The lifting of international sanctions from Syria’s economy has removed a key obstacle to the country’s recovery, but serious challenges remain. While investors are sizing up opportunities in the country, some Syrians remain unconvinced that their homeland is a place where they can do business safely. In an interview published in The National on Sunday, Syrian businessman Khaldoun Qassem said he was debating whether to return from Poland for good and develop one of the courtyard houses he owns in Old Damascus into a hotel.
Mr Qassem’s reticence – and that of thousands more diaspora Syrians – is understandable. As well as the country’s highly volatile security situation, a critical part of its financial infrastructure – the banking system – is barely getting back on its feet after years of sanctions and mismanagement under the Bashar Al Assad regime. For Syria’s economy to have a fighting chance, bold steps must be taken quickly to re-establish a banking network that can earn citizens’ and investors’ trust, removing as much financial risk from the country as possible.
However, there are encouraging signs that those charged with renewing Syria’s banking sector are working towards solutions. In an exclusive interview with The National published yesterday, central bank governor Abdul Kader Husriyeh outlined plans to update monetary policy, review banking legislation, strengthen anti-money laundering measures and engage with foreign depositors, including sovereign entities.
These are necessary steps to restore confidence in Syria’s financial sector and attract the external capital that the country’s banks need to play their part in reviving the national economy, such as helping to tackle unemployment by providing loans to small businesses. But this process must involve more than funnelling money into under-capitalised Syrian banks, which could lead to the country falling into political and economic dependency. Instead, banks must be supported in their journey to become “engines of lending and investment” rather than repositories for deposits, as Mr Husriyeh told The National.
However, much work remains to be done. Although there has been important international support for Syria’s economy, such as Saudi Arabia and Qatar clearing the country’s $15.5 million World Bank debt, the situation regarding sanctions is still in flux. While the US Treasury on Friday issued a general licence to authorise “transactions prohibited by the Syrian Sanctions Regulations”, a waiver of Caesar Act secondary restrictions announced by US Secretary of State Marco Rubio is valid for 180 days only, subject to renewal.
When this uncertainty is combined with the varying speed of other countries’ and trading blocs’ lifting of their own Syria sanctions, it is unclear when businesspeople such as Mr Qassem will feel that their country is truly open for business. What is certain, however, is that the absence of sanctions is not enough on its own to make Syria’s economy bloom.
The country needs a banking system that its people and would-be international investors can depend on. This requires sustained and realistic outside support, but with the right guarantees of transparency and good governance building up solid banks that drive the country’s recovery is an entirely achievable goal.
