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Syria's Economy
By Micah Halpern

Sunday December 23, 2012

I'm Predicting:

Predicting what will happen in Syria is almost impossible to do. But there are some indicators.

Like Russia: Right now, it seems as if the pendulum is swinging toward the rebels and that Russia is hinting that Assad's time may be coming to an end. But that pendulum can just as easily swing in the other direction any day now.

Like the money flow: I have been following the flow of money in Syria with great interest. Assad tapped into his Central Bank which 22 months ago had $18 billion in reserves, by now it is depleted by half.

Like the economy: Normally, civil wars are terrible for an economy. Before this conflict Syrian currency was 48 pounds to one US dollar. At one point it went to 105 pounds per US dollar. The currency is now coming down and hovers in the range of 90 plus Syrian pounds per one US dollar. That is s huge injection into the local economy - but not as it should be from the Syrian Central Bank.

The rebels are getting huge foreign currency injections. That is how they pay for the war. Saudi Arabia, Bahrain, Qatar, Turkey, the US and even some European countries must be pouring dollars into Syria. They are giving it to the rebels, paying them to fight. Money changers across Syria report rebel commanders selling dollars.

This is all counter-intuitive. In times of crisis people buy dollars to be safe and protect themselves against uncertainty. In this case they are selling dollars - large amounts of dollars. The foreign money is almost all US dollars and those dollars are keeping the pound stable.

Despite the analysis and the expertise and past experience, nobody knows what will happen next in Syria.

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4 June 2017 12:13 PM in Predictions

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