Syrian pound plummets as new US sanctions loom

Syrian pounds are pictured inside an exchange currency shop in Azaz, Syria. (File/Reuters)
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Updated 06 June 2020

Syrian pound plummets as new US sanctions loom

  • Syria is in the thick of an economic crisis compounded by a coronavirus lockdown and a dollar liquidity crunch in neighboring Lebanon
  • The UN food agency said any further depreciation risked increasing the cost of imported basic food items

BEIRUT: Syria’s pound hit record lows on the black market Saturday trading at over 2,300 to the dollar, less than a third of its official value, traders said, ahead of new US sanctions.
Three traders in Damascus told AFP by phone that the dollar bought more than 2,300 Syrian pounds for the first time, though the official exchange rate remained fixed at around 700 pounds to the greenback.
After nine years of war, Syria is in the thick of an economic crisis compounded by a coronavirus lockdown and a dollar liquidity crunch in neighboring Lebanon.
Last month, the central bank warned it would clamp down on currency “manipulators.”
Analysts said concerns over the June 17 implementation of the US Caesar Act, which aims to sanction foreign persons who assist the Syrian government or help in post-war reconstruction, also contributed to the de fact devaluation.
Zaki Mehchy, a senior consulting fellow at Chatham House, said foreign companies — including from regime ally Russia — were already opting not to take any risks.
With money transactions requiring two to three weeks to implement, “today’s transactions will be paid after June 17,” he said.
Heiko Wimmen, Syria project director at the conflict tracker Crisis Group, said that with the act coming into force, “doing business with Syria will become even more difficult and risky.”
Both analysts said the fall from grace of top business tycoon Rami Makhlouf despite being a cousin of the president was also affecting confidence.
“The Makhlouf saga is spooking the rich,” Wimmen said.
After the Damascus government froze assets of the head of the country’s largest mobile phone operator and slapped a travel ban on him, the wealthy feel “nobody is safe,” he said.
They are thinking “you better get your assets and perhaps yourself out preparing for further shakedowns,” he said.
Mehchy said the impact of the pound’s decline and ensuing price hikes on Syrians would be “catastrophic.”
Most of Syria’s population lives in poverty, according to the United Nations, and food prices have doubled over the past year.
The UN food agency’s Jessica Lawson said any further depreciation risked increasing the cost of imported basic food items such as rice, pasta and lentils.
“These price increases risk pushing even more people into hunger, poverty and food insecurity as Syrians’ purchasing power continues to erode,” the World Food Programme spokeswoman said.
“Families may be forced to cut the quality and quantity of food they buy.”


Tensions between Turkey, France pose threat to NATO alliance, warn experts

Updated 07 July 2020

Tensions between Turkey, France pose threat to NATO alliance, warn experts

  • Turkey ‘challenging’ international norms by breaking arms embargo on Libya, invading northern Syria, claims analyst

JEDDAH: Increasing tensions between France and Turkey were posing a threat to the cohesion of the NATO alliance, experts have warned.

Paris’ recent decision to suspend its involvement in the NATO Sea Guardian maritime security operation in the eastern Mediterranean following an incident between a French frigate and Turkish vessels, has highlighted the organization’s difficulties in maintaining order and harmony among its members.

Months of escalating dispute between France and Turkey came to a head on June 10, when Paris claimed that its La Fayette-class Frigate Courbet was targeted three times by Turkish Navy fire control radars while it was trying to approach a Tanzanian-flagged civilian cargo ship suspected of trafficking arms to Libya.

The cargo ship was under the escort of three Turkish vessels, but Ankara denied harassing the Courbet and demanded an apology from France for disclosing “improper information,” saying the ship in question had been carrying humanitarian aid.

The incident resulted in France pulling out of the NATO operation, partly aimed at enforcing a UN embargo on arms supplies to Libya, and accusing Turkey of importing extremists to Syria.

French President Emmanuel Macron said: “I think that it’s a historic and criminal responsibility for a country that claims to be a member of NATO. We have the right to expect more from Turkey than from Russia, given that it is a member of NATO.”

The classified report on the Courbet incident is expected to be discussed soon by member states of the alliance.

Turkey’s purchase of the Russian S-400 missile system has also angered some NATO members over concerns it could undermine Western defense systems and led to Turkey’s expulsion from the alliance’s F-35 stealth fighter jet program.

Seth J. Frantzman, executive director of the Middle East Center for Reporting and Analysis, told Arab News: “NATO faces increasing challenges from its member state Turkey which behaves contrary to NATO’s mission and values.

“Turkey’s government has begun to violate international norms by breaking an arms embargo on the Libyan conflict and invading northern Syria, backing extremist groups, and bombing northern Iraq.

“Ankara has tried to strong-arm NATO into supporting it through threats to hold up a Baltic defense plan and also through threatening and insulting other NATO members.

“Turkey insinuated to the US that Turkey would brush US forces aside in Syria in 2019 if the US didn’t leave, it has escalated conflicts rather than reducing them, and threatened to send refugees to Greece while staking counter claims to the Mediterranean against Greek claims,” he added.

Frantzman pointed out that the controversy with France was a byproduct of this.

“NATO increasingly looks like it is being called upon to appease Ankara’s monthly crises that involve new military operations in several countries. Once a key and helpful ally of NATO, Turkey looks increasingly like it seeks to exploit its NATO membership, using it as a cover for military operations that undermine human rights, democracy, and international norms,” he said.

Turkey is seen as an important and strategic member of the military alliance. On its website, NATO says that all the organization’s decisions are made by consensus, following discussions and consultations among members. “When a ‘NATO decision’ is announced, it is therefore the expression of the collective will of all the sovereign states that are members of the alliance.”

However, recent disagreements within NATO led Macron to say that the alliance was “suffering brain death” over Turkey’s cross-border military offensive into northern Syria last year.

On Turkey’s unilateral behavior, Frantzman said: “This is part of a global rising authoritarian agenda but appears to be counter to the NATO mission that once ostensibly was about defending Western democracies from the Soviet totalitarian threat.

“This calls into question the overall NATO mission and whether NATO is now enabling Ankara’s authoritarian trend. NATO countries are generally afraid to challenge Turkey, thinking that without Turkey and with a US disinterested in global commitments, NATO would become a European club with an unclear future. For Russia that is good news as it supplies S-400 systems to Turkey, further eroding NATO,” he added.

Aaron Stein, director of research at the Foreign Policy Research Institute, felt NATO would be able to manage the spat between France and Turkey.

“Libya isn’t really a NATO issue. It is out of the area for the alliance. I see this more as a bilateral dispute between two rival powers in the Mediterranean.

“What I worry more about is how NATO members, including both Turkey and France, are letting these bilateral squabbles seep into the North Atlantic Council. They should keep their fights to themselves.”