Syria: Local Currency Devaluation Exacerbates Sufferings In Damascus

Souvenir mugs featuring Syria’s President Bashar al-Assad, Russia’s President Vladimir Putin and Lebanon's Hezbollah leader Sayyed Hassan Nasrallah are seen among other items for sale in old Damascus, Syria, February 8, 2016. REUTERS/Omar Sanadiki
Souvenir mugs featuring Syria’s President Bashar al-Assad, Russia’s President Vladimir Putin and Lebanon's Hezbollah leader Sayyed Hassan Nasrallah are seen among other items for sale in old Damascus, Syria, February 8, 2016. REUTERS/Omar Sanadiki
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Syria: Local Currency Devaluation Exacerbates Sufferings In Damascus

Souvenir mugs featuring Syria’s President Bashar al-Assad, Russia’s President Vladimir Putin and Lebanon's Hezbollah leader Sayyed Hassan Nasrallah are seen among other items for sale in old Damascus, Syria, February 8, 2016. REUTERS/Omar Sanadiki
Souvenir mugs featuring Syria’s President Bashar al-Assad, Russia’s President Vladimir Putin and Lebanon's Hezbollah leader Sayyed Hassan Nasrallah are seen among other items for sale in old Damascus, Syria, February 8, 2016. REUTERS/Omar Sanadiki

The rise in the exchange rate of the US dollar against the Syrian pound has exacerbated the suffering of the people of Damascus. Recent tension erupted between Rami Makhlouf, who for decades had the country’s most prominent economic pillars, and the government who asked the businessman to pay about $180 million. As a result, the lira lost about 35 percent of its value, as the exchange rate fell against the dollar from 1200 to 1600 after it was 46 liras back in 2011.

The Syrian regime has ordered a series of measures against Makhlouf’s companies, including the Association, and his shares in the state-owned Syrian Telecom Company (Syriatel), the country’s biggest mobile phone company.

The government’s Telecommunications and Postal Regulatory Authority informed two of Makhlouf’s companies, “Syriatel” and “MTN” mobile phone to pay about 234 billion Syrian pounds to the state treasury as a penalty.

Official media quoted a Syrian economic researcher as saying that the amendment of the contracts with the two mobile companies has caused the loss of more than 338 billion pounds (482 million dollars) to the treasury.

Economists told Asharq Al-Awsat that the crisis between the government and Makhlouf had been silent for a year, but that the new conflict emerged in light of “the government’s urgent need for the dollar,” which was reflected in a terrible rise in food prices in the capital.

The World Food Program estimated that food prices rose by 107% in one year.

In parallel, the Ministry of Oil stopped, on Sunday, supplying vehicles with subsidized gasoline, in a new austerity measure that reflects the exacerbation of the economic and financial crisis.

The decision sparked criticism on social media and on the street, while government officials blamed the fuel crisis on economic sanctions imposed by several Arab and Western countries, which prevented the arrival of oil tankers.

The US sanctions against Tehran have aggravated the fuel crisis in Syria, which depends on a credit line that links it to Iran to secure its fuel.

Meanwhile, the government and the central bank have demonstrated a great inability to find solutions to the economic crisis and to control the exchange rate. Instead, they stood idle at the fastest deterioration of the value of the lira without taking any proper action.

“Our government does not have the needed dollars and is barely managing to bring in wheat, sugar and rice,” An economic expert told Asharq Al-Awsat.

“Unless the government demonstrates great flexibility in the international conflict taking place over the Syrian file, the economic situation in the country is heading towards a further deterioration,” he added.



Iran Scrambles to Swiftly Build Ties with Syria’s New Rulers

A handout photo made available by the Iranian presidential office shows Iranian President Masoud Pezeshkian (R) and Foreign Minister Abbas Araghchi (L) during the opening session of the Organization of Eight Developing Countries (D-8) summit in Cairo, Egypt, 19 December 2024. (EPA/Handout)
A handout photo made available by the Iranian presidential office shows Iranian President Masoud Pezeshkian (R) and Foreign Minister Abbas Araghchi (L) during the opening session of the Organization of Eight Developing Countries (D-8) summit in Cairo, Egypt, 19 December 2024. (EPA/Handout)
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Iran Scrambles to Swiftly Build Ties with Syria’s New Rulers

A handout photo made available by the Iranian presidential office shows Iranian President Masoud Pezeshkian (R) and Foreign Minister Abbas Araghchi (L) during the opening session of the Organization of Eight Developing Countries (D-8) summit in Cairo, Egypt, 19 December 2024. (EPA/Handout)
A handout photo made available by the Iranian presidential office shows Iranian President Masoud Pezeshkian (R) and Foreign Minister Abbas Araghchi (L) during the opening session of the Organization of Eight Developing Countries (D-8) summit in Cairo, Egypt, 19 December 2024. (EPA/Handout)

The Iranian government is scrambling to restore some of its influence in Syria as it still reels from the shock ouster of its close ally President Bashar al-Assad on December 8.

