Enab Baladi – Zeynep Masri
The Syrian pound has enjoyed a minor surge that saw it manage to maintain an average of 2500 S.P. for every $1 U.S. dollar contrary to common speculations. This comes after the Caesar Act came into force on 17 June, which led to speculations that the Syrian pound will continue to plummet as it was closing to 3,000/$ one threshold on the day of the act’s enactment.
Economic analysts linked this to the tightened security procedures enforced by the Syrian regime on exchange offices ahead of the act’s commencement. In a statement published on its Facebook page in early June, the Central Bank of Syria (CBS), threatened to take punitive actions against “individuals” who send or receive foreign money transfers outside the bounds of the licensed exchange companies, as well as to prosecute them on the grounds of terrorism financing laws or charges of unsanctioned exchange and dealing in foreign currencies.
The regime was quick to act on its threats. On the day following the release of the statement, the Syrian Telecommunication & Post Regulatory Authority’s (SY-TPRA) licensing department issued a resolution to shut down six exchange companies which were ordered to cease their internal money transfer services across their branches and to stop sending or receiving any transfers until further instructions.
The Head of the Syrian Regime Bashar al-Assad had issued Decree no. Three early this year, which provided grounds for sentencing any entity that uses any currency other than the Syrian pound in their dealings with seven-year imprisonment with hard labor. Such entities will also have to pay a fine up to two times the original sum of the transaction, the amount paid, or the original value of the supplied goods or services. In addition, the paid or dealt sums, whether in the form of money or precious metals, will be seized according to the said decree.
This was followed by Decree no. 4 which imposes a punishment of provisional detention and a fine ranging between one million and five million Syrian pounds upon anyone who broadcasts, publishes, or republishes any fabricated incidents or false claims, through any medium, in an attempt to devalue or destabilize the value of the national money bills or its specified value in official publications, or to undermine trust in the resilience of the state’s monetary strength and bonds.
Security as the only route
Dr. Osama al-Qadi, head of the Syrian Economic Task Force, stressed that the regime’s security arm is the only means to regulate exchange rates, seeing that relying on conventional economic means would inevitably have the Syrian pound plunge to its possible lowest value in light of the absence of credible goods and productions that can carry and maintain the currency’s value.
Speaking to Enab Baladi, Qadi accorded the regime’s reliance on “its security grip” with it losing control of the economy’s establishments in all of Syria’s 14 provinces. This was compounded, Qadi adds, by losing control of Rami Makhlouf’s network that held Syria’s economy for 20 years.
The only recourse that remains, according to Qadi, is the security route which manifested in imprisoning exchangers and shutting down exchange offices “as if they were responsible for the devaluation of the Syrian currency rather than the misguided economic and political policies.”
Cut the cord
CBS followed on the crackdown on exchange offices and unlicensed transfers with raising the fees on money transfers by 550 S.P. – from 700 S.P. to 1,250 S.P. per $1 U.S. dollar, which enabled the regime to consolidate the power to regulate money transfers exclusively in the CBS.
Qadi believes such a step will block “a significant lifeline” for the Syrian people, namely money transfers, given that it will “turn off” anyone who wants to transfer money, be it Syrians or foreigners, to Syria, especially after Assad had issued Decree no. 3.
In May 2017, the local newspaper al-Watan estimated the size of money transfers at $5 million daily with no official figures released by the Syrian regime on the value of money transfers flowing from abroad. Many Syrians living in Syria rely on money transfers as their mean of living in light of the rising prices and worsening living and economic conditions.
An economic-security impact
On the other hand, researcher Mohammad Mousa believes that those actions taken by the Syrian regime have helped reduce the dollar exchange rate despite the regime shrinking the size of money transfers flowing into its areas of control.
Regime-approved companies set the fees for receiving inbound money transfers at 1,800 S.P. per 1 U.S. dollar, compared to 2,200 S.P. on the black market, which many companies and individuals abroad resort to, according to the rates disclosed on 11 July.
This step, Mousa stressed, had a “big” impact on exchange offices in Syria and abroad. Some regime-approved offices ceased dealing with companies abroad in the wake of these decisions. Money transfers delivered by hand or received in person have also been halted. The latter was a means used by people living in areas out of the regime’s control to send money, which is no longer viable.
Speaking to Enab Baladi, Mousa noted that Syrians were affected by those decisions in both a financial and security sense, as they are now more wary of prosecutions and questioning the source of their transfers. Additionally, those who will receive transfers via a regime-approved office will have to concede some losses due to the rate disparity between those offices and the black market, which many working in the financial field are turning away from out of fear of being arrested.
