Enab Baladi – Marina Merhej
The new Syrian government is looking to lift the sanctions on the international payments system (SWIFT) imposed on Syria, considering that the banking system forms the lifeblood of any economy, and its disruption means disrupting the economy as a whole, according to Minister of Economy and Trade, Mohammad Nidal al-Shaar.
In an interview with Emirates’ Asharq channel after taking office in the Syrian government on March 29, he stated that lifting the sanctions would not cost the United States a lot, but it would make a significant difference in productivity levels and improve the economic and living situation in Syria. He added that this step would also incentivize the Syrian people and the Syrian government to engage better with the international community in general.
The United States has imposed a series of sanctions on dozens of entities and individuals in Syria following the Caesar Act, which included prohibiting public and private banks in Syria, led by the Central Bank of Syria, from dealing within the global SWIFT network.
Regarding the impact of depriving Syrian banks from dealing within the global SWIFT network and the importance of Syria returning to this network, Enab Baladi approached the Dean of the Faculty of Economics at the University of Damascus, Dr. Ali Kanaan, who spoke about the negative effects of this deprivation and its implications.
Laundering Assad’s money
The ban on renewing sanctions on Syria in 2020 prevented Syrian banks from dealing with the SWIFT network, thereby forbidding Syrian banks from dealing with global banks, according to Dr. Kanaan, pointing out that the aim of this measure was to punish Assad’s regime.
This prohibition disrupted the financing of international aid through banks, as well as transferring funds and payment for imports abroad through money transfer and transportation companies, which increased the cost and risk for traders, raising prices by 40 to 50%.
The absence of SWIFT negatively impacted legitimate traders in Syria, as a network of corrupt traders emerged with ties and partnerships to Assad’s regime, authorized to control the flow of funds into and out of Syria. This action transformed from a penalty into a means of stealing the Syrian people’s money, according to Dr. Kanaan.
Assad’s regime exploited the sanctions imposed by the United States on the banking sector to launder money, especially funds derived from its drug trade, transferring them through exchange companies or planes to obscure banks, some of which are located in Abkhazia, to be redirected from there to European and Asian banks as payment for goods.
Assad’s regime and its affiliates garnered approximately 40% of the volume of external transfers as a result of imposing fees on legitimate traders, utilizing them in import operations to launder the illicit funds existing domestically.
According to Dr. Kanaan, the annual volume of remittances was around $2.5 billion from expatriates to their families in Syria and about $4 billion for imports from abroad.
The Syrian regime acknowledged Abkhazia and South Ossetia in May 2018 and announced the establishment of diplomatic relations with them.
Formal meetings and theft of aid
The Central Bank of Syria held several meetings following the earthquake catastrophe on February 6, 2023, to discuss measures to reactivate the global SWIFT system for financial transfers, in a step to benefit from the exemptions in the US sanctions law for aid efforts to earthquake victims in Syria.
Dr. Ali Kanaan described the meetings held during that period as formal, stating that the Central Bank of Syria did not work seriously to take advantage of the opportunity to lift sanctions on the banking system, as these meetings were not followed by any practical measures from the previous Syrian authorities.
The US Treasury Department issued a general license permitting all transactions related to earthquake relief in Syria and Turkey for a duration of 180 days, which had been prohibited under the US sanctions imposed on the Syrian regime.
The Assad regime rejected the measures imposed by the United States following the February 2023 earthquake, which included alleviating its security and military grip, beginning to release prisoners and conducting trials against criminals, in addition to delivering aid to the affected populations, in exchange for gradually easing sanctions over six months, leading to a complete removal of sanctions thereafter.
The continuation of the previous regime’s repressive and abusive practices against Syrians, along with the theft of humanitarian aid intended for the affected populations at that time, repackaging, and exporting it abroad in exchange for obtaining foreign currency, led the United States to abandon the idea of lifting sanctions on Syria.
A banking system qualified to return to SWIFT
Dr. Ali Kanaan noted that the banking system in Syria is qualified with capabilities and infrastructure and possesses advanced systems that can aid its return to the global payments system (SWIFT) swiftly.
Kanaan emphasized that the return of the global network will help investors outside Syria to transfer part of their funds and begin investments, encourage expatriates to send money to their families more safely and at lower costs, and also aid the delivery of social, economic, and health assistance to Syria.
Syrians have over $250 billion invested abroad, and Kanaan anticipated that approximately 10% of these funds would return upon the lifting of sanctions on the Syrian banking system, contributing to a revival of production in Syria and an economic recovery.
Restructuring
The Union of Arab Banks aims to launch its project related to restructuring and rehabilitating the banking sector in Syria, in partnership with Europe, under a work program scheduled to last about three years.
The project will include developing the infrastructure of the banking sector and training and qualifying banking personnel in collaboration with the German Central Bank, as announced by the Secretary-General of the Union of Arab Banks, Wissam Fattouh, on February 15.
Dr. Firas Shaabo, a financial and banking sciences expert, noted in a previous statement to Enab Baladi that Syria suffers from a significant imbalance in its banking system, and that most commercial, agricultural, and industrial banks are ineffective, necessitating their restructuring and merging into a single bank.
What is SWIFT?
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications, which is a cooperative organization that provides communication services related to financial payments at a high level of efficiency and reasonable costs.
The idea of SWIFT began in the late 1960s with the development of global trade and the organization was established in 1973, headquartered in Belgium, commencing operations in 1977.
The aim of this system is to provide the latest scientific means for connecting and exchanging messages and information among all financial markets through the banks responsible for executing it in various countries, thus enabling participants to meet the needs of both foreign and local clients.
Syrian banking system awaits SWIFT’s return for economic recovery Enab Baladi.
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