Samir Seifan said that strategy Syrian regime used to fix the Syrian pound exchange rate against the US dollar has been somewhat successful; despite the fact that the rate is three times the rate three years ago, it is still far less than expected.
Seifan said that regime has used many methods to achieve this, including observation and control of exchange offices to prevent manipulation of exchange prices. This has extended to arresting people working in currency exchange and closing the non-abiding offices.
Although this method helped in controlling the Syrian Pound exchange rate, its role was still minimal according to the researcher.
“Other important factors helped in stabling the Syrian Pound exchange rate was the law of supply and demand for the foreign currency,” Siefan said. He explained that demand for foreign currency has fallen as government need for the foreign currency decreased as a result of reduced foreign investment, which used to comprise 40% of the public budget.
This is in addition to a reduction in the import of equipment for the public sector, as most of services have nearly stopped.
“Moreover, stopping the import of consumable products like sugar, tea and rice, and equipment for teaching and healthcare, losing control of wide areas of land all helped the regime to shrink its expenses," he said.
"Many employees in the public sector were killed or left the country, or the regime has stopped paying them salaries, which helped reduce spending” the economist added.
Other factors, according to the researcher, were a reduction in the private sector and people's expenses to the minimum spending. Displacing people from their areas and forcing them to live in camps, forcing others to leave Syrian to neighboring countries, along with decreased demand for the U.S. dollar for treatment or study abroad, all helped in reduce the elevation of the Syrian Pound exchange rate.
On the other hand, supply of US dollars has fallen down, the economist explained.
"That resulted from stopping or reducing petrol production and export, a reduction in export of vegetables and fruits, shrinking of inward money transfer and lastly, many investors and businessmen exported their money abroad at the beginning of Syrian revolution," he said.
"The rational use of standby budget by the regime, Iranian and Russian financial support, and the Russian’s support in regard to arms, all helped keep the balance of supply and demand at that level," he added.
Two other factors also helped support the Syrian Pound, Seifan said.
"First was forcing businessmen in Syrian to pay a proportion of their income to support regime. The other factor is the money sent to the opposition, which helped, in a way, to pump foreign currency and U.S. dollars into the market."
The economy expert does not believe selling gold alloy or pounds has had any effect on the demand and supply equation, because in the end, gold prices would follow international prices.
However he says it may help war traders, as hiding gold in their houses or even underground would be easier for them than hiding foreign currency.
Tthe idea is nothing more than propaganda,” the economist said.
Regarding petrol and gas, Seifan said that Syria is ricjh in the resources in three areas: the first is Hasakeh, which used to produce 220,000 barrels of heavy oil, which is now under control of the Kurdish PYD; the second storage facility is based in Dier El-Zor, and used to produce 140,000 barrels of light oil, and is now mostly under the control of different militant groups and out of Syrian regime control; and the third is in the middle region around Palmyra and to the East of Homs, which produces mainly gas. In practical terms, most oil storages in Syria are out of regime control.
The Expert confirms that there is no oil exporting as the production capacity for both Homs and Baniyas refineries do not exceed 240 thousand barrels a day.
Mr Seifan does not believe in the claim that crude petroleum is transferred to Iraq to be refined and imported again, as there is no pipeline to do so, besides the local refinery are capable to do the job.
Translated and edited by The Syrian Observer