Desperate Consumers Finding New Ways to Overcome Collapse of the Syrian Pound

The value of the Syrian pound continues to fluctuate against the US dollar, recording an unprecedented fall over the past two weeks before making a relative improvement over the past few days. This has led to increased prices for services and basic commodities in Syria, with ordinary people now experiencing great difficulties in securing day-to-day necessities in a country already ravaged by war.

Syrian citizens living in different areas controlled by various parties – be they the Syrian regime, the Syrian Democratic Forces (SDF) east of the Euphrates, opposition factions or the Tahrir al-Sham militant group in northwest Syria - are experiencing increased confusion and dismay with the outset of the Caesar Act, a potentially crippling new set of US sanctions that came into force in late June. This is expected to lead to an even greater collapse of the Syrian economy and official currency exchange rates, meaning more pressure on Syrians, who have already been crushed.

According to the United Nations 2019 annual report, Syria topped its list of the poorest countries in the world, with an estimated 38 percent of the population below the poverty line. The majority of Syrians in all three main areas of control face difficulties in securing daily necessities due to a lack of job opportunities, low wages and the COVID-19 pandemic, which itself has caused a global economic recession.

 

What’s Behind the Collapse of the Syrian Pound?

Since the beginning of the Syrian revolution in March 2011, the value of the Syrian pound's has steadily fallen. But since November 2019, it has undergone accelerated lows and wild swings in value. On June 8, for example, the Syrian pound recorded its highest exchange rate in the history of the country, reaching SYP 3175 to the dollar. Today, the exchange rate has fluctuated to 2275 SYP to the dollar.

This can be attributed to increased speculation on the Syrian currency, as well as traders and residents saving in foreign currencies instead of SYP, governmental confusion, and widespread corruption within regime institutions, while the regime's Russian and Iranian allies control foreign exchange sources. This comes in addition to international sanctions having depleted the regime's foreign currency reserves.

Not all Syrian officials have presented it this way. Governor of the Central Bank of Syria, Hazem Qarfoul, recently said: "The high dollar exchange rate is due to a systematic campaign aimed at weakening the Syrian pound and the economy, undermining confidence in the Central Bank, and pushing citizens to give up their national currency."

In a phone interview with Syria TV in June 2019, he also said: "The high exchange rate is a delusion. It has no economic justification and has no basis on the ground at all."

These thin justifications, though, have been rejected by members of the People's Assembly and those loyal to the Syrian regime, who decried the statement as "far from reality."

Dr. Abd al-Hakim Al-Masri, minister of economy for the Syrian Interim Government, said: "The collapse of the Syrian pound and its reflection on the region's stability will mean poor purchasing power for citizens whose wages are paid in Syrian pounds. These losses will be transferred onto business owners, even if prices are set in foreign currencies."

Speaking to IranWire, he confirmed that the interim government is working on "issuing minimum wages for workers in both the public and private sectors in Turkish lira," adding that it is also working “to prevent employers from exploiting workers because of increased unemployment."

 

Trader Problems

In May, Bashar Al-Assad appeared in a meeting with the "governmental group tasked with confronting the COVID-19 pandemic and its repercussions," talking about the coronavirus pandemic and high prices. He did not mention the ongoing fallout with his cousin, Syrian businessman Rami Makhlouf – one of the country’s richest men and key financier of Al-Assad’s war effort – and the potential repercussions of this dispute on the Syrian pound.

During the meeting, which was reported on by the regime's media outlets, al-Assad said that he had been listening to people complain about high prices since he was in elementary school, and that "the supply does not control the violators:" stressing that the problem was, rather, with traders and regulatory agencies.

In order to prevent price manipulation and the supposed dominance of certain traders, Al-Assad granted the Syrian Trade Corporation greater powers and privileges.

 

Widespread Difficulties Lead to Fresh Protests

Days after this meeting, Al-Assad issued a presidential decree in which he stood down the Minister of Internal Trade and Consumer Protection, Atif Al-Nadaf, and appointed the former Governor of Homs, Talal Al-Barazi, in his stead. But the situation continued to deteriorate, and prices rose in an unprecedented manner.

Abu Ibrahim, 35, has been displaced along with his family of four to the city of Azaz, north of Aleppo, which is under the control of the Syrian opposition. He is now struggling to secure basic necessities, having completely given up on any luxuries at all. He told IranWire: "One day my son asked me for a shawarma sandwich, which costs SYP 2,000. But I kept avoiding the subject and distracted him with other things so that he would forget about it."

Abu Ibrahim works in construction and earns a daily wage of between SYP 2,000 - 5,000 ($0.86 - $2.15 at best, assuming an exchange rate of SYR 2,275).

The city of Nawa in the countryside of west Daraa, in the south of Syria, returned to regime control after signing a reconciliation agreement in July 2018. Resident Abu Salim, 45, and his family are now in similarly dire economic straits, trying to adapt to the urgent situation by changing their lifestyle.

Abu Salim told IranWire: "We are trying to depend on the vegetables and crops that our land produces, such as chickpeas, lentils and beans, and to store them for next year. Fruit and meat have become very difficult for us to buy."

Likewise in Damascus, Samar Adam, 35, is trying to budget her household expenses for her family of five. Adam told IranWire: "I had to do away with a lot of expenses such as fruit, meat and poultry, as well as having to buy cheap second-hand bundles instead of new clothes. Even tea and coffee are now rationed at home due to the increase in prices."

As a result of this, begging has recently become widespread in recent times. Some families who have lost their breadwinners and have no income are now having to scavenge in garbage bins for food.

