World / Middle East

Syria brawls to cope with economic crunch

(Xinhua) Updated: 2012-06-18 11:17

DAMASCUS - Sanctions on Syria are getting harder with world countries racing every now and then to introduce new package of sanctions to further squeeze the Syrian economy and accelerate the collapse of its economic system as an introduction for toppling the Syrian regime.

The European Union slapped on Friday a ban on exporting caviar, cigars, leather shoes and other luxury goods to Syria reportedly to punish the Syrian regime over alleged unrelenting bloodshed in the country over the past 16 months.

Despite the accelerating and pressing sanctions, Syria is still showing a defiant stance and alluding that it's still able to resist those pressures by further sustaining a self-efficiency policy and relying on friendly countries to fill the gap and meet the shortage.

During a meeting with a number of Syrian industrialists on Sunday, Syrian President Bashar al-Assad highlighted the role played by Syrian industrialists to encounter the excruciating sanctions and propping up the Syrian economy.

According to local media, the industrialists affirmed the industrial sector's ability to cope with the sanctions, which they said could constitute an incentive to boost national industries through dedicating work for developing local products instead of depending on the imported ones.

However, facts on ground are not so rosy.

Local media has lately talked about huge troubles facing industrialists in the northern province of Aleppo, the second largest city that is deemed to be Syria's economic capital.

The reports said Aleppo's industrialists have put their premises for sale because of the problems and dangers that beset the future of their industry and the prolonged crisis in Syria, in addition to the increasing wave of displacement towards other countries or other Syrian cities that have less security risks.

Industrialists complain of deteriorating security conditions, low purchasing power, rising prices, unemployment rates, inflation and the inability to export as a result of sanctions imposed on the country.

An industrialist in Aleppo told pro-government al-Watan newspaper that he is about to close his factory because of his inability to pay the exorbitant electricity bill.

The protracted crisis has caused gross losses in various sectors, and Syria's oil sector, an artery of the Syrian economy, has lost around 4 billion Syrian pounds since the eruption of the crisis in mid-March 2011.

The Syrian pound also declined against US dollar, increasing thus the rate of inflation and sending prices of basic items skyrocketing.

Despite the Syrian Central Bank's favorable intervention that has somehow succeeded in flourishing the pound over the past two months, yet concerns are still high that the pound would further deteriorate during the coming weeks.

Recent reports suggesting that Russia is printing new Syrian banknotes have further boosted those concerns.

Russia is Syria's most important ally, economically and politically. Furthermore, the sanctions imposed on Syria do not ban Russian companies from printing Syrian banknotes.

Financial sources said most of money changers are currently accumulating dollars and pulling them out of the black market amid expectations that dollar will soon witness a remarkable spike against the pound.

The General Director of Real Estate Bank Abid Fadhliyah tried to appease concerns by stressing that the measure is very normal, noting that it's common for all world countries to periodically print new currency to meet their needs.

Fadhliyah said this procedure, in case it's correct, is necessary, especially as most of Syrian banknotes have become worn- out.

He said printing new banknotes does not mean a new version of the currency but rather new banknotes to cover the mangled notes and not to finance the deficit.

Bankers circulated recently that the first batches of Syrian banknotes that were printed in Russia are scheduled to hit the country next August.

Media reports said Syria has put into circulation new coins to finance the fiscal deficit, making it vulnerable to rising inflation.

The Minister of Finance Mohamed Jlailati said last week that Syria raised the issue of printing new banknotes with Russian officials during the economic talks held at the end of May in Moscow.

However, the Central Bank of Syria, denied lately the circulation of new banknotes.

Sanctions on the countries along with rising violent acts have dramatically scattered the country's revenues and led to a severe economic downturn.

The Syrian economy has been enormously affected by recent events and protests in several cities, as well as by a number of economic sanctions that have hit all aspects of economic life in the country.

Further economic sanctions are still looming in the horizon to squeeze the Syrian economy amid domestic complaints that the sanctions actually affect Syrian citizens, not the government.

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