Middle East

Sanctions 'halve Syria's foreign currency reserves'

Pro-government demonstration outside Syria's Central Bank in Damascus (7 April 2012)
Image caption The European Union expanded its sanctions to target Syria's central bank in February

French Foreign Minister Alain Juppe has said that international sanctions against the Syrian government have cut its foreign currency reserves by half.

Mr Juppe warned that Damascus was actively trying to evade sanctions and called for a solid international response to such "manoeuvres".

Syria's foreign reserves were estimated at $17bn (£10.7bn) before the uprising.

French diplomats also said the Syrian government was now losing about $525m (£326m) a month in oil export revenues.

In November, the European Union banned crude oil imports from Syria, and in February it expanded sanctions to block trade in gold, precious metals and diamonds with Syrian public bodies and the central bank.

Before then, 90% of oil exports went to the EU - mainly to Germany, Italy and France - and oil revenues accounted for about 20% of Syrian GDP.

'Weakening the regime'

Addressing a conference on Syria in Paris, Mr Juppe said: "We know that the Syrian authorities, whose financial reserves have, according to our information, been cut in half, are continuing to actively seek alternative routes to get around these sanctions."

Certain countries were responding to these overtures, Mr Juppe said, by "more or less directly offering alternative deals".

"We must respond to these manoeuvres," he added.

Syria's economy has suffered considerably, contracting by 2% in 2011, while the value of the Syrian pound has crashed. Inflation is also increasing rapidly, with the official rate up to 11% in March 2012, and unemployment is running at more than 20%.

Mr Juppe said this was "contributing effectively to the weakening of a regime that bases its legitimacy on fear, propaganda and manipulation".

However, the International Crisis Group warned last week in a report that the economy's slow collapse would "prompt significant concern or recalculations among decision-makers".

"The Syrian pound's plummeting value paradoxically has reduced the state's foreign currency expenditures, postponing its bankruptcy; indeed, public service salaries have been halved as the dollar's local value doubled," it noted.

"Delays in salary payments, declining basic services, fuel shortages and skyrocketing prices have barely affected the course of events or the opposition's effectiveness.

"In a highly mobilised society, whoever potentially could be tempted to protest has done so already; economic hardships are unlikely to draw many more to the streets."

The ruling Assad family, the ICG said, could "readily shift its business interests from the legal economy to other, equally lucrative black-market opportunities".