Enab Baladi – Jana al-Issa
Five years ago, the interim authorities in northwestern Syria, where these areas were outside the control of the previous regime, decided to adopt the Turkish lira instead of the Syrian pound for monetary reasons. This was a temporary solution until a political resolution could change the situation in the country.
Now, despite more than five months having passed since the fall of the Assad regime and the opening of markets between Syrian provinces, the monetary authorities have not clarified their decision regarding stopping transactions in the Turkish lira and replacing it with the national currency. On the contrary, the circulation of the Turkish currency has extended to other provinces, reaching Damascus due to the opening of trade routes and visits from residents of northwestern Syria to the capital.
Why was it adopted?
With the loss of the Syrian pound’s value significantly since 2011, in addition to the cessation of many commercial transactions that used to take place before 2011 between rural Aleppo, Idlib, and other areas of Syria, and to cut off the benefits of the previous regime, stimulate foreign trade, and other reasons, the Turkish lira was adopted as a local currency in northwestern Syria in June 2020, at the expense of the Syrian pound.
The adoption of the Turkish currency instead of the Syrian pound came after the exchange rate of the Syrian pound reached around 3500 pounds to one dollar, amid demands from Syrians that the replacement be a temporary solution until a political resolution could be reached.
The circulating Turkish currency in Idlib is subjected to damage, with the deterioration reaching a level where merchants and gas stations refuse to accept and deal with it.
In addition to the issue of national sovereignty, all the aforementioned data raises the question of why the circulation of the Turkish lira continues as a substitute for the Syrian pound and its effects on the currency itself, on the monetary market, and on the country’s economy more broadly.
To obtain information regarding the government’s plan concerning the continuation of the availability of transactions in the Turkish lira at the expense of the Syrian currency and the future of this circulation amid its expansion towards Damascus, Enab Baladi contacted the Director of the Public Relations and Media Office at the Ministry of Finance of Syria, but did not receive any response by the time this report was written.
Sovereignty and the economy
The national currency is an economic and sovereign issue; therefore, we find that most countries place national and historical symbols on their currencies. This is from the sovereign side; as for the economic side, the presence of any foreign currencies in circulation is not considered a correct phenomenon, and it limits the central bank’s ability to control the monetary market and achieve stability for the national currency, as confirmed by political economy researcher Yahya al-Sayed Omar.
Al-Sayed Omar added in a conversation with Enab Baladi that the adoption of the Turkish lira in Syria began under exceptional circumstances, and that the adoption of the Turkish lira and the dollar as circulating currencies was justified. However, currently, there are no economic justifications for dealing in the Turkish lira.
Negatives outweigh the positives
The continuation of trading in the Turkish lira may have some positives, according to Dr. Yahya al-Sayed Omar, especially as it may reduce the effects and ramifications of the liquidity crisis. However, the negatives outweigh the positives, especially since the presence of the Turkish lira in circulation and in the absence of an ability to determine its available quantity may negatively affect the value of the Syrian pound and could encourage speculation, thereby increasing the volatility of the exchange rate.
All of this negatively impacts the national economy and delays the onset of economic recovery, and it may have adverse effects on foreign investment, as foreign investors would not be inclined to work in a country where the value of its currency is volatile and unstable, according to the researcher.
The presence of the Turkish lira in circulation and the inability to determine its available quantity may negatively affect the value of the Syrian pound and could encourage speculation, thus increasing the volatility of the exchange rate.
Dr. Yahya al-Sayed Omar, Political economy researcher
A unique exception
Among the key challenges facing the management of currency in Syria is that it should be built on fixed scientific methods to achieve its goals of achieving monetary balance, controlling the monetary mass (money supply) with the quantity of goods and services (demand for money), and maintaining an inflation rate of +2% (known as benign inflation), as explained by economic and banking expert Dr. Ibrahim Nafea Koshaji.
Koshaji confirmed in a conversation with Enab Baladi that the national currency is a symbol of economic sovereignty and a vital tool for monetary policy, enabling the state to control inflation, interest rates, and economic growth; its strength reflects investors’ confidence, while its weakness threatens stability and increases dependency on foreign currencies.
Maintaining the sovereignty of the national currency requires prudent monetary management and support for local production and reserves, making it fundamental to financial independence and flexibility in facing crises, according to Koshaji.
From an economic and sovereign perspective, the spread of the Turkish lira in Syria is considered a “dangerous” phenomenon that threatens Syrian monetary sovereignty, especially if trading shifts from “temporary” to “official.” Acceptance of this means several things, including:
Undermining the Syrian pound as the sole instrument of monetary policy, which would be solidified by traders in those areas refusing to deal in the Syrian pound. Generalizing economic dependence on Turkey, which weakens the Central Bank of Syria’s control over inflation or capital movement. Cementing the economic divide between areas under Turkish influence and those under the Syrian government.
The only exception to dealing in foreign currency is if trading is temporary in specific areas (such as northwestern Syria) to fill a monetary gap due to the collapse of the Syrian pound, but it must be within strict controls to prevent generalization.
Dr. Ibrahim Nafea Koshaji, Economic and banking expert
Loss of seigniorage sovereignty
The spread of the Turkish lira in the capital Damascus and elsewhere reflects a serious decline in citizens’ trust in the national currency. This results in, according to Koshaji:
Infringement on Monetary Sovereignty: The transition of the Turkish lira to a reserve or daily trading currency means transferring part of the monetary policy to Turkey (for instance, changes in the Turkish lira exchange rate which will directly affect prices in Syria), which is termed imported inflation. Complication of Monetary Reform Efforts: Any attempts to reinforce the Syrian pound will face resistance from the reality of trading a strong foreign currency. All countries prevent their currency from being reintroduced from abroad and do not accept it as cash transfers at all, meaning the monetary mass in Turkish lira will remain in Syria and cannot be relied upon as a reserve because it is not a major currency globally. The spread of the Turkish lira in Syria represents a clear loss of the concept of “seigniorage” (the profit made by issuing currency) and contradicts the essence of monetary sovereignty. When a foreign currency (such as the Turkish lira) spreads in the Syrian market, the Central Bank of Syria loses control over the monetary supply as an instrument of monetary policy since demand shifts towards the foreign currency, disrupting tools such as setting interest rates or combating inflation.Koshaji considers that the spread of the Turkish lira is a temporary and unsustainable solution to the monetary crisis, but rather a reflection of a deep-seated sovereign and economic problem. Addressing this requires restoring confidence in the Syrian pound through well-planned monetary policies that restore financial balance, enhance the ability to control inflation, and limit negative external influences.
The success of these reforms will determine the extent of the Syrian economy’s ability to escape from monetary dependency and re-establish internal economic stability, protecting the country from global market fluctuations and enhancing monetary independence in facing crises, according to Koshaji.
Continuing to deal in Turkish lira threatens Syrian sovereignty and economy Enab Baladi.
Read More Details
Finally We wish PressBee provided you with enough information of ( Continuing to deal in Turkish lira threatens Syrian sovereignty and economy )
Also on site :
- Child and two adults killed in M5 crash as road remains closed
- The Best Things to Do in Italy's 'Boot Region,' According to an Apulian Tour Guide
- Iran's Foreign Minister: Uranium enrichment non-negotiable