Enab Baladi – Christina al-Shammas
The transitional phase in the Syrian economy is anticipating a long-awaited return for a gradual reintegration into the global financial system, after 14 years of financial isolation due to previous European-American sanctions imposed on the economic sector.
The economic sanctions that targeted the Central Bank of Syria and the Commercial Bank of Syria, along with the resorting to the informal remittance system, have harmed citizens who depend on external financing from Syrians abroad and international humanitarian organizations.
The sanctions imposed on the Syrian Central Bank significantly reduced external financial flows, which means strangling the activity of Syrian banks, losing control over the exchange rate, and the escape of the majority of foreign banks from the country, except for Islamic and Gulf banks that maintained their relationships and dominated the local banking scene despite being recent in Syria.
Economic isolation has affected the growth and development of private banks, even though they were not on the list of targeted institutions in the sanctions, as they are linked to Lebanese and Jordanian banks. However, they lost their relationships with western intermediary banks due to compliance policies and risk avoidance.
SWIFT: An international window
The Central Bank of Syria intends to work on re-linking the banking system in Syria with the global transfer system “SWIFT,” following the lifting of American sanctions on Syria.
The Governor of the Central Bank of Syria, Abdul Qader Hasriyeh, stated that the bank has begun working on activating the SWIFT system for international transfers, noting that more than 50 Arab and international banks expressed interest in opening a branch and investing in Syria before the announcement of the lifting of sanctions.
Hasriyeh pointed to the importance of lifting American sanctions to lift the ban on the Central Bank’s funds and the funds of the Syrian state, and to rebuild a reserve for Syria, which could be deposited in foreign banks, alleviating the burden of cash and earning profits from deposits.
Dr. Abd al-Rahman Muhammad, Vice Dean of the Faculty of Economics for Administrative Affairs and Student Affairs at Hama University, told Enab Baladi that the return of Syrian banks to the global financial system and the return of the SWIFT system is considered an important and essential step, but it carries many challenges and procedures that must be taken into account.
Economic researcher Muhammad al-Saloum believes that the return of Syrian banks to the global SWIFT system after years of financial isolation is one of the most significant transformations in the Syrian economic scene over the past decade.
This step, while seemingly technical at first glance, entails political and economic implications that go beyond simply connecting banks to the global financial communications network, as it allows the resumption of financial transfers from abroad, especially from expatriate Syrians who relied in past years on unofficial and costly channels, which reached additional costs of up to 40% in some instances.
On the other hand, reactivating SWIFT represents a potential signal of a constrained political openness, reflecting the readiness of some international parties to gradually reintegrate the Syrian economy, albeit through the banking sector, according to al-Saloum.
Al-Saloum noted that economic history teaches us that excluding countries from the global financial system occurs swiftly, but their reintegration requires years of continuous work and transparency. Therefore, the return of SWIFT should be viewed as a window rather than a salvation, and as a strategic opportunity rather than a guaranteed outcome.
A return that requires building trust
Al-Saloum clarified that Syria’s return to the global financial system is not just about reactivating SWIFT to achieve the desired benefits, but it requires a banking infrastructure that is technically and operationally ready, capable of adhering to international standards required for accession to the global financial system.
He pointed out that the return of SWIFT is not based solely on technical linkage, but rather on restoring trust both internally and externally, which is a rare commodity in an environment saturated with challenges and regulatory constraints.
“The success of this step requires a mix of political will for reform, smart investments in financial infrastructure, along with flexible regional partnerships capable of compensating for the shortfall in Western channels,” said al-Saloum.
Dr. Abd al-Rahman Muhammad shares this opinion, stating that the return of Syrian banks to the global financial system demands significant efforts from all concerned parties, including modernizing systems, improving transparency, and building trust with external banks.
Internal modernization
Dr. Abd al-Rahman Muhammad, Vice Dean of the Faculty of Economics for Administrative Affairs and Student Affairs at Hama University, indicated that Syrian banks, in order to restore trust on the international stage, must undertake several procedures that include modernizing their technical systems and complying with international anti-money laundering standards, among others. They must also enhance financial transparency and provide accurate reports.
Economic researcher Muhammad al-Saloum agrees with Dr. Muhammad, stating that the return of SWIFT is considered a gateway to openness, and qualifying Syrian banks is the mandatory pathway for crossing.