The Iranian president, Masoud Pezeshkian, is already facing multiple domestic and international crises, including an economy in shambles and continued tensions over its nuclear program. But it is the sudden loss of influence in Syria after the fall of Assad to opposition groups that is exercising Iranian officials most, reported The Guardian on Friday.

“In the short term they want to salvage some influence with the opposition in Damascus. Iranian diplomats insist they were not wedded to Assad, and were disillusioned with his refusal to compromise,” it said.

Foreign Minister Abbas Araghchi said in an interview this week: “We had long ago reached the conclusion that the continuation of governance in Syria would face a fundamental challenge. Government officials were expected to show flexibility towards allowing the opposition to participate in power, but this did not happen.”

He added: “Tehran always had direct contacts with the Syrian opposition delegation. Since 2011, we have been suggesting to Syria the need to begin political talks with those opposition groups that were not affiliated with terrorism.”

At the same time, Iran’s foreign ministry spokesperson insisted it only entered Syria in 2012 at Assad’s request to help defeat ISIS, continued The Guardian. “Our presence was advisory and we were never in Syria to defend a specific group or individual. What was important to us was helping to preserve the territorial integrity and stability of Syria,” he said.

Such explanations have not cut much ice in Damascus. Iran remains one of the few countries criticized by Ahmed al-Sharaa, the Hayat Tahrir al-Sham (HTS) leader.

Short honeymoon

Many Iranian officials are claiming the current victory lap being enjoyed by Türkiye in Syria may be brief as Ankara’s interests will start to diverge from the government led by the HTS.

Senior cleric Naser Makarem Shirazi said: “We must follow the Syrian issue with hope and know that this situation will not continue, because the current rulers of Syria will not remain united with each other”.

The conservative Javan newspaper predicted that “the current honeymoon period in Syria will end due to the diversity of groups, economic problems, the lack of security and diversity of actors.”.

Officially Iran blames the US and Israel for Assad’s collapse, but resentment at Ankara’s role is rife, ironically echoing Donald Trump’s claim that Syria has been the victim of an unfriendly takeover by Türkiye.

In his speech responding to Assad’s downfall supreme leader Ali Khamenei said a neighboring state of Syria played a clear role” in shaping events and “continues to do so now”. The Fars news agency published a poster showing the HTS leader in league with Recep Tayyip Erdogan, Benjamin Netanyahu and Joe Biden.

Iran’s Strategic Council on Foreign Relations questioned whether HTS would remain allies with Türkiye for long. It said: “Although Türkiye is only one of the main winners of Bashar al-Assad’s fall from power in the short term, Ankara can never bring a government aligned with itself to power in Syria. Even if HTS attempts to form a stable government in Syria, which is impossible, in the medium term, it will become a major threat to Türkiye, which shares an 830-kilometer border with Syria.”

Reliance on Türkiye

Former Iranian President Hassan Rouhani predicted a bleak future for Syria and Türkiye. “In recent weeks, all of Syria’s military power has been destroyed by Israel, and unfortunately, the militants and Türkiye did not respond appropriately to Israel. It will take years to rebuild the Syrian army and armed forces.”

Mohsen Baharvand, a former Iranian ambassador to the UK, suggested the Damascus government may find itself overly reliant on Türkiye. “If the central government of Syria tries to consolidate its authority and sovereignty through military intervention and assistance from foreign countries – including Türkiye – Syria, or key parts of it, will be occupied by Türkiye, and Türkiye will enter a quagmire from which it will incur heavy human and economic costs.”

He predicted tensions between Türkiye and the HTS in particular about how to handle the Syrian Kurdish demand in north-east Syria for a form of autonomy. The Turkish-funded Syrian National Army is reportedly ready to mount an offensive against the Kurdish Syrian Democratic Forces in Kobani, a Kurdish-majority Syrian town on the northern border with Türkiye.

Türkiye’s Foreign Minister Hakan Fidan said on Wednesday that if the issue were addressed “properly” Ankara would not seek a military intervention. “There is a new administration in Damascus now. I think this is primarily their concern now,” Fidan said.

More broadly, the Syrian reverse is forcing Iran to accelerate a rethink of its foreign policy. The review centers on whether the weakening of its so-called Axis of Resistance – comprising allied groups in the region – requires Iran to become a nuclear weapon state, or instead strengthen Iran by building better relations in the region.

For years, Iran’s rulers have been saying that “defending Iran must begin from outside its borders.” This hugely costly strategy is largely obsolete, and how Iran explains its Syria reverse will be critical to deciding what replaces that strategy.