IranWire reporter Rami Muhammad notes that the situation is having an impact on public health. "Patients are flowing into hospitals supported by medical and governmental organizations backed by the interim government in northwestern Syria, due to the high cost of patient check-ups at private hospitals and clinics," he says.

This was also confirmed by Abd al-Karim, 27, a resident of the city of Azaz north of Aleppo. He said: "Living standards have become very bad due to the depreciation of the Syrian pound against the dollar. This has caused a significant increase in food prices as well as doctors' fees.

“Before, a medical investigation used to cost SYP 1,500, but the check-up was free. Today, however, it costs TYR 20, equivalent to approximately SYP 10,000, and the check-up costs TYR 5, equivalent to almost SYR 2,500."

In an interview with IranWire, Abd al-Karim added: "For me, as a worker on a daily wage of SYR 3,000, I must work for four days in order to be able to visit a doctor’s clinic."

Last week people took to the streets in protest in Al-Suwayda governorate and other Syrian regions in protest against deteriorating economic and living conditions, chanting slogans and singing songs against the Syrian regime. The city also witnessed an almost comprehensive strike by traders and shop owners.

 

Depreciation of the Syrian Pound

The interim Syrian government has set the price of a 600 gram bag of bread, sold through the bakeries that it supports, at TYR 1, which is equivalent to SYP 500. At private bakeries, however, the price of a kilogram of bread is between SYP 1,000 and 1,500.

The Interim Syrian Government’s minister of economy, Abd al-Hakim Al-Masri, has said on this matter: "The interim government started buying wheat from farmers at $220 per ton." He added, "Flour and bread will be subsidized in two phases. Flour will be made available to government bakeries, while it will be sold to private bakeries at a low price.”

The regime, on the other hand, is trying to distribute bread through "smart cards" in areas of its control in an attempt to overcome the bread crisis and the long queues that build up outside bakeries. Protests that took place the city of Latakia in April were in part spurred by the lack of bread and its poor distribution among citizens.

The government has set the price of a bag of bread at SYP 50. But it is not available to everyone, forcing some residents to purchase from markets at a much higher cost of SYP 300. In many cases, people may have to buy high-quality bread at a price of SYP 1,000, despite the regime's Ministry of Internal Trade and Consumer Protection having set the price at the end of 2018 at SYP 350.

 

Products

Idlib

Daraa

Damascus

1kg Sugar

TYR 4 (SYP 2,000)

SYP 1,110

SYP 1,200

1kg Tea

TYR 45 (SYP 22,500)

SYP 17,500

SYP 17,000

1l Sunflower oil

TYR 7 (SYP 3,500)

SYP 2,900

SYP 3,400

1kg Burghul wheat

TYR 3.5 (SYP 1,750)

SYP 900

SYP 1,200

1kg Chinese rice

TYR 4 (SYP 2,000)

SYP 1,250

SYP 1,450 – 2,000

1kg Kabsah rice

TYR 7 (3,500)

SYP 2,800

SYP 3,500

1kg Dried Lentils

TYR 4 (SYP 2,000)

SYP 1,000

SYP 1,100

1/2 kg Thyme

TYR 5.5 (SYP 2,750)

SYP 1,000

SYP 1,200

Tin of sardines

TYR 2.5 (1,750)

SYP 850

SYP 1,000

 

 

Prices Changing Over the Course of One Day

Many shops in areas under opposition control in northwestern Syria have now resorted to setting the price of goods in foreign currencies, either in Turkish lira or US dollars, in order avoid losses as far as possible.

Abu Ahmad, the owner of a shop in the city of Azaz, told IranWire: "I had to set prices in a foreign currency because trading in Syrian pounds has become impossible. I sold one kilogram of sugar at SYP 1,500, but a short time later I was shocked to see that its price had increased by SYP 500, so I set the price of one kilogram at TYR 4 or its equivalent in Syrian pounds – according to how the buyer wants to pay."

Abu Ahmad's experience and that of most shops in northwestern Syria is not applicable in areas of the Syrian regime's control, as it prohibits transactions in anything other than Syrian pounds. According to Abu Salim, the 45-year-old consumer from Nawa, this means that the same item can be purchased for different prices over the course of the day.

"Last week,” he says, “I bought half a kilogram of sugar for SYP 450, but in the evening of the same day, I bought another half kilogram from the same shop for SYP 550. The reason, according to the shop, was that the dollar had risen."

This has prompted local opposition councils in northern Aleppo to issue guidance instructing traders to replace commercial transactions with Turkish lira, in the place of Syrian pounds, and to pay workers' wages in Turkish lira.

The Syrian Interim Government’s minister of economy said: "The decision to replace the currency in circulation is a temporary one, pending the fall of the regime." He added, "The aim of this is to ensure the regime's crises will not be reproduced in areas outside of its control."

He added: "All institutions have been instructed to pay employees' salaries in Turkish lira so that they do not significantly lose their purchasing power. Turkish currency was pumped into northern Syria through Turkish post centers, with the Turkish currency replacing US dollars to reduce the smuggling of dollars into areas of the regime's control."

The shift to transactions in Turkish lira might improve or contribute to greater stability in the lives of poor citizens, while also staving off the worst repercussions of the collapse of the Syrian pound – or the problems that have been thrust upon citizens in opposition-held areas in northwestern Syria.

Despite this, however, not enough requirements can be fulfilled to completely replace the Syrian currency with Turkish lira due to the lack of international, or at least Turkish, agreement to allow the Turkish currency to be pumped in significant quantities into opposition areas – especially the kinds of small denominations of cash used in the markets. This is also due to the lack of a banking system and the absence of Turkish banks within these areas, or any Turkish bank intervening to control the financial process.