News / Middle East

    Iran Gives Syria an Economic Boost

    FILE - A vendor counts Syrian currency notes in Damascus, November 13, 2012.
    FILE - A vendor counts Syrian currency notes in Damascus, November 13, 2012.
    Iran is stepping in to help Syria stabilize the value of its currency, which has been dropping sharply since U.S. President Barack Obama decided to start giving weapons to the anti-government rebels.
     
    Iran’s intervention was announced this week by Syria’s central bank, which said it would draw on a billion-dollar line of credit set up by Tehran to stabilize the Syrian pound.
     
    The Syrian rebels have been fighting to oust Assad for the past two years in a civil war that has taken more than 93,000 lives. The White House decided to begin providing weapons to the rebels last week after it concluded the Syrian military had used chemical weapons against its opponents.
      
    The Syrian pound has been in what the bankers call a “managed decline” for the last two years, falling from 47 pounds to the U.S. dollar at the start of the protests against President Bashar al-Assad in March 2011, to 100 pounds at the end of last year.
     
    For the last few weeks it had been trading on the black markets at around 147 pounds to the dollar. But last weekend, after President Obama announced the change in U.S. policy toward the rebels, black market trading put the pounds’ unofficial rate at 250 to the dollar, according to Beirut bankers.
     
    U.S. dollars hard to find
     
    Exchange dealers in Damascus, the Syrian capital, said the U.S. currency was hard to get and was trading wildly, but was settling in at around 200 pounds to the dollar even though the official rate was just under 100 to the dollar.
     
    Dubbing the currency panic as “unreal and illusionary,” the central bank governor, Adeeb Mayaleh, blamed speculators for record-level drops.
     
    On Syrian television Tuesday, Mayaleh said new accords signed between Iran and the Assad government would help fund needed imports. He said the currency speculators were “intimidating people and exploiting people.”
     
    With demands for foreign currency mounting from Syrian banks, the government had activated the credit line Iran extended in January to fund “a big part of the market needs” at acceptable prices, Mayaleh said. Under current regulations Syrian banks are allowed to sell foreign currencies to individual customers up to value of $1,333 per month.

    Syrian Prime Minister Wael al-Halki said the government would continue to work on stabilizing the currency to counter what he called “the media and economic war.” The Assad government insists it has large foreign currency reserves.

    Mazen, a former salesman who goes back and forth between and Lebanon and Syria, told VOA that his neighbors in the Damascus suburb of Jobar were gripped by panic over the depreciation of the pound, worrying that their lifetime savings would disappear.

    “They were desperately hunting for dealers to exchange with but the prices were fluctuating madly,” Mazen said.

    According to Reuters news agency, currency dealers in Damascus have complained that central bank chief Mayaleh had failed to meet his previous promises about stabilizing the currency amid talk of Assad’s ally Iran having deposited $2 billion in the Syrian central bank.

    The dealers say a 100 million euro cash injection for banks failed to help, as the requirements for taking up the money were so burdensome only a fraction of it was used.
     
    Some surprised currency has not collapsed

    The fact that the Syrian currency has not already collapsed has surprised some analysts, who thought it would go into free fall as Iraq’s did in the wake of the U.S. invasion. Aid and loan facilities from Iran and Russia may have made the difference.

    Iran also has helped out on the battlefield in the past two months. In addition to supplying weapons and trainers on the ground, Tehran was key to getting thousands of Lebanon-based Hezbollah guerrillas fighting on the government side against the rebels.

    Soldiers loyal to the regime and civilians holding the Syrian national flag stand near boxes containing aid from the Syrian army in Qusair, June 5, 2013.Soldiers loyal to the regime and civilians holding the Syrian national flag stand near boxes containing aid from the Syrian army in Qusair, June 5, 2013.
    x
    Soldiers loyal to the regime and civilians holding the Syrian national flag stand near boxes containing aid from the Syrian army in Qusair, June 5, 2013.
    Soldiers loyal to the regime and civilians holding the Syrian national flag stand near boxes containing aid from the Syrian army in Qusair, June 5, 2013.
    The seasoned Hezbollah fighters were especially effective two weeks ago in capturing the strategic town of Qusair that had been in rebel hands for the past year.

    But as the currency turmoil this past week demonstrated, the economic challenges also threaten Assad’s hold on power, and the Syrian government is being forced to rely ever more heavily on Iran and Russia.

    Syrian officials refuse to put a figure on the fall in the gross domestic product (GDP) since the civil war started 27 months ago. But in March, the former deputy prime minister for economic affairs, Abdullah Dardari, now with the United Nations, estimated the nation’s GDP had shrunk by just over a third in the last two years.

    Deputy Economy and Trade Minister Hayan Suleiman told Lebanon’s Daily Star in March that “the Syrian economy has managed to be self-sufficient despite all the problems imposed on us.” He said the country was “shifting to the East for our goods, food and production needs,” citing Russia as a key country.

    And talking to Syrian state media earlier this year, Qadri Jamil, the current deputy prime minister for economic affairs, said, “the West has been surprised by the continuation of Syria’s economic wheel. The wheel here in Syria has slowed ... but it has not stopped completely.”

