Syria: Lifting sanctions is a miracle and cooperation with the World Bank to stabilize the currency
Given the severe economic challenges facing the Syrian Arab Republic, recent official statements have described the lifting of Western sanctions imposed on the country as akin to a "miracle" at present, due to the political and legal complexities surrounding this thorny issue. In parallel with this difficult reality, sources revealed intensive efforts to work and coordinate with international financial institutions, specifically the World Bank and the International Monetary Fund, with the aim of finding mechanisms that contribute to stabilizing the local currency and controlling inflation rates.
The reality of economic sanctions and their direct impact
This description of the current situation comes in the context of years of stringent economic sanctions imposed by the United States and the European Union. Perhaps the most prominent of these sanctions is the Caesar Act, which came into effect in mid-2020. This act imposed severe restrictions not only on Syrian entities but also on any external parties dealing with Damascus in vital sectors such as energy, construction, and engineering. This historical backdrop of sanctions has rendered the Syrian economy virtually isolated from the global financial system, complicating import and export operations and banking transactions, and leading to a sharp decline in the value of the Syrian pound against foreign currencies.
The currency crisis and the historical context of the decline
To understand the importance of current efforts to stabilize the currency, one must consider the broader context of the Syrian economy, which has suffered immense depletion of its resources since the outbreak of the crisis in 2011. The Syrian pound has experienced successive collapses, eroding citizens' purchasing power and causing a dramatic rise in the prices of basic commodities. While cooperation with the World Bank and the International Monetary Fund appears complex given the financial arrears and the political situation, its primary aim is to obtain technical and advisory support that can assist the Central Bank of Syria in managing monetary policy and mitigating exchange rate volatility—a crucial factor for the food security and livelihoods of the population.
The regional and international importance of economic movements
These statements take on particular significance in light of recent regional developments, especially following Syria's return to its seat in the Arab League and the renewed Arab rapprochement with Damascus. Economic policymakers recognize that genuine recovery requires more than just humanitarian aid; it necessitates a restructuring of the financial system and a gradual lifting of restrictions to enable investment. However, relying on international institutions remains fraught with challenges, as these institutions often link any substantial financial support to a political solution based on UN resolutions, specifically Resolution 2254.
Future prospects and financial stability
Describing the lifting of sanctions as a miracle reflects a realistic assessment of the international landscape, where no signs of a radical shift in US or European policy toward sanctions without political concessions are on the horizon. Therefore, Syria's current focus is on viable solutions within the available margins, such as improving the management of available resources and attempting to stabilize the exchange rate to be more realistic and paving the way for any potential future economic recovery, whether through Arab investments or by improving the domestic business environment.
