Syrian regime controls markets with North Korean mentality

A greengrocer selling potatoes in Souq al-Hal Market  in Damascus (Athr Press)

A greengrocer selling potatoes in Souq al-Hal Market  in Damascus (Athr Press)

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Enab BaladiZeinab Masri

“We will not allow the violation of our markets, nor the destruction of our national products, with these grave breaches. And the decree was issued to protect national industry by removing all products of unknown sources, expired, or having other issues.” With these goals, the Minister of  Domestic Trade and Consumer Protection Talal Barazi promoted the new consumer protection law passed a few weeks ago.

Since the law was approved on 12 April, the Syrian regime officials have been doing their best to promote its scope, which assigns financial penalties and prison sentences for contravening its provisions. Meanwhile, the merchants are making efforts to abolish “the unfavorable” prison sentences, calling upon the ministry to reverse its decision.

Law definition

Last April, the head of the Syrian regime, Bashar al-Assad, issued Legislative Decree No.8 for 2021 that stipulates the new consumer protection law. The law includes 83 articles that provide an overview of the provisions that govern the sale, storage, quality of goods, penalties, and the work of consumer protection societies, in addition to other general provisions.

On 2 May, the local pro-government al-Watan newspaper quoted Barazi as saying that the decree guarantees the right of producers and suppliers to determine their goods’ prices fairly based on the cost statement and the specified profit percentage.

Prices are regulated by competent committees with the participation of representatives of the chambers of industry and commerce.

The decree also guarantees the consumers’ right to know the prices, information, and data of the items, commodities, or services for which they pay. 

The purpose of the decree, according to the minister, is to protect the consumer from fraud and deception; the consumer has the right to obtain safe and suitable commodities, and these commodities should conform to the standard specifications. The consumer should be able to pay the commodities’ value with an objective and reasonable profit.

Offenses for which merchants can be sent to prison

Strict penalties, including fines and imprisonment, will be imposed on suppliers who breach provisions of the Consumer Protection Law 

  • Not less than one-month imprisonment and a fine of 400 thousand Syrian Pounds (SYP) for withholding invoices, issuing fake invoices, or supplying goods without invoices if the perpetrator was a wholesaler or a semi-wholesaler. 
  • At least one-year imprisonment and a fine between 600 thousand and one million SYP  for raising prices, refraining from the sale, or possessing materials of an unknown source. 
  • Six months imprisonment and a fine between 200 and 500 thousand pounds for trading in relief items.
  • Six months imprisonment and a fine between 200 and 500 thousand pounds for fraud in selling by weight and measure.
  • At least one-year imprisonment and a fine of one million SYP for selling goods by fraud and deception.
  • At least one-year imprisonment and a fine of five million SYP for food fraud.
  • Imprisonment at least one year and a fine of one million SYP for trading in “smart card” supplies.
  • Imprisonment from three to five years and a fine of ten million SYP for the importer or producer withholding the customs declaration, invoices, or materials.
  • At least seven years in prison and a fine threefold the value of the seized amount for theft, embezzlement, or trade in flour or government-subsidized goods.
  • One to six months in prison for a police officer to cover up wrongdoing.

Merchants have a different opinion

In an interview with Melody FM radio station on 24 April, Ali Turkmani, a member of the Board of the Federation of Syrian Chambers of Commerce and a member of the Board of Directors of Aleppo Chamber of Commerce, said that the prison sentence in the new law unpleasantly surprised merchants and almost everyone alike.

Turkmani talked about continuous meetings and communication between the chambers of commerce represented by their members with the Ministry of Domestic Trade and Consumer Protection to reach a satisfactory result for all, the most important of which is abolishing prison sentences.

The Syrian regime official considered that the imprisonment penalty is severe. The merchants are seriously concerned about this undesirable penalty. The Competition and Markets Authority (CMA) patrols have become acting like judicial police and customs agencies; they can arrest the merchants violating the new law’s provision. In addition, those merchants can be directly referred to the court. 

This law was issued amid rising food prices as well as the high unemployment rate in Syria. Thus, the Syrian regime is trying to control the prices of foodstuffs in the market by enforcing this law.

Simultaneously, the Central Bank of Syria(CBS) also presented a new price list of foreign currencies. The CBS raised the official price, which led to a temporary decrease in the black market exchange rate. However, the upcoming days will see a new decline in the value of the Syrian currency. Things will get back to square one; there will be a depreciation of the SYP again, and merchants will pay for their goods in foreign currencies as usual, according to economic researcher Adham Qadimati.