    Betting on the economic collapse of the Assad government would be a waste of time, he said, because “we have friends ... who are supporting us ...”

    How long this can continue isn’t clear.

    Syria has lost an estimated $12 billion in foreign investment. Thanks in part to sanctions and oil fields captured by rebels, oil production has fallen by at least half and maybe more. And tourism, which had provided 11 percent of Syria’s GDP, has disappeared.

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    Comment Sorting
    Comments
         
    by: Godwin from: Nigeria
    June 22, 2013 10:33 AM
    So Iran still has money to give to Syria, so why do people rumor that Iranian people are suffering under the economic and other sanctions imposed on the country? Bullshit! Could it be that the US efforts have yielded nothing? Could it be that all we have been hearing is mere propaganda? Is it true that the US has so far failed to do what it should do in Syria because it can ill-afford it under pressure of its own economy? Is it true that USA shies away from the no-fly-zone in Syria because it is afraid it will be disgraced by the Hezbollah, Iranian and Russian conglomerate? Hmn..., many questions, but with Iran's money flying in dollars to Syria, there may be so much happening that we do not yet know - may never know.
    In Response

    by: mehrdad from: earth
    June 24, 2013 5:21 AM
    The battle in Syria is between Iran and USA, that's a fact which can't be denied why these sides are involved? why USA is so interested to the situation which is happening in this part of planet? (maybe USA is making the happenings) why Iran is sensitive about these events which is taking place in neighborhood?
    are news reliable? should we just hear one side and one aspect of them? economic, are Iranian driving golden cars? are Iranians living on towers which touch clouds? do all Iranians have work? ..Idon't know about these, can you help me to answer these?

    by: samal54 from: Nigeria
    June 22, 2013 8:19 AM
    By the time the dust settles in favour of Syrian opposition, Iran and its allies, who have been aiding Asaad's massacre, will reap the seeds they sowed when Asaad's hired fighters begin to run back to their respective countries, just as it happened in the case of Libya and Mali.

    by: Anonymous
    June 22, 2013 12:17 AM
    Iran needs their hand smacked as a supporter of terror, if they are financially supporting Assad as he wrecklessly kills (and killed) civilians in Syria.
    In Response

    by: mehrdad from: earth
    June 24, 2013 5:37 AM
    who knows, maybe Iran is supporting the terror, but what is the meaning of the terror, i think it means great fear, ok let's see, who is supporting chaos in middle east? if we look at the history of this matter we find out the ... were always the Root of these events, as you can see this country support Iraq to make and create a war vs Iran, after a while this country conquer Iraq and killed its leader (did they let him talk?!), who create a man named bin laden? (and then what happened? yes, ... conquered the Afghanistan to destroy what was made by its own hand, so they said the leader was killed, did he talked before execution?) who is supporting the death in middle east?


    by: Anonymous
    June 21, 2013 12:38 PM
    Assad is the biggest terrorist in Syria, he has killed more innocent civilians than anyone in Syria. He has also destroyed more than anyone in Syria. In fact he has killed more innocent civilians than Osama Bin Laden. 90% in Syria want Assad arrested or killed.

    by: Baphomet from: Lesotho
    June 21, 2013 7:37 AM
    Go with the Afghan and Iraqi models - let the US destroy the place, 'win' and the dollars will be as dead leaves blowing through the streets.

    Who cares what a US dollar is worth in Syria? It's not worth that in America.
    In Response

    by: mehrdad from: earth
    June 24, 2013 5:46 AM
    indeed, that's what this country always does, here the question emerge, did america ever did something for others profits? it was always about america and it's benefits, wasn't it? (if it's not, make an example please.) of course i think the people and governments are apart from each other things were different if all people were informed about the truth which is going on around them

    by: giggig24 from: FL USA
    June 21, 2013 1:02 AM
    It was USA who said Assad must go, So defectors relied on
    this pledge . USA cannot let them down ,Gen Salum Idriss is
    an honest General i believe,he thought USA would help him and have soon everything again in law and order. He did maybe not realize the infiltration from Syria and the intrusion from Lebanon.
    In Response

    by: Anonymous
    June 22, 2013 12:19 AM
    The west is not minding their own business neither is many other countries, as Assad is inflicting genocide, and atrocities in Syria, nobody can sit back and watch. Assad must face justice who cares what country he is in, if he kills 50,000 civilians the world should intervene, and that is what the west is doing by arming the Syrians and the FSA. You can't get away with bombarding your own people.
    In Response

    by: Anonymous
    June 21, 2013 12:36 PM
    Get your facts straight please, this all began as protests by Syrians NOT Americans. Americans came in afterwards. You can use your speculations by they aren't true.
    In Response

    by: Sari from: Canada
    June 21, 2013 7:45 AM
    The USA should mind it's own business. It has no right to act, and it won't act because it has become weaker. Russia and China and Iran have agreed on this issue too. The population of the USA doesn't want the government to interfere either.

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