Enab Baladi – Hussam al-Mahmoud

The northern Idlib region is experiencing a complex economic reality made incumbent by a combination of political and economic factors that draw a different face to a governorate that is beyond the control of the Syrian regime.

The dependence of commodity and product prices on the trading rate of the US dollar against the Turkish lira, which has lost some of its financial value in recent months, inflation and high prices, unemployment, and low wages; these are some of the problems to the financial situations in Idlib, which mark various aspects of people’s lives.

Given the challenges and obstacles that the region is encountering, Idlib seeks to establish its own economic independence by paving the way before an economic recovery associated with the development of industry and trade. However, the banking sector is almost nowhere to be found in the region, which raises questions about this absence and its impact on any plans for economic growth.

The home of 3.5 million people and IDPs tries to defy the economic challenges resulting from the soaring density due to people fleeing bombardment along with the ‘reconciliation’ evacuees, who all turned northern Syria into a hefty human reservoir.

A one and only initiative in this regard was taken by the Hayat Tahrir al-Sham (HTS) in the area it controls to regulate the exchange market in Idlib. 

In June 2018, the HTS transformed al-Waseet, a money transfer, and exchange company, into the Sham Bank, based at the location of the former Industrial Bank.

Is banking a necessity?

Speaking to Enab Baladi, Dr. in economics and researcher Firas Shabo asserted that the situation in Idlib does not provide many of the conditions required to open a bank in this governorate.

Shabo explained that opening a bank entails the presence of a regulatory authority that would regulate its functioning, the processes for setting interest rates, legal reserves, and legal deposit, in addition to lending methods. In other words, there is a need for a monetary authority that supervises banks’ operational methods.

In light of the absence of such authority, the term “bank” cannot be loosely used to refer to a facility bearing the same name. Rather, it is more of a currency exchange given that the situation in Idlib lacks the minimum safety elements that would enable it to persuade capitalists into investing their money in the market or convince the authorities to protect the funds.

The economic researcher reminded that “capital is a coward” and that it always seeks stability, so it will not bring itself and its money to an “unstable or unsafe pit” marked by regime forces and Russian-induced bombing, and a state of internal security chaos that is clearly visible.

Syrian regime forces continue to repeatedly target civilian and vital areas in Idlib, as two people were killed and two others were wounded by artillery shells targeting the market in the town of Afs, east of Idlib, on 27 February, according to what was documented by the Syrian Civil Defense (SCD) teams.

The regime, through its officials, keeps talking about “taking back Idlib.” The last of these statements was made by the Syrian Foreign Minister, Faisal Mekdad, in an interview with the Russian RT channel, on 20 February.

The attacks are not limited to Russian-backed targeting carried out by the regime, which disrupts daily and social safety in the region. There are also assassinations and discovery of unidentified bodies, with widespread bombings that have claimed the lives of civilians and gunmen, as well as elements of the Turkish army.

On 20 February, the region witnessed the death of two children by strangulation, hours after they were abducted in the al-Wafaa refugee camps in Atma, north of Idlib.

The economic researcher rules out the possibility of opening an “actual bank” in Idlib, that is, in the absence of an authority that can protect it. He clarified that it is possible to establish industrial cities and trade fairs, which is adequate to stimulate economic mobility. But the establishment of banks is unlikely in light of the absence of a “genuine authority” to handle conflict resolution.

Enab Baladi contacted the Syrian Salvation Government (SSG) and inquired about the government’s connection to Sham Bank, whether there had been requests submitted earlier for the opening of a bank in the area, the licensing mechanism, and what the region needed to set up banks in it. However, Enab Baladi received a brief late response, which did not answer much questions, from the Director of Public Relations at the Ministry of Economy and Resources of the Salvation Government, Hamdou al-Jassem; he indicated that, in Idlib, there was not a bank in the truest sense of the word. Al-Jassem articulated that there are money transfer and exchange companies that exist today, which are supervised by the General Monetary Agency. Al-Jassem also explained that nothing stands in the way of obtaining licenses within the pre-established conditions of cooperation, the projects and policies of financing, and the mechanism and principle of credit-granting provided that they are in conformity with the Sharia with regard to the methods of dealing and trading.

