Iran, Russia and China prop up Assad economy

Iran, Russia and China are propping up Syria’s war-ravaged economy, with President Bashar al-Assad’s regime doing all its business in rials, roubles and renminbi as it seeks to beat western sanctions, according to the country’s senior economics minister.

Syria’s three main allies are supporting international financial transactions, delivering $500m a month in oil and extending credit lines, Kadri Jamil, deputy prime minister for the economy, said in an interview with the Financial Times. He added that its allies would also soon help with a “counter-offensive” against what he called a foreign plot to sink the Syrian pound.

Mr Jamil’s combative remarks on the deepening economic crisis highlight a wider show of regime assurance, founded on recent military gains and a belief that its biggest international supporters remain solidly behind it.

“It’s not that bad to have behind you the Russians, the Chinese and Iranians,” Mr Jamil told the FT. “Those three countries are helping us politically, militarily – and also economically.”

Mr Jamil said Syria had an unlimited credit line with Tehran for food and oil-product imports. Damascus, he said, had also corrected its pre-crisis “mistake” of trading in western currencies and had switched transactions to Russian, Chinese and Iranian currencies instead.

“Now we have a straight line between the Syrian pound and those three currencies, and we have got out of the circle of euros and dollars,” he said.

The minister, who studied in Moscow and has been closely involved with the Assad regime’s discussions with the Kremlin during the conflict, said ships “under the flag of the Russians” were delivering oil products to Syria’s government-controlled coast, although he declined to give details.

“We are waiting for someone to attack them,” he said. Russia and Iran have both been very public in their support for Mr Assad’s regime; China has been less open.

Mr Jamil accused the regime’s international opponents of waging a financial war as well as a military campaign, through western sanctions ranging from a ban on imports of Syrian oil to prohibitions on financial transfers via credit cards and banks. Imports of oil products were now costing Syria half a billion dollars a month, he said, while the regime had been further hit by the rebel occupation of Syria’s oilfields. He described the economic situation as “complicated and very difficult”, but added: “Still we have not reached the point of no return.”

Syria’s crisis of more than two years has savaged entire industries and sent gross domestic product plunging, but the economy’s resilience to total implosion has led analysts to speculate about the amount of international help the regime is receiving. It is only in the past few weeks that the gradual slide in the Syrian pound from its pre-crises levels of about 45 Syrian pounds to the dollar has turned into something more severe, with the rate topping S£200 some days.

Mr Jamil accused Saudi Arabia, the US and Britain of orchestrating a plot to undermine the Syrian currency by flooding pounds into neighbouring Lebanon and Jordan. Asked if he had evidence for this, he said only that he had “historical proof”.

Mr Jamil said Syria was now co-ordinating with Russia, China and Iran to defend the pound and bring it down to the government target price of 100 to the dollar. “We are preparing for a counter-offensive,” he said, although he declined to give details.

He added that once a political resolution to the war had been achieved, the Syrian government would be seeking compensation from world powers that had opposed it, just as Germany had to give reparations after the second world war. “If England feels like paying something, we don’t mind,” he said.

Copyright The Financial Times Limited 2013.