By Timour Azhari
BEIRUT (Reuters) – Syria received a new shipment of its local currency printed in Russia on Wednesday and more shipments were expected in the future, a Syrian government official said, in a new sign of improving ties between Moscow and Syria’s new rulers.
The cash arrived via plane at Damascus airport on Wednesday and was taken by a convoy of several trucks to the central bank, according to a separate source familiar with the matter.
Syria began paying Russia to print its currency under a multi-million dollar contract during the 13-year-old Syrian civil war, after Damascus’ previous contract with a subsidiary of the Austrian central bank was terminated due to European sanctions.
It is unclear if the arrangement is now continuing under the same terms. One source familiar with the contract said it was.
Russia backed Syrian autocrat Bashar al-Assad during the war, swaying the conflict with its bombardment of rebels including the Islamist group Hayat Tahrir al-Sham that ousted Assad in a lightning offensive last year.
But Russia quickly moved to maintain its ties with Damascus in the weeks after Assad fled to Moscow, with an eye on keeping its two key bases in the country’s coastal region.
A senior Russian diplomat visited Damascus in January and Syrian President Ahmed Sharaa held a phone call with Russian President Vladimir Putin on Feb. 12.
Two days later, Syria received its first shipment of local currency from Russia.
The cash shipments are critical: Syria’s war-ravaged economy has slid further in the past months amid a shortage of currency that Syrian officials have attributed in part to delays in the Russian cash shipments, as well as to hoarding of Syrian pounds.
A senior former Syrian official said Russian cash shipments in the hundreds of billions of Syrian pounds (tens of millions of U.S. dollars) used to arrive in Damascus each month. Reuters could not determine exactly how much had arrived on Wednesday, the second such shipment since Assad was ousted on Dec. 8.
The cash crunch has left Syrian depositors struggling to use their savings and has piled pressure on local businesses who are already being squeezed by new competition from cheap imports as the protectionist economy is opened up by the new rulers.
Adding to the economic malaise, a planned 400% public-sector salary increase has not materialized, neither has the Qatari finance underpinning that increase, sources told Reuters, due to ambiguity over U.S. sanctions and U.S. President Donald Trump’s Syria policy.
Economists and analysts say Syria’s cash shortage is largely behind the currency’s strengthening on the black market in the months since Assad fell, while it has also been helped by an influx of visitors from abroad and an end to strict controls on trade in foreign currencies.
The pound on Thursday was trading at around 10,000 per Greenback on the black market, compared to the official central bank rate of 13,000.
It traded at around 15,000 per U.S. dollar before Assad was toppled.
Syrian central bank governor Maysaa Sabreen told Reuters in January that she wanted to avoid printing Syrian pounds to guard against inflation.
The central bank only has foreign exchange reserves of around $200 million in cash, sources previously told Reuters, a huge drop from the $18.5 billion that the International Monetary Fund estimated Syria had in 2010, a year before civil war erupted.
It also holds nearly 26 tons of gold, the same amount it held before the war, the sources said.
(Reporting by Timour Azhari; Editing by Jacqueline Wong and Philippa Fletcher)
Comments