Pound Down Syria

Before Syria began experiencing the undertow of insurgency, well before the Syrian dictatorship crushed its own people under the heavy and deadly arm of a full military attack killing an estimate 9,000 so far, it took 47 Syrian “pounds” to equal one U.S. dollar. Today, it takes 62, and the pound is going anywhere but up. If you deal in the currency markets in Lebanon, the rate is an even nastier 67 to $1. Whatever may be said about the sustainability of the government attacks against a mounting rebellion, now moving strongly into the universities of Syria’s second city, Aleppo, the underlying economy is withering under the pressures from within – as local business people panic and move their resources out of the country as best they can – and without from the international community that, with the exception of the Russian investments in that Arab nation, is pulling back and out wherever possible.

If the Assad regime were counting on the local conservative business cronies to provide additional moral and general support for their remaining in control… and not simply rely on the military for it all… there’s a very good chance that such support will find the hit to their pocketbooks intolerable. And for the ordinary citizens shopping for what stores make it through, the news is dismal. “The economy may contract 5.9 percent in 2012 after shrinking 3.4 percent in 2011. Prices of imported products have soared. In Damascus, a jar of Nescafé instant coffee that sold for 325 pounds ($6.90) a year ago is now 525 pounds. A packet of sliced French cheese that was 85 pounds now costs 150.” Bloomberg Businessweek, May 10^th.

With credit card purchases measured in dollars, the cost of repaying that debt has slowly slid out of reach for many Syrians. And as much as the government is trying to create stability by subsidizing basic staples, it too is running out of currency reserves to fund such efforts indefinitely. With “terrorists” sabotaging oil pipelines (bringing oil from the Gulf to its Mediterranean ports) that generating much needed tax revenues, the major source of international currencies is literally drying up.

Foreign banks, even in the region, are loathe to deal with Syria in light of international sanctions: “Banks in neighboring Lebanon, where Syria has long wielded political influence, have halted all transactions with Syrian lenders to conform with United Nations sanctions, according to Gaith Mansour, head of capital markets for Beirut-based bank Credit Libanais. ‘Lebanon can’t afford politically to override any UN Security Council decision despite the strength of the ties between Lebanon and the Syrian regime,’ he says. EU governments stiffened sanctions on April 23, banning the export of luxury goods to Syria and adding more products to a list of banned technologies that could be imported by the regime and used to suppress dissent. The UN is sending 300 unarmed monitors to oversee the April 12 cease-fire agreement that has so far failed to stop daily attacks by government forces on urban areas.

“Tightening credit and a slowing economy are having a ‘big psychological impact on those who have been sitting on the fence like the business community, those that have been supporting the regime,’ says Salman Shaikh, director of the Brookings Doha Center. ‘Is the banking sector facing the threat of collapse? I suspect it probably is,’ he says. ‘Assad is piling all his money into this war, draining resources from other sectors like education and finance. This can’t go on forever.’” Businessweek. We read about the violence, but there is erosion in every sector of the ravaged nation that will impose pain and suffering on millions well beyond the bullets and the bombs.

            I’m Peter Dekom, and sometimes getting the full picture means digging behind the obvious headlines.