Syria’s Economic Meltdown Puts Pressure on Assad

For the first time in years, demonstrators in government-controlled sections of Syria are calling for the ouster of Bashar al-Assad.

The destruction of the Salaheddine neighborhood in the eastern Aleppo, Syria. (AP file photo/Hassan Ammar)

(AP) — In scenes not witnessed for years in government-controlled parts of Syria, dozens of men and women marched through the streets this week, protesting a sharp increase in prices and collapse of the currency, some even calling for the downfall of President Bashar Assad and his ruling Baath party.

“He who starves his people is a traitor,” protesters chanted at the protest in the southern city of Sweida.

There is an impending fear in Syria that all doors are closing. After nearly a decade of war, the country is crumbling under the weight of years-long Western sanctions, government corruption and infighting, the pandemic and an economic downslide made worse by the financial crisis in Lebanon, Syria’s main link with the outside world.

Syria faces near complete isolation as the toughest U.S. sanctions yet come into effect next week. While Assad may have won the military war against his opponents with the help of Russia and Iran, he faces an even bigger challenge of governing while more than 80% of his people live in poverty.

In government-held areas, prices increase several times a day, forcing many shops to close, unable to keep up with the chaos. This week the Syrian currency dropped to a record 3,500 pounds to the dollar on the black market — compared to 700 at the beginning of the year. Some staples such as sugar, rice and medicine are becoming hard to find.

“The Syrian economy has spiraled out of control and the regime cannot control the Syrian pound anymore,” said Osama Kadi, a Canada-based Syrian economic adviser.

The pain is likely to grow under the new U.S. sanctions, which Washington says aim to punish Assad and his top lieutenants for crimes committed during the country’s conflict.

Effectively, the sanctions prevent anyone around the world from doing business with Syrian officials or state institutions or participate in the war-ravaged country’s reconstruction. They also target anyone involved in smuggling to Syria, mostly from Iraq and Lebanon.

The United States already has imposed sanctions on Assad and a number of his top officials. The new authority, known as the U.S. Caesar Syria Civilian Protection Act, allows foreign companies to be targeted, including in neighboring Lebanon, Jordan and Iraq.

“This legislation will close all the doors on the Syrian regime and any person that deals with it,” said Nizar Zakka, a Lebanese citizen who is a member of the Caesar Act team, which advises U.S. authorities on implementing the sanctions.

The first wave of sanctions will be imposed on June 17. Three other stages will follow before the end of August, he said.

Caesar is the code name of a Syrian forensic photographer who graphically exposed the brutality of the government crackdown by smuggling out thousands of photos of torture victims.

Experts say the new sanctions will be a heavy blow to a country where eight out of 10 people make less than $100 a month, according to the United Nations. The Syrian government called the sanctions “economic terrorism.”

Some of the repercussions already have been profound.

Bread prices increased by nearly 60% in the rebel-held northwestern province of Idlib, even though the territory with a population of over 3 million is not included in the new sanctions. Its population, many of them unemployed and living in refugee camps, have also been hit hard by the collapse of the pound, since it is the main currency used in Idlib.

As a result, protests erupted this week calling for the ouster of the “Salvation Government” administering Idlib, led by al-Qaida-linked Hayat Tahrir al-Sham.

The Syrian pound — which had been at 47 to the dollar at the start of the conflict — had held steady at around 500 to the dollar from 2014 until last year.

It started crumbling from a number of factors: the coronavirus lockdown, Lebanon’s financial crisis, new rules requiring use of the Syrian pound and a feud between Assad and his cousin Rami Makhlouf, one of Syria’s richest men.

The Syrian government has lost major income from resources in areas outside its control, including oilfields in the east held by U.S.-backed fighters and farmlands that produced much of the country’s wheat.

Most damaging, perhaps, has been the financial turmoil in Lebanon. Banks there have served as a gateway to the world for Syrian businessmen, officials and average people. Now Lebanon’s tight capital controls lock away billions of dollars in their accounts.

