DAMASCUS – Syria’s central bank has been targeted by the most recent round of sanctions imposed by the United States under the Caesar Act, which experts warn that would worsen the economic crisis in the Arab country.
Washington has imposed six rounds of sanctions on people, companies and entities with links to the government of Bashar al-Assad since the implementation of the act, named after a military police photographer who leaked photos of 11,000 people killed while in custody.
In the most recent of these sanctions, the Treasury Department added the central bank to the Specially Designated Nationals and Blocked Persons List (SDN List), which seizes properties in the US or in Washington’s hands, as well as the prohibiting business dealings with targets of the sanctions.
The new package, the severest since the act came into force, does not differ in essence from the sanctions previously imposed on the central bank, which has been banned from issuing foreign exchange money and international credit and financial transactions.
“Since the beginning of the crisis, multiple sanctions have been imposed on the Syrian central bank to limit the state’s ability to utilize its funds and resources in foreign currency to secure the necessary needs including oil, food and medicine despite excluded from the sanctions,” Adib Mayale, former governor of the Central Bank of Syria, told EFE.
Syria has been struggling with a shortage of basic products, including bread and fuel, which has been largely attributed to the collapse of the local currency, with the exchange rate on the black market doubling the official one, and the sanctions that limit the state’s import capacity.
The sanctions have caused “serious difficulties” for the central bank and the banking sector in general, especially when it comes to initiating documentary credits or issuing and receiving endorsements from other international entities, Mayale added.
“This led to weakening the banks’ ability to facilitate foreign trade operations and settle commercial transactions, in addition to the great difficulties in shipping operations to Syria and the high insurance costs of shipped goods,” Mayale said.
The sanctions in general have led to the deterioration of the microeconomic indicators in the Arab country, including growth, inflation and public debt, he warned.
“This matter has been deepened by the negative psychological impact that accompanied the issuance of the Caesar Act, which in its entirety contributed to the rise in the exchange rate of the Syrian pound,” he added.
The World Bank has not provided any official details on the Syrian economy since before the war broke out in 2011.
The United Nations Economic and Social Commission for Western Asia warned in a 2014 report that Syria’s GDP dropped by half during the first three years of war.
Syrian central bank’s reserves of foreign currency fell from $14.4 billion in 2011 to $3.5 million in 2019 due to efforts to maintain the Syrian pound’s exchange rate between 150 and 160 pounds to the US dollar, the UN commission said.
Today, the official exchange rate stands at just over 1,200 pounds to the dollar, and on the black market it is around 3,000.
For his part, economist and researcher at the London School of Economics Zaki Mahshi said that the sanctions could have an impact on private banks.
The sanctions also make Syria more dependent on its allies, Russia and Iran, which could mean more debts and concessions for Damascus, he warned
“The central bank is the artery for the country’s economy. No country will be able to support the Syrian authority with US dollars, which means a further drain of the pound,” Mahshi told EFE.
Last week, the United Nations Special Rapporteur on Negative Impact of Unilateral Coercive Measures on Human Rights, Alena Douhan, warned that the implementation of the Caesar Act “may exacerbate the already dire humanitarian situation in Syria.”
The sanctions hinder the processing of international aid and the importation of humanitarian material, and the legislation under which they are protected “runs roughshod over” Syrians’ right to health or access to housing, she warned.
“The US government must not put obstacles in the way of rebuilding of hospitals because lack of medical care threatens the entire population’s very right to life,” she added.