 

Low need

In spite of the emerging features of economic growth, which is recognizable through trade increase and the launching of factories, Shabo says that the financial situation is rather poor, which has led to the unfailing control of the financial situation in the north by exchange offices and companies.

The economic researcher also questions people’s trust and desire to actually put their money in a bank in today’s Idlib while also wondering about the bank’s capacity to grant loans and set guarantees for loan repayment in the absence of regulations, laws, and legislation regulating the work of this sector.

Economist Yahya al-Sayyed Omar told  Enab Baladi that there are local, national banks, and there are branches of foreign banks. However, foreign banks do not wish to open branches in Idlib for the time being due to the fact that the Salvation Government has no international legitimacy.

Due to the absence of legitimacy, bank funds cannot be transferred completely freely, and the economic and security situation is unstable. As for local national banks, investors are not willing to invest in the financial sector for the same reasons.

With regard to the region’s need for banks, any economy, whether small or large, is in need of financial services. However, the region’s need for small and microfinance services is greater than its need for traditional financial services.

As for the reality of the region and its financial and economic activity, the deteriorating security situation directly affects the prospects for the development of economic and financial activities, as it was pointed out by al-Sayyed Omar.

The economist sheds light on Idlib’s dire need for microfinance services; early recovery activities cannot be initiated without supporting small and micro-enterprises. This support is usually provided by micro-financing institutions, which lowers the need for financing provided by traditional commercial banks.

HTS is attempting to regulate financial activities and exchange operations and prevent monopoly and currency manipulation. On 11 May 2017, Hayat Tahrir al-Sham formed what is known as the General Monetary Agency for Cash Management in Idlib, northwest of Syria, after it previously established the General Monetary Agency for Cash Management and Consumer Protection.

This agency’s job is to manage the cash movement within the “liberated areas” and to grant licenses to all money transfer and exchange companies and follow up on their work in those areas.

Endeavors

In 2018, the HTS established Sham Bank after it turned its own money transfer and exchange company, al-Waseet, into a financial bank. This bank works on receiving the transfers of the Watad fuel company, which the HTS denies having any connection with, by purchasing fuel stations and depositing the money from fuel sales in the Watad bank account.

Although there are 11 branches of the Turkish Postal and Shipping Corporation (PTT), which are considered Turkish banks in northern Syria, and are spread over the countryside of Aleppo that is under the control of the Syrian Interim Government (SIG), there are no branches of the said corporation in the areas under the control of the Salvation Government.

Turkish postal centers in the countryside of Aleppo offer the possibility of opening personal bank accounts. It also allows citizens to deposit their assets therein and to withdraw deposited amounts at any given time.

Employees’ pensions are wired via these accounts, as employees in those areas, including teachers, policemen, council employees, doctors, and Khateebs, were provided with bank cards that allow them to withdraw their salaries, in addition to remittances and external shipping services.

Enab Baladi surveyed a group of Idlib residents, and their opinions regarding the use for a bank in Idlib were divided; some considered talking about a bank in Idlib a luxury people cannot afford in light of more pressing service and living needs, while others deemed it a necessity in view of the region’s high population density.

Some citizens accentuated the trying economic situations that left people with their daily bread for a concern, as opposed to caring about the deposit and collection of money.

Concerning trusting a bank in Idlib, some of the residents confirmed their unwillingness to deposit their money in the bank in the future. Others indicated that it could be dealt with if it was licensed and possessed financial assets abroad.

Enab Baladi has reached out to the Salvation Government for details about the operations of the Sham Bank in its areas of control, and about the obstacles to establishing other banks, the mechanism for granting bank licenses, and the relations between the financial and commercial situations in the region, but have not received a response as of the time of writing this article.