Syria, in its current state, imports most of its products from abroad. This puts Syrian merchants between the hammer of the laws enacted by the Syrian government and the anvil of fluctuating exchange rates, according to Qadimati. The Syrian regime tries to draw attention to importers and hold them accountable for this problem. In fact, the Syrian regime’s failure to establish the right economic structure is the cause of all these crises.  

In mid-April, the CBS doubled the official exchange rate and the remittance rate by 100 percent. Syria raised its official exchange rate to 2,512 to the dollar from 1,256, bringing it close to informal market rates. 

Syrian regime operates with “a North Korean mentality”

Syrian economist and researcher at the Middle East Institute in Washington, Karam Shaar, said that it is strange how the Syrian regime is still convinced that it can make producers or industrialists act in a certain way only by coercion. The Syrian regime’s recent “procedures pursuant to the new consumer protection law is like shooting a bullet in the foot instead of hitting the target.”

Shaar told Enab Baladi that such a policy could be successful in the short term. The merchants could stop selling their products at higher prices. Under a certain degree of pressure, merchants might become subject to the restrictions imposed by the government for a while. But in the long term, economically speaking, it is possible that people carrying out business or commercial activities may change their careers or close them. “This is because nothing can be done under duress.” 

The researcher pointed out that the fundamental problem lies in the fact that the Syrian regime “works with the mentality of North Korea, everything is imposed by force. This is bad. And it is strange that there is no understanding of the basic economics at this stage.”

The Syrian regime has always used merchants and industrialists, mainly in wartime, as a scapegoat to blame for its failure. This can be easily done, according to the researcher. 

He also spoke about a state of complete separation between the merchants or the industrialists and the consumers, as if merchants and industrialists are not consumers simultaneously and as if they are not an integral part of society.

Shaar indicates that “attacking the merchants and industrialists and accusing them of betraying their country just because they enjoy a better standard of living” creates a state of hatred.

Therefore, recently even “in a repressive environment like Syria,” the chambers of commerce and industry began to express their views and demand an end to the strict measures imposed on them.

Imposing prices on merchants is not a “wise” policy or a sustainable solution. According to Shaar, this policy can be implemented for one or two weeks during the war due to the pressures exerted by the security services.

 He elaborated that the security situation has eased in the regime-controlled areas, so the state cannot use this solution forever. 

Any solutions?

Adham Qadimati, an economic researcher, said that there are several factors for the rise in food prices, such as the currency’s rate fluctuation. The SYP depreciation could stop the production wheel in Syria and increase food insecurity due to the lack of the required infrastructure and a conducive environment.

The researcher explained that the control of the “war merchants and the regime’s affiliate men” over the remainder of the Syrian economy, and the employment of Syria’s resources to serve the regime’s military machine during previous years, are also among the reasons leading to a significant increase in inflation in Syria. If these problems are well addressed, there will be price stability in general. 

Meanwhile, economic researcher Karam Shaar believes that price liberalization can be seen as a solution instead of imposing certain prices on merchants by force.

He added that the International Monetary Fund (IMF) has always called on countries to liberalize prices as a preliminary step to providing support and loans. This is because “there is no force in the world like the free market in determining values fairly.”

He pointed out that the root cause of smuggling between Syria and Lebanon is that there are products sold at lower prices in one of these countries, and if there were a liberalized market, there would be suitable prices for both countries, then smuggling would end.

Al-Assad held merchants responsible for the high prices and threatened to intervene with force and severe penalties without hesitation if merchants did not cooperate, describing the exchange rate as a battle, in a meeting with the Council of Ministers at the end of last March.

In a previous phone interview with Enab Baladi, a retailer in the Bab al-Srija Market said that the Ministry of Domestic Trade and Consumer Protection prices do not take into account that a retailer is supposed to make a profit that keeps his storefront stocked and his business running.

Withholding his name for security reasons, the retailer added that the profit should cover operating expenses, bills, taxes, and other costs.

The retailer said that the ministry wants to confirm that prices are stable and everything is under control at the expense of merchants. That is why we find that all the decisions issued in recent months target retailers as if the depreciation of the Syrian currency is their responsibility.

Syria topped the list of the ten most affected countries in 2020, with food insecurity levels increasing by nearly 20 million people since 2019, according to a report issued by the Global Network Against Food Crises (GNAFC) on food insecurity in the world.

By November 2020, nearly 12.4 million people in Syria were food insecure, of whom 11.1 million were moderately food insecure, and 1.3 million were severely food insecure, according to the report.

 

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