“Lebanon was not only Syria’s economic get-out-of-jail card, but it is the beating heart of Syria’s business community,” Danny Makki, a Britain-based Syrian journalist and political analyst, wrote recently for the Middle East Institute.

Lebanon is also panicking about losing Syria, particularly the electricity it still buys from the war-torn country. In recent weeks, the Lebanese army has begun closing some smuggling routes to and from Syria where fuel, diesel, medicine and other goods flow.

Lebanese army soldiers cover themselves as anti-government protesters storm them with stones in downtown Beirut on Friday. (AP photo/Hussein Malla)

Syria and its allies say the Caesar Act aims at starving the Syrian people. The U.S. Embassy in Syria — closed since the beginning of the conflict — tweeted on Sunday: “The regime’s destructive war has crushed the Syrian economy, not U.S. or EU sanctions.”

Amid the turmoil, Assad fired Prime Minister Imad Khamis on Wednesday in a move that appeared aimed at deflecting public anger. Khamis told parliament this week that the government was discussing with allies ways to boost the pound’s value. He said the government was also taking steps to avoid shortages of pharmaceuticals.

Samer Aftimos, a pharmacist in Damascus, said shortages are already occurring, in part because of people hoarding medicine. Drug companies have stopped supplying some medicines, he said.

Syrian legislator Muhannad Haj Ali, who has been under European and American sanctions for years, said Syria survived past economic crises and will overcome the Caesar Act.

“What the terrorists and the Americans couldn’t take on the battlefield, where we paid with our blood and wounds, they won’t be able to gain politically, no matter how much pressure they exert,” he said.

Meanwhile in Lebanon, Prime Minister Hassan Diab held an emergency Cabinet meeting Friday after a night of raging protests that saw demonstrators shut down roads across the country with burning tires in renewed protests spurred by a plunging national currency.

Scuffles with security forces broke out in several places Thursday night as people took to the streets after the pound tumbled to a new low against the dollar. Protesters in central Beirut pelted police and soldiers with rocks and smashed some storefronts, drawing volleys of tear gas.

Some protesters set fire to a private bank, while others threw stones at the offices of other banks in an expression of anger at their perceived role in deepening their economic malaise.

“Three glass windows were broken in the front and the back, the fridge and the phones. And they broke the photocopy machines and the chairs. … I am not sure yet what is the estimated material loss,” said the owner of a travel agency in downtown Beirut.

Security forces reopened blocked roads early Friday as the protests calmed. Diab canceled his meetings for the day and called for an emergency session to discuss the crisis. Riad Salameh, the governor of the central bank who has been singled out by Diab for his mishandling of the situation, was taking part in the meeting.

The renewed demonstrations amid calls for Diab’s resignation are a huge challenge for the prime minister who took over in December after his predecessor, Saad Hariri, resigned amid nationwide protests. His government is supported by the Shiite group Hezbollah and its allies and has been weakened by the crisis.

Despite efforts to control the currency depreciation in recent weeks, the Lebanese pound tumbled to more than 6,000 to the dollar on Thursday, down from 4,000 on the black market in recent days. The pound had maintained a fixed rate of 1,500 to the dollar for nearly 30 years.

The crash appeared to reflect the growing shortage of foreign currency on the market amid the crisis. It also signaled panic over new U.S. sanctions that will affect neighboring Syria in coming days as well as lack of trust in the government’s management of the crisis.

The heavily indebted Lebanese government has been in talks for weeks with the International Monetary Fund after it asked for a financial rescue plan but there are no signs of an imminent deal.

Lebanon’s financial crisis predates the virus pandemic that put the country in a total lockdown for months, compounding the crisis. Years of corruption and mismanagement have left the tiny Mediterranean country with depleted resources, while shrinking investment in the war-riddled region and falling remittances from Lebanese abroad have increased the shortage of foreign capital.

Anti-government protesters ride scooters to a square near the government palace in downtown Beirut, Lebanon, on Friday. (AP photo/Hussein Malla)

By BASSEM MROUE and FADI RAWIL

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