Syria Cuts Imports to Protect Reserves

In an effort to save an economy plagued by war and inner turmoil, Syrian authorities are cutting imports to increase export capacity. The Syrian central bank is offering fewer licenses to importers while refusing to offer a decent exchange rate.

In an effort to save an economy plagued by war and inner turmoil, Syrian authorities are cutting imports to increase export capacity. The Syrian central bank is offering fewer licenses to importers while refusing to offer a decent exchange rate.

Syria may be in the middle of a civil war, but the country still has an economy to maintain. To date, no one is aware of the exact foreign reserve amount in the central bank. The final quarter of 2014 saw the granting of licenses to only the most vital industries, with two-thirds of the share going to such industries as pharmaceutical, energy and agriculture. The Syrian government saw $2.7 billion worth of license requests during the same quarter, but only $1.2 billion licenses underwent approval, and only 13 percent of importers granted licensure received solid exchange rates. Syrians are increasingly cutting down on imports, preferring to grow and manufacture what they can domestically for export.

Syria Strengthens Domestic Market

The trim compensates for the devastation of agriculture and manufacturing, and the government aims to boost foreign reserves to get local industries on steady ground. The Syrians are not closing their economy, but they are towing the line between protecting national interests and not isolating importers.

The nation still honors current deals with other countries, but policymakers are determined to protect the economy from outside encroachment. For instance, oil made up a large part of Syria’s revenue base, but embargoes displaced exports. Also, the hijacking of oil fields by ISIS has taken a heavy toll on Syria’s energy sector. However, the government does export other products such as textiles and leather. There is also the sanctions issue, while still allowing Syria’s business sector to conduct trade abroad. Currently, the sanctions imposed on Syria primarily target state-run institutions. Business owners are finding ways to ship goods abroad, but the export process is not easy, and they need plenty of funds to get through difficult routes. For example, products must pass through Jordan in order to reach the Gulf States, and goods heading to Europe must go through Lebanon.

Future of Syria Hangs in the Balance

As of now, there appears to be no end in sight to the Syrian civil war, which is also a complex proxy war that includes the United States, Great Britain, Iran, Russia and the Gulf States. The Syrian economy will be on better footing when the instability ends, but Secretary of State John Kerry did signal room for negotiation to end the conflict. However, Syrian President Bashar al-Assad dismissed the statement, saying that a political solution is for the Syrian people to decide. As of now, all parties are at a stalemate.