Distinguished research director at CNRS, Elizabeth Picard is a specialist in Lebanon and Syria. She is notably the author of Lebanon-Syria, intimate foreigners (Actes Sud, 2016).
With the financial crisis in Lebanon, drastic restrictions have been placed on bank withdrawals, and the hitherto widely used dollar is becoming scarce. How does this situation affect Syria?
From 2013, when the conflict in Syria worsened and internationalized, many Syrian entrepreneurs moved their activities and their bank assets to Lebanon, causing a new flight of Syrian capital to Lebanese banks. This money is now blocked, both for depositors and entrepreneurs and for large importers close to the regime. Consequently, the enormous sums necessary for the import of cereals, via the Lebanese ports of Beirut or Syrian of Latakia, are inaccessible. This contributes to strangling the Syrian regime, but it also weighs on the people in distress for whom the supply of wheat is essential.
This role of financial lung for Syria, held by Beirut, is not new …
With the breakdown of the customs and monetary union between the two states in 1950, the Syrian banking system began to atrophy. As early as 1960, Syrian businessmen and individuals began to place their savings in Beirut, buy dollars there or obtain payment facilities. In the early 1970s, a third of the major Lebanese banks were thus run by Syrian emigrants who had fled socialist and nationalization policies in their country. In the 1990s, a third of the assets in Lebanese banks belonged to Syrians. Since Bashar Al-Assad came to power in 2000 and the privatization process that prompted it, Syria has not had the means to develop the financial tools necessary for a liberal economy. Beirut therefore remained an essential place.
How, conversely, does the agony of the Syrian economy affect Lebanon?
The paralysis of the few companies that are not destroyed in Syria and the obstacles to the fraudulent activities of the regime’s men constitute an undeniable loss for the Lebanese partners, first of all for the banks. In the reconstruction of Lebanon undertaken by Prime Minister Rafic Hariri after the end of the civil war [1975-1990], the Lebanese economy has been hyperfinancialized. With the bursting of the speculative bubble and the massive flight of capital to Western banks since September 2019 [et malgré l’interdiction des transferts à l’étranger à partir du mois d’octobre], Lebanese but also Syrians have lost their savings. The money generated by political corruption that plagues both countries has also likely evaporated. To these problems was added the interruption of traffic at border posts since mid-March, on the pretext of the health crisis linked to Covid-19.
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