Since September, the value of the already-embattled Syrian Pound has collapsed against the US Dollar, reaching a new of of SYP790 against $1. The rapid collapse, exacerbated by economic difficulties in Lebanon, has so far gone unchallenged despite the many efforts of Damascus to stabilise the currency.
Since September, the value of the Syrian Pound has witnessed an unparalleled collapse against the value of the US Dollar. Although the value of the Syrian Pound has been going down ever since the war started in 2011 – when its value against the US Dollar was 50 to 1 – the most recent developments have raised fears even among the supporters of the Syrian Government that the economy may face outright collapse.
Marking a 12% rise in the value of the US Dollar against the Syrian Pound, the exchange rate went from SYP500 for $1 to SYP790 for $1 within the space of nearly two months. The new value, which marks a new low for Syria’s already-embattled currency, suggests that the measures implemented by Damascus to stabilise the economy are not working.
It would appear that the collapse of the Syrian Pound is not caused by a single factor, but a combination of a number of factors that have essentially created a perfect storm for the economy. The most obvious factor is the tightening of the sanctions placed on President Bashar al-Assad and the wider Syrian Government. Although numerous sanctions have been in place for much of the war, 2019 saw the implementation of a series of new sanctions by the United States and its allies. These sanctions not only targeted Syria but also Russia and, most significantly, Iran, reducing their ability to support the Syrian economy. The sanctions on Iran have impacted the shipments of oil in particular, exacerbating the fuel crises experienced periodically across Syria.
The state of the Lebanese economy has also contributed to the situation. Lebanon was the main source of the US Dollar in Syria. Furthermore, many Syrian business-people used Lebanese banks, which have significantly better global access compared to the Syrian banks. However, Lebanon’s own economic difficulties resulted in the Lebanese Government implementing restrictions on the circulation of the US Dollar. Lebanese banks were also shut down for a period of two weeks and many of them continue to have restrictions on them. These developments have resulted with Syrians losing access to their money, resulting in a liquidity crisis.
As a result of these developments, the prices of merchandise and everyday goods across Syria have seen an increase of 20%, severely reducing the purchasing powers of many Syrians. Numerous shopkeepers in government-held areas such as Latakia and Hama have gone on strikes to protest the situation.
So far, Damascus has tried to stabilise the Syrian Pound by injecting foreign currencies into the market. After the value of the US Dollar against the Syrian Pound reached SYP500 to $1, business tycoon Samer Foz donated – though some say he was forced to “donate” – $10 million. A special fund to support the Syrian Pound was also created. Both of these efforts failed. There are now rumours that Damascus and Moscow are in talks to support the flagging economy in the same way.
So far, the discontent has not impacted Assad, with much of the economic failure blamed instead on Prime Minister Imad Khamis. However, with the mood among loyalists increasingly pessimistic and with protests over similar issues engulfing the neighbouring Lebanon and Iraq, it remains to be seen whether the economy will prove to be the Achilles Heel for the Syrian Government that managed to survive nine brutal years of war.