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Syria, September-5 Volume
21.
27.09.2002
US Sabre Rattling Hits
Syrian Pound Hard |
Syria’s currency took a heavy
hit in mid-September, as the country’s economy
minister and analysts said the prospect of a US
strike on Iraq - and perhaps Syria, in the
worst-case scenario envisioned in Damascus - led
many Syrians to truck currency as they could into
Lebanon and sell it for whatever it brought.
Bankers, some exchange offices and
informal currency traders in Beirut said the
Syrian currency was trading between 55-58 to the
dollar in the third week of September, when U.S.
President George W. Bush sent a draft resolution
to Congress asking for approval for the use of
force against Iraqi President Saddam Hussein, who
the Bush administration says must be brought down
before he acquires weapons of mass destruction.
That rate compared to one of 51-52 Syrian
pounds per dollar that has long prevailed in
Lebanon, which effectively functions as the
financial services centre Syria’s centrally
planned economy and archaic banking sector lack.
Syrian Economy Minister Ghassan El Rifai, speaking
to Syrian television, attributed that slide to the
anxiety surrounding a possible US strike on Iraq
and assured that his country had sound enough
fundamentals and adequate hard currency reserves
to merit a stronger pound. "The surprising drop in
the value of the pound has no domestic roots,
economic or otherwise, but is linked to the
regional situation and the negative effects of the
American threats against Iraq," he said.
The dip was the most dramatic movement in
the currency since Syria partially liberalised its
exchange rate regime in 2001, putting the pound at
around 50 to the dollar and eliminating several
official transaction rates which had compelled
transactions at rates divorced from the currency’s
actual market value. Syria has retained sharp
restrictions on the movement of currency out of
the country that it had maintained in order to
preserve the old exchange rate regime.
While there is nothing new about Syrians
using Lebanon as a channel for assets they fear
could be subject to some form of expropriation in
Syria, the combination of the escalating US war
rhetoric on Iraq and new US pressure on Damascus
look to be the trigger for currency transactions
on a scale and under circumstances that are taking
a toll on the pound.
The US Congress this
month began hearings on the Syria Accountability
Act - a piece of legislation put forth by hawkish
pro-Israeli lawmakers - that proposes punishing
Syria diplomatically for alleged backing of
terrorism, chiefly through its support of
Lebanon’s Hizbollah and through hosting
Palestinian groups such as Hamas and Islamic
Jihad. Much to the delight of the Christian-based
opposition to Syrian political dominance in
Lebanon, the resolution also calls for Damascus to
cease its "occupation" of its little neighbour.
The Bush administration opposes the
legislation, calling it unhelpful in the context
of the US attempt to rally support for the
anti-terror campaign sparked by the September 11
attacks; Washington has acknowledged significant
cooperation against al Qaida with Damascus. But
repeated allegations by the Israeli media that
Lebanon is hosting al Qaida training camps in the
Bekaa Valley have found their way onto the tongues
of US lawmakers.
Democrat Eliot Engel, who
co-sponsored the Syria Accountability Act, said in
committee: "Syria has close ties to numerous
violent terrorist groups - including al Qeada and
Hezbollah - and is developing weapons of mass
destruction. It has been reported that Syria
recently allowed 150-200 al Qaeda operatives to
enter a Palestinian refugee camp in Syria. In the
post-September 11th world, we cannot stand by
while Palestinian militants, Al Qaeda terrorists
and the Syrian government armed with weapons of
mass destruction stir together like some deadly
terrorist cocktail." "It is time to hold Syria
accountable for its actions and put them on notice
that the world is watching. Turning a blind eye to
Syria, its weapons of mass destruction and their
support of terrorists weakens the United States in
the eyes of the world, undermines our war on
terror and threatens American lives," he said.
While the proposed legislation does not
goes as far as threatening military action,
Damascus has undoubtedly caught the smell of
gunpowder coming from Washington, and its official
press has begun warning that Syria and Lebanon may
well be targets in the US campaign which now
focuses on Iraq. The idea, it warns, is to restock
the Middle East with more pliable leaders - along
the lines of Afghan interim leader Hamid Karzai –
who are unable to confront US client Israel.
The state Tishreen daily warned earlier
this month that Israel was already calling the
shots in Washington vis-a-vis Iraq and
particularly through its pawns in Congress to
exert pressure on Damascus, saying:
"Extremist Congressmen known for their
clear Zionist inclinations have proposed this law
in full coordination with the racist government of
(Israeli Prime Minister Ariel) Sharon. They are
using some weak-willed individuals who conspire
against Lebanon and its Arab identity, and
collaborators with the Zionist entity for this
purpose." That commentary concluded with
predictably robust pledges to stand firm against
the US-Zionist machine, but the beating Syria’s
pound has absorbed raises the question of whether
Damascus isn’t already starting to pay for what
Washington and Israel claim are its sins.
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