Technical modernization forms the foundation of this path; it has become essential to adopt the “ISO 20022” standards for transfer messages and to develop the digital infrastructure of banks to align with compliance systems, particularly those related to anti-money laundering and counter-terrorism financing according to the requirements of the Financial Action Task Force (FATF).
Moreover, it requires greater transparency in corporate governance and periodic publication of financial data in accordance with international accounting standards, in addition to rebuilding human resources and training them to handle transfers via global networks.
Al-Saloum believes that the Lebanese experience in the post-financial crisis phase provides a clear example that formal reform alone is not sufficient. Updating systems without liquidity support and building trust with international correspondents could turn reform into an organizational burden without developmental impact.
From here arises the need for external support, especially regional, to contribute to accelerating the structural qualification of Syrian banks and creating a temporary financial umbrella until the country fully prepares for reintegration.
Qatar intervenes
Syrian Foreign Minister Asaad al-Shibani announced at a press conference attended by Enab Baladi following his return from Qatar on June 3rd, that discussions were held to enhance and develop cooperation in the sectors of energy, economy, trade, finance, tourism, telecommunications, information technology, higher education, and others.
According to al-Shibani, several agreements were made in the economic and financial sector between the Syrian and Qatari sides, which included:
Qatari banks starting to provide services to Syrian banks in Qatari riyals, aiming to link Syria to the global financial system. Reactivating the Qatari-Syrian holding company to serve as a genuine investment platform. An anticipated visit of a Qatari economic delegation to Damascus during June to discuss priority projects. Supporting government efforts in addressing debts towards international financial institutions. Enhancing the participation of Qatari financial institutions in the Syrian banking sector. Organizing a Syrian-Qatari investment forum soon to strengthen the partnership between the two countries. Training courses for Syrian government staff in Qatari institutions.Dr. Abd al-Rahman Muhammad clarified that the role of Qatari banks is reflected in providing messaging services, which will facilitate financial transfers between Syrian banks and international banks, thereby helping to link Syria to the global financial system.
The Dean of the Faculty of Economics for Administrative Affairs at the University of Hama, Dr. Abd al-Rahman Muhammad, believes that Qatar providing its services to Syrian banks in Qatari riyals could have multiple objectives, including strengthening the Qatari currency in the Syrian market and easing financial transactions between the two countries.
On the other hand, Muhammad touched upon concerns from foreign banks regarding the risks associated with dealing with Syrian banks, especially in light of the current economic situation.
Therefore, Qatari banks could play an intermediary role in restoring confidence by providing guarantees and facilitations, and it is essential to have real investment in developing the financial infrastructure, which could help restore banking relations with international banks, according to Muhammad.
Supportive cooperative models
Qatar was not the only one providing support to the Syrian banking sector; according to a statement by the Governor of the Central Bank of Syria, Abdul Qader Hasriyeh, there are three Jordanian banks currently operating in Syria, and the goal is to increase the number of Jordanian banks in the Syrian market to enhance the contribution of the Jordanian banking sector to the Syrian economy.
Economic researcher Muhammad al-Saloum considered regional partnerships, especially with Qatar and Jordan, play a complementary and necessary role at this transitional stage of the Syrian economy. Cooperation with Qatari banks provides riyal correspondent accounts, which alleviates pressure resulting from restrictions imposed on the use of the dollar in transfers.
It also opens the door for financing bilateral trade through documentary credits, which could increase the total trade exchange to about 300 million dollars annually, in addition to facilitating the reception of remittances from expatriates estimated at 750 million dollars annually.
The Syrian-Jordanian cooperation represents a qualitative opportunity by utilizing the extensive Jordanian banking infrastructure as a temporary intermediary channel, allowing for the execution of transfers and accelerating transactions in vital sectors, most notably pharmaceuticals and agriculture.
Al-Saloum pointed out that these cooperative models remain limited in their ability to meet Syria’s financial needs alone, necessitating the expansion of the cooperation framework to include other countries from the Gulf and Asia and adopting additional currencies such as the Chinese yuan and the UAE dirham, amid the complexities of dealing with the dollar due to the sanctions previously imposed.
Effective SWIFT return depends on bank qualifications and financial transparency in Syria Enab Baladi.
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