Report: Foreign aid lost in Syria exchange rate distortions

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Syrian President Bashar Assad’s government has used distorted exchange rates to divert at least $100 million in international aid into its coffers over the past two years, according to new research.

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Currency manipulation deprives the Syrian people, most of them from much-needed wealth after a decade of war. It also allows the Damascus government to circumvent sanctions imposed by Western countries that it holds responsible for most of the war’s atrocities.

“Western countries, despite the imposition of sanctions on Syrian President Bashar Assad, have become one of the regime’s biggest sources of hard currency,” said a report published this week by the Center for Strategic and International Studies, a Washington-based research organization which focuses on international public policy. issues.


“Assad has not only profited from the crisis he has created,” the report said. “He’s built a system that rewards the worse things he gets.”

On Friday, the United Nations acknowledged that exchange rate fluctuations have had a “relative effect” on the effectiveness of some UN programmes, especially since the second half of 2019 when the Syrian currency depreciated.

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Francesco Galtieri, a senior UN official in Damascus, said his office received the report on Thursday. “We are reviewing this carefully, in the coming weeks to discuss it openly with our donors, who as we are concerned that the impact of aid to people in Syria is maximizing,” said the resident team leader Galtieri and Syria’s humanitarian coordinator told the Associated Press in a written response.

The authors of the research published on Wednesday said the amount of aid lost to the Syrian government as a result of the depreciation of the national currency over the past two years is likely to exceed $100 million. The data they used to calculate the amount was limited to UN purchases and does not include aid given through other international aid groups, salaries or cash aid.

Sarah Kayli, a Syrian researcher with Human Rights Watch, called the findings shocking and said donors could no longer ignore the fact that they were effectively funding the Syrian government and its human rights abuses. He said the UN procurement process does not meet due diligence standards from a human rights perspective.

The Syrian pound has been hit hard by war, corruption, Western sanctions and the recent financial and economic collapse in neighboring Lebanon.

Syria’s Central Bank, sanctioned by the US Treasury, obliges international aid agencies to use the official exchange rate – pegged at around 1,500 Syrian pounds for the dollar – while the black market rate is around £4,000 for the dollar. hovered around. The Syrian government prohibits the use of informal currency exchange services. The official exchange rate has been changed to around 2,500, leaving a difference of more than 30%, the report said.

This is an automatic loss of about two-thirds of the support amount in exchange rate transactions, the report said.

For example, in 2020, UN agencies converted a minimum of $113 million for purchases of goods and services into the Syrian pound – meaning $60 million was being diverted into donor dollars at an unfavorable exchange rate, According to the report, in which the published data was reviewed. The United Nations estimated lost dollars in 2019 at $40 million, bringing the total estimate to $100 million.

Galtieri said the majority of UN aid is spent on procurement in international and regional markets. For aid spent in Syria, the United Nations and humanitarian partners have negotiated a “preferential” exchange rate until 2021 to bridge the gap between the official and unofficial market rate and maintain the value of aid. Galtieri said that with the change in the informal market, the preferential rate fluctuated.

The official exchange rate has been revised last year to 2,500 pounds in dollars, but this still leaves a gap of more than 30%.

“We continue to engage with the Central Bank on this issue of the preferential rate to maintain the maximum impact of our assistance,” Galtieri said.

The Syrian war, sparked by largely peaceful protests in early 2011, has killed between 350,000 and 450,000 people, displaced half of the country’s pre-war population in and out of Syria, and destroyed infrastructure. left in ruins. Parts of the country are under the control of opposition groups and armed rebels.

The war in Syria has been described as one of the most brutal wars in modern history, with the use of indiscriminate barrel bombs, chemical weapons, and torture. Aid and rights groups have also complained that the Syrian government has long directed international aid to areas it considers loyal to it and used sieges around areas held by the opposition to deny aid. .

Backed by Russia and Iran, the war has turned in favor of Assad, who has been in office since 2000 and was re-elected this spring for another four-year term.

A boon for Assad and after years of isolation, several Gulf countries have reopened their embassies. Jordan has restored direct flights to Damascus and Egyptian gas will flow through Syria, automatically diverting it to be sent to Lebanon.

“As donors in Syria continue to become exhausted and needs continue to grow, ensuring that every dollar reaches those in need will be more important than ever,” the report said.


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