Syrian economists blame Damascus for capital flight to Beirut
DAMASCUS, Syria (North Press) – Syrian economists and experts blame Damascus for the flight of capital from Syria to the Lebanese capital Beirut, and said that the deposits of Syrian funds in Lebanese banks have negatively affected the local economy, just as Syrian President Bashar Assad said a few days ago.
Economists and experts said in exclusive interviews with North Press that these deposits are not new, and doubled after 2011.
However, although the Syrian president did not mention the reasons, they have held successive Syrian governments responsible for capital flight due to their economic policies.
Fundamental cause of the crisis
Lamia Assi, an economist and former Minister of Economy living in Damascus, said “The flight of Syrian funds into Lebanon was a major and fundamental cause of the Syrian economic crisis.”
Assi said in an interview with North Press, “The money of Syrians deposited in Lebanon was before the crisis, and the massive flight of funds towards Lebanon, the Gulf States and Turkey, are consequences of the war.”
Few days ago, while attending a trade fair in Damascus, the Syrian president said that funds deposited in Lebanon is the main reason of the economic crisis in Syria.
The Syrian president didn’t absolve the embargo and US sanctions, as he estimated these funds at 20 to 42 billion dollars.
Assi attributes the movement of capital to a set of reasons, including that the Syrian financial system suffers from poor reliability, in addition to US and European economic sanctions.
The monetary policy of the Central Bank of Syria and the adoption of an official (artificial) exchange rate lower than the market also have a major role in the capital flight, according to Assi.
The third reason, according to the economic expert, is that some deposits are money from illegal sources, so their owners smuggle them abroad because they are afraid of confiscation or seizure.
The fourth reason lies in the fact that the Syrian government has allowed what are known as strategic partners to establish private banks while they are related to banks in Lebanon, which helped in the transfer operations to its main banks outside Syria.
Among the reasons also, according to Assi, is the raising of interest on the dollar by the Central Bank of Lebanon to attract more money in foreign currency, and most of this money was Syrian.
The deposit of funds in Lebanon existed before the war, due to Syrian businessmen’s search for safety, confidence, and flexibility in completing financial transactions.
“The monetary policies have not changed, whether in terms of interest or multiple exchange rates,” Assi added.
Mentality of guardianship
Tamer Qarqout, a Syrian economic journalist residing in Germany, believes that the mentality of guardianship over major businessmen who deposit their money in Lebanon is curious.
He said in an interview with North Press that “Syrian businessmen are dominated by fear. They are dominated by fear for the future of their money and profits, since nationalization in the early 1960s until now.”
“For six decades, the Syrian government has been floundering with its economic policies, starting from a utopian position that says that it is the nation’s right to invest in it,” Qarqout added.
The journalist asks, “Aren’t the Syrians entitled to ask about how these funds were transferred to Lebanon and why?”
“If we add to it what was transferred to the Emirates, Russia, Belarus, India, Egypt, and Turkey, the numbers become very large,” he said.
Qaraqout pointed out that what the trustees are ignoring is that the Syrian money in Lebanon’s banks is savings money and not investment money, and therefore calls for returning these funds to invest in Syria are a waste of time.
The Lebanese Central Bank raised the interest on foreign currency deposits from 6% to 9.89%, and up to 14% for large amounts.
Numbers on paper
“The Syrian funds deposited in Lebanon’s banks are sufficient to make an insanely tangible difference to the exchange rates in Syria,” said Yasser Qashlak, a Palestinian businessman.
“The loss of this money is one of the reasons for this insanity,” added Qashlak, who is also the head of Free Palestine movement and lives in Damascus.
He said, “Syrians’ deposits are kept in Lebanon as numbers on paper, and the solutions that they are trying to invoke will not be feasible unless the root of the problem in Lebanon is be dealt with.”
Finance Syrian imports
According to a Syrian study titled Lebanon is facing an upcoming financial crisis, and bad effects on the Syrian economy, there is a possibility to benefit from these deposits.
The study indicates that the Syrian government can ask Lebanon to finance Syrian imports through the accounts of Syrian importers in Lebanese banks in dollars.
The study, which was published recently by the pro-government al-Watan newspaper, believes that this process is simple because it relies mainly on the principle of clearing.