Posted by Joshua on Tuesday, May 24th, 2011
The veteran Dutch diplomat and academic explains what is important about each of his top-five picks on Syria and why meaningful political change in Syria will be difficult to achieve. He warns that any move towards democracy is likely to be accompanied by severe sectarian tension.
Tear down this wall, President Assad
By David W. Lesch Monday, May 23, 2011, Foreign Policy
….Assad’s initial strategic vision for an internationally respected and integrated Syria has been consumed by a Syrian paradigm of political survival. He desperately needs to break out of this stifling, anachronistic box and embrace a transformational role in his country. It will be difficult, with powerful pockets of resistance to any significant changes to the status quo potentially arrayed against him. Is he willing to boldly take them on? Can he be Gorbachev-like? Is he the father who did everything he could to ensure his children’s future? Because if he is not all of these things, he will once again be faced with two possibilities: He will either be violently overthrown or be president of a country that has become the North Korea of the Middle East. I doubt this is what he really wants.
Syria: Desperate measures, 16 May 2011
Economist Intelligence Unit – Business Middle East
The central bank has hiked deposit rates sharply in what seems to be a desperate bid to shore up ebbing confidence in both the local currency and the banking system
The Central Bank of Syria has announced a set of measures that seem to be aimed mainly at shoring up confidence in the local currency in the face of the extreme political turbulence that has hit the country since mid-March. The measures could succeed in their assumed objective of protecting the Syrian pound, but they risk imposing heavy costs on both banks and their business creditors. They also betray a certain desperation on the part of the authorities, and suggest that the state’s foreign exchange reserves could be sinking to dangerously low levels.
The central bank has addressed the problems of an exchange rate under pressure and shrinking liquidity in the banking system on three fronts: it has increased interest rates on deposits (in both local and foreign currency); it has cut the statutory reserve requirement of banks; and it has introduced a foreign exchange savings scheme.
Soundings by the Economist Intelligence Unit indicate that the central bank did not consult with banks about its plans, which were communicated through a statement from the governor, Adib Mayaleh, to Al-Thawrah, a state-owned newspaper. The increase in rates on Syrian pound deposits has been, in effect, 300 basis points: the recommended range for rates on time deposits has been set at 7-9%, compared with 5-7% previously, but the additional margin that banks are allowed to use has been narrowed by 100 basis points to plus or minus 1 percentage point (from 2) on condition that the gap between the highest and lowest rate is not more than 2 percentage points (previously 3). Given that banks will be unable to pass on the increases to all of their loan customers (as some facilities will have had fixed rates), the impact on lending rates for new customers and existing ones with variable rates will be severe. Syrian businesses have been able to borrow at 9-10% since deposit rates were cut at the end of 2010; lending rates are now likely to shoot up to about 15%. The central bank is evidently hoping that the higher deposit rates will stem the recent tide of withdrawals (which have been particularly marked in public-sector banks). Mr Mayaleh also said that he has decided to increase rates on foreign exchange deposits, to 2-3% over Libor for US dollars and 1-2% over Libor for euros. He said that this measure should encourage Syrians to keep their hard currency savings inside the country.
In response to banks’ complaints about a shortage of liquidity, the central bank has lowered the statutory reserve requirement to 5% of total deposits from 10% previously. This ratio can be cut to zero in relation to the portion of deposits devoted to financing projects.
Earlier this year the central bank increased the amount of foreign exchange that Syrians were permitted to buy for unspecified reasons to US$10,000 per month from US$3,000 previously. However, as pressure mounted on the local currency this dispensation was in effect suspended. Mr Mayaleh has now offered a scheme whereby a customer can make a one-off purchase up to US$120,000 per year on condition that it is left in a term deposit account. The funds will earn interest, but this will be deducted in the event that the funds are withdrawn before the minimum term of three months.
Pound on the slide
The central bank has chosen to take these measures after several weeks of pumping foreign exchange into the market in an effort to narrow the differential between the official exchange rate and rates offered on the black market. The Syrian pound is pegged against the SDR, but the official rate has hardly moved over the past few months. As a result of the intervention the gap between rates had started to narrow, but the resort to interest rate hikes suggests that the authorities may be starting to be concerned about the risk of running down the country’s foreign exchange reserves. These are estimated by the IMF to have been about US$20bn prior to the crisis, but this sum includes holdings of the largest state-owned bank as well as those of the central bank itself. The authorities appear to have shied away from the option of devaluation.
The measures appeared on balance to reassure the Syrian financial markets, at least to judge by the performance of the stockmarket, whose index rose by 2% on May 4th (as well as on the next three trading days), after steady declines over the previous six weeks. Bankers clearly hope that the authorities will compensate them through offering realistic rates on upcoming treasury bill issues and through placing some more foreign exchange in the banking system. It is also assumed that if the political situation stabilises, the authorities will be in a position to lower interest rates before too long.
The EU sanctions that went into effect on May 10th will not have a serious immediate impact on the Assad regime, but they serve as warning that one important source of development finance is now at risk.
Kuwaiti Investors Acquire Syria Duty Free’s Border Outlets
2011-05-24 By Lina Ibrahim
May 24 (Bloomberg) — Kuwaiti investors acquired duty-free shops operated at airports, ports and border crossings in Syria, according to a statement posted on the website of Syria Duty Free Ltd. The previous owners included the Makhlouf family, whose members were covered by recent U.S. and European Union asset sanctions related to human-rights abuses in Syria. The investors, who were not identified, bought all the shares in the company including those held by Sunset Ltd. and Dawn Ltd. and plan to disclose more information about the transaction, Syria Duty Free said in the statement dated May 20.
الحكومة تقرر تخفض سعر ليتر مادة المازوت من “20 ليرة إلى 15 ليرة “ Syria lowers the price of Mazout – Kar0sin oil – from 20 to 15 liras a liter. This is a big deal and will cost the government a lot of money.
أصدرت رئاسة مجلس الوزراء، يوم الثلاثاء، قرارا بتخفيض سعر ليتر مادة المازوت من (20 ليرة سورية) إلى (15 ليرة سورية)، وذلك بعد قيامها بتخفيض سعره في العام 2009 من (25 ليرة) إلى (20 ليرة).
An interesting analysis of the Kurds (in french Le Monde) about their delicate position in Syria in the uprising.
Que veulent les Kurdes syriens ?
Syria’s cyberdissidents fight from abroad
May 24, 2011 12:04 PM (Last updated: May 24, 2011 12:12 PM)
By Khaled Soubeih, Agence France Press
Syria’s cyberdissidents are determined to keep fighting for freedom in their homeland, which for 48 years has been ruled by the Baath party.
“We have no choice. We either keep fighting or we accept that our children will be ruled by the children of Bashar al-Assad, as our parents lived under Hafez,” Bashar’s late father, Samra said.
Massoud Akko, a 28-year-old Syrian Kurdish activist, is banned from travel in his native Syria. He managed to escape to Lebanon one year ago and today continues his activism from Norway.
“Our cause today is to restore dignity to all Syrians, no matter who they are, and to build our future with our own hands, the hands of the people, as in any civilised country,” Akko said.
Abed al-Hindi, a 28-year-old Christian from Damascus, fled to Lebanon in 2007 before moving to the United States, where he today works with cyberdissidents.org, an organisation that promotes online activism.
“What every Syrian dreams of today is a state that is fair to all and has as its priority the safety and interests of its citizens,” Hindi told AFP….