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Turkish authorities continue cash transfer to banks in opposition-controlled areas in northern Syria. Due to the sharp fall in the Syrian pound, the so-called ”Syrian interim government “recently formally approved the Turkish lira and the US dollar for circulation in its areas in an effort to stabilize the local economy. Banks in Azaz and Idlib were the first to receive new banknotes. Also areas of Aleppo, Afrin, Jarablus witness large quantities of Lira circulating in towns. The structures controlled by Hayat Tahrir Al-sham (the so-called “The Government of National Salvation”) supported this initiative. They have bought the Turkish currency in exchange for the US dollar with value different from the international exchange rate.
On June 11, General Finance Director of the Government of National Salvation announced that all ‘public sector employees’ will receive salaries in Turkish lira.
“Due to the continues collapse of the Syrian pound, and in response to the request of employees, who don’t want to get paid in Syrian pound, the government has started to pay salaries in Turkish lira.. this widely welcomed by the employees,” al-Ibrahim said.
The Salvation Government established by Hayat Tahrir a-Sham, governing Idlib, will begin paying salaries to its employees in Turkish lira. pic.twitter.com/HTyaxRcfMF
— Elizabeth Tsurkov (@Elizrael) June 11, 2020
The Turkish opposition has expressed its concerns about this step. According to some experts, an increase in the money supply at the expense of Syria will create a substantial strain on economy. The Turkish lira itself is also not stable – against the US dollar, it has depreciated by 13.5% in the past year alone. This is due to both global trends and the aggravation of relations between Ankara and Washington. Turkey’s financial system is heavily influenced by the US. Washington understands this well and uses its tools smartly. Very sensitive sanctions strikes were delivered on Ankara by US for the operation in Northern Syria (later canceled) and the purchasing Russia’s S-400 air defence systems.
The direct and rapid dependence of Turkish economy from its foreign policy is conditioned by current geopolitical equation where Turkey has a role of a disposal variable. Since Turkey began providing active assistance to anti-government groups in 2011 the lira has fallen by 78%. Turkey’s GDP fell from $950.5 billion in 2014 to $ 740 billion in 2019. Taking into account Turkey’s actions in Libya, it is hardly predictable when the economy will be able to return to the previous indicators.
As for the Syrian pound, there are also no prerequisites for its strengthening. As the consequence of pending US sanctions its exchange rate to the US dollar crashed to 3 000 that is six times less then pre-war level. The switch to the Turkish lira put additional pressure on its value. Syria’s allies have still no desire (or ability) to support its currency and it continues its way to complete depreciation. Deteriorating living conditions already caused anti-Assad government protests in the government-held territories such as the areas of Latakia, Suweida and Damas.
In the current situation, the only good advice for Bashar al-Assad is to switch to another currency too. The best options are the Russian Ruble or Chinese Yuan, since the Iranian Rial is also passing through hard times.
The roll-out of the Turkish lira is a very important mean of influence in northern Syria which already contains Turkey-held institutions, including the large military presence. Today the talks are underway to switch the areas controlled by Hayyaat Tahrir Al-Sham and other affiliates exclusively to the consumption of Turkish electricity. All this steps fit well into the strategy of Ankara to create a quasi-state under its control on the territory of Northern Syria with its further possible annexation. The economic collapses accelerate the financial transition. The current situation in Syria compounded by Western sanctions and a coronavirus lockdown offer an opportunity to the Turkish-backed forces to fill the country with the Turkish lira and to multiply their influence. There is a good chance that Turkish actions in northwestern Syria were approved by Russia. Recently, there were several signals indicating that Russia and Turkey settle their differences on key topics of the global agenda.
Jarabulus Chamber of Commerce in Syria recommended the usage of Turkish Lira in the market instead of the Syrian Pound. Well it seems like the Turks followed your advice @masss11 https://t.co/YtQ2pmw95Q pic.twitter.com/Qg9mUzYADT
— تبع الExcel (@OmarTamo19) June 8, 2020
The approach implemented by Turkey is not a novation. The very similar one was applied on the East of Ukraine. The 26th of May the Russian ruble was established as the main currency in the self-proclaimed Donetsk People’s Republic. The reason for the reform is called “harmonization of its legislation with the legislation of the Russian Federation”. The switching to the ruble last already for years and was due to the deficit of the Ukrainian hryvna because of the financial blockade on territories not controlled by Kiev. The weakening of economic ties with the rest of Ukraine, the lack of receipts for budget payments, the cessation of Ukrainian banks led to the formation of a “vacuum” of means of payment in uncontrolled territories. Filling this vacuum with another currency has become necessary. It was a financial and economic pattern as well as an important politically determined process.
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