we filmed his lonely burial near Bruges.
A handful of strangers watched a coffin being lowered into the ground. We were determined to investigate this tragedy, but there was little to go on.
This week all that changed when the man who presided over the funeral told us the police had handed back Masoud’s few possessions.
He entrusted them to ITV News in the hope we could find out more about the man who drowned trying to swim to these shores.
The books Masoud carried were still wet from the sea.

His possessions were few, but led to clues about his life. Credit: ITV News

They included a Koran, a Bible and some other religious texts.
It appeared the books had not been thoroughly searched – wedged into some pages were notes from a life now extinguished.
There was also Masoud’s phone.
The handset itself was ruined by the corrosive sea water – but the memory card inside was intact.
As we put it into my laptop, we thought it unlikely it would work.
We were wrong.

Hundreds of photos were on Masoud’s photo which gave clues about his life. Credit: ITV News

Straight away there were dozens of photos of the same man, clearly the owner of the phone.

It was Masoud Niknam.

Until now a faceless victim, photos on his phone suddenly restored him to a human being.

His was a face impossible to forget. Tattooed with five Shia stars across his forehead. But as well as numerous selfies there were clues about his journey through Europe. Shots of Masoud in the Alps at great altitude and hundreds of documents and letters.

ITV News has spent hours poring over these fragments of a life.

We’ve learnt Masoud had a daughter and sons and was from Iran – not Iraq as previously thought.

Mr Niknam had several photos of himself on his mobile phone. Credit: ITV News

We’ve managed to track down an aid worker and priest who both tried to help him. It’s clear Masoud was in a fragile state of mind.

His letters to the Queen and George Bush were perhaps designed to give the impression he was an Anglophile who had survived Saddam’s regime.

Aid workers told us it’s common for Iranian refugees to give the impression they are from Iraq, knowing it will strengthen their asylum claim.

The sad truth was that Masoud had been wandering Europe for 15 years, looking for sanctuary.

He briefly found peace in Marseilles at a church where he was offered a place to stay.

The statues carved by Mr Niknam at the French church where he took refuge. Credit: ITV News

In return, he insisted on working on beautiful wooden sculptures of Mary, a sign of his skill as an artist and his generosity of spirit.

We hope one day we could trace his family in Iran and return his possessions.

Their father left a strong impression on those who met him, as kind, honest, and hard working. There is no doubt he was troubled even by Europe’s refusal to offer him asylum and the prospect of returning to repression in Iran.

His swim seemed to be the last act of a man who felt he had run out of options.

Last updated Sat 16 Nov 2019

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