Syrian regime tends to “barter economy” as money does not exist

Port of Latakia - 2020 (Port’s website)

Port of Latakia - 2020 (Port’s website)

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Enab Baladi – Muhammed Fansa

The Syrian Minister of Economy, Samer al-Khalil, recently talked about the signing of many agreements with a number of “friendly countries” and the activation of the barter system for goods and commodities to secure materials that are not produced locally, which raises questions about the effectiveness of this financial system in providing the country’s needs.

The Presidency of the Council of Ministers approved the Economic Committee’s proposal on 5 December to open export markets for surplus goods and locally produced commodities to the markets of “friendly countries.”

The Cabinet also approved the proposals of the Ministry of Economy and Foreign Trade, which include cooperation with federations of Chambers of Agriculture, Industry, and Commerce, to expand the establishment of exhibitions for the direct sale of agricultural and industrial products in “friendly countries” to increase the volume of exports.

It also agreed to secure a transport ship to mitigate the high costs of shipping exported products to the target countries, especially Russia, and to launch a program to support Syrian industrial and agricultural exports to Russia for a period of six months.

The Minister of Economy stressed that exporting production surpluses from the local market contributes to securing foreign exchange for the continuous import of many necessary basic materials and commodities and operating production facilities with “acceptable” production capacities.

The financial barter system, according to the book “The Economy: Principles in Action,” is an exchange system for exchanging goods or services directly for other goods or services without using a medium of exchange, such as money.

This system exists in parallel with the monetary systems in most developed countries, but on a “very limited” scale, and barter usually replaces money as a means of exchange in times of “monetary crises,” such that the local currency is either unstable (due to inflation or deflation) or due to the lack of currency to conduct trade.

Who is bartering now?

The financial barter system became famous in the 1930s during the global depression when people used it to obtain food and other various services.

The researcher in political economy, Yahya al-Sayyed Omar, told Enab Baladi that the economic barter system is considered the oldest ever in human history, and it prevailed for thousands of years before the existence of money and later and after the entry of money into the economic system, the role of barter declined to almost disappear.

Currently, some countries are activating the barter system with other countries so that it has modern economic foundations in terms of records, “bookkeeping,” value estimation, and other related concepts, according to the academic researcher.

The barter system is an effective system in exceptional cases, as it is “rarely” applied in normal cases, according to al-Sayyed Omar.

Among these cases, when Libya signed barter agreements with the Turkish side during the circumstances of the war, stipulating the collection of four billion dollars for Turkish investors from Libya by obtaining in-kind materials such as oil.

The EU also resorted to the barter system with Iran in 2018 in order to “circumvent” the US sanctions imposed on Tehran, which prevented monetary exchange with Iran. The researcher explained that the barter is effective in light of the inability to pay cash by one of the parties to the agreement.

Does barter solve economic crises?

Syria mainly imports wheat from Russia and exports agricultural food products to it, such as pomegranates, citrus fruits, medicinal and aromatic plants, ornamental plants, and fruit seedlings, according to the statements of the Syrian Minister of Agriculture, Mohammad Qatna.

Syria does not export many goods to Iran, while it mainly imports oil and its derivatives, according to the co-chair of the Joint Syrian-Iranian Chamber of Commerce on the Iranian side, Kiwan Kashfi.

At the beginning of 2022, Rania Ahmed, Assistant Minister of Economy for Economic Development and International Relations, said that the ministry’s policy focuses on rationalizing imports, focusing on priorities, and developing exports, adding that at the end of 2021, the value of Syrian exports amounted to 664 million euros.

The value of the trade balance deficit in 2021 amounted to about 3.33 billion euros.

According to a report issued by the Ministry of Foreign Trade in September 2021, Iraq topped the list of importers of goods exported from Syria, and Saudi Arabia ranked second during the first seven months of 2021.

The Gulf region’s markets are one of the places for selling Syrian products, which include foodstuffs and clothing.

The regime’s government plans to rely on the barter system in light of its inability to provide the foreign currency needed for imports, as the scarcity of revenue sources, especially in dollars, is the main motive for this trend, according to al-Sayyed Omar.

The economic researcher excludes that reliance on the barter system will contribute to solving the economic crisis of the regime’s government.

The success of the barter system requires the availability of several requirements, the most important of which is the presence of externally acceptable goods, and the majority of materials that are planned to be bartered are agricultural materials, which are in low demand in foreign markets, especially since they do not conform to international quality standards, according to al-Sayyed Omar.

In addition, the countries with which it is planned to activate the barter system are not considered to be in dire need of Syrian agricultural products.

“The success of barter requires administrative flexibility and speed in completing transactions, especially with perishable agricultural products. All of this is not available to the government of the regime, which suffers greatly from administrative sluggishness,” the researcher said.

The government of the regime sought several times to activate the barter system, but the majority of these attempts were unsuccessful, the most recent of which was with Lebanon in 2019.

Refrigerator trucks stuck in front of the Nassib border crossing with Jordan (Al-Khabar TV).

Refrigerator trucks stuck in front of the Nassib border crossing with Jordan (Al-Khabar TV).

Weak export reality

The Minister of Economy, al-Khalil, said regarding the status of exports that he would communicate with the Iraqi side to allow Syrian trucks to enter Iraqi territory again and to form a committee from the ministries of economy, transport, and finance to communicate with Jordan to discuss issues related to the “transit fee.”

Meanwhile, Fayez Qasouma, member of the Damascus Chamber of Commerce and former head of its export committee, complained that the economic committee’s most recent proposals on export are “outdated.” 

The Syrian ship to ship Syrian products, especially citrus fruits, to Russia has been wanted for about 25 years, he added.

Qasouma stated that transporting the commercial container to Russia needs to be transported to Lebanon first and then loaded onto the ship, which requires an additional two thousand dollars for each container.

He pointed out that the varieties that were successfully exported to Russia are lemons, red oranges, pomegranates, and winter eggplants.

With regard to exporting to Iraq, Qasouma explained that for about 11 years, the government of the regime has been communicating with the Iraqi side to allow Syrian trucks to enter Iraqi territory again.

He also considered that if this proposal was implemented, shipping costs would be reduced because the transportation of goods from Syrian trucks to Iraqi ones would lead to their damage.

Ayman Joban, director of border crossings at the International Federation of Goods Transport, confirmed that the fuel crisis and the rise in the exchange rate negatively affected the export movement, especially across the Jordanian-Syrian border, describing the Syrian fleet as “almost suspended.”

Joban mentioned that truck drivers and goods transport companies face many difficulties in the export movement from the Jordanian side.

Joban pointed out that the Syrian truck stops at the Jordanian Nassib Jaber crossing to transfer its goods to a Jordanian or Arab truck after “the Jordanian side imposed high fees,” which exposes the goods to damage.

Last August, Mohammad al-Akkad, a member of the Vegetable and Fruit Traders and Exporters Committee, announced that Syrian exports to the Gulf countries decreased by about 50% during that period.

Regarding the reasons for the decline in exports, Yasser Akram, a member of the Board of Directors of the Damascus Chamber of Commerce, said that the increase in costs delays exports, explaining that the rise in energy prices has a significant impact on all stages of the commercial movement from production to export.

 

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