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The Interview: Samir Aita on the Regime’s Financial Standing

Samir Aita is a member of the Syrian Democratic Forum, and editor-in-chief of Le Monde Diplomatique Arabic edition. Here, he discusses the collapse of the Syrian economy and the financial situation of Bashar al-Assad’s regime.

Written by Lara Setrakian and Karen Leigh Published on Read time Approx. 3 minutes

ND: What is holding up the Assad regime today?

[![][2]][2] SA: The errors of the opposition, of the Syrian National Council, which has been long supported by the international coalition Friends of Syria. It has made tremendous errors and lost the support of the population, even those fighting on the ground.

ND: How is the regime managing, financially? Does it risk going bankrupt? Could the Syrian pound collapse? Has it already?

SA: Syria is a rich country. Before the conflict, it had substantial foreign reserves, as well as stocks of wheat and goods. Hafez Assad [Bashar’s father, the former president] had prepared for a moment like this one. He had experienced a similar blockade during the 1980s.

The Friends of Syria had helped the regime with their sanctions on imports and on finance. These sanctions were a completely wrong idea, as they negatively affected the population and not the regime. Security services had profited from the smuggling created by these sanctions, which in the end financed the pro-regime militia, or Shabiha.

A war economy has developed, adapting policies as we go through different phases of the conflict. The spending of hard currency is minimal, as it mainly concerns basic food goods not produced in the country. Aid and loans are given by Iran and Russia. Exportations have declined considerably as well, but they have restarted recently in a strange way: factories in Aleppo dismantled and smuggled to Turkey, and the same for wheat stocks from silos, of oil from captured wells, cotton crops, etc…

This is while the flow of hard currencies is high: relief aid from Syrian abroad, political money to some opposition groups, smuggling out. The government reserves have declined, but they were initially higher than declared. Otherwise, budget spending is also minimal, as the government had been discharged from its usual duties in the “liberated” areas.

I don’t expect that the regime will collapse soon because of financial reasons. It can withstand the current situation for months, and maybe years. And all these discussions on the fall of the value of the Syrian Pound don’t take into account that even before the revolution, half of the money in circulation was in hard currency and that today this share is maybe 70 or 80 percent.

Its current value is normal, as its nonsense pegging to the U.S. dollar has been stopped. So like in the long civil war in Lebanon, the Syrian Pound would only collapse when the flow of political money would stop to the regime and the opposition.

ND: Do you have a personal estimate for how much the economy has shrunk since the start of the uprising?

SA: You can’t analyze war economy in the same ways than that of peace. One can say that GDP had shrunken by 40 or 50 percent, but this does not mean a lot.

Of course the major items included in the classical calculation of the GDP before the revolution have lost their values: production of oil almost stopped, and cotton, the crop which has always been bought at a cheap price by Turkey.

But now new ways of creating added value have emerged with the war: local production of ammunitions by both sides, different new services linked to the war situation, etc… Some have very large added values.

ND: Any other indicators you’d watched? As we’ve seen it, prices of bread, food, and oil are up by as much as 200 to 300 percent in some places.

SA: The mechanisms of the economy have been disrupted. Any increase in price depends on location, and is linked to the government policies to punish rebelled towns or regions, or to the lack of security to bring the goods to destination.

When the prices jump this way, this means that someone is taking the initiative to bring the goods to the destination, whether they be smugglers or pro-government and opposition combatants taxing the flow.

One should also remember that bread or oil derivatives are two goods which used to be provided by government services, and that their prices were subsidized comparatively to international prices.  And one of the major issues when the war ends is to retrieve all the old mechanisms to provide these basic goods at a reasonable price in all regions of Syria.





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