Syrian banking sector raises international concerns, hampers reconstruction

International newspapers published today highlighted the major challenges facing Syria’s economy, which are generating global concern and obstructing reconstruction efforts.

Collapsed Syrian banking sector alarms US regulators

Syria is seeking to reintegrate its financial sector into the global system after years of isolation and sanctions, but it faces significant challenges related to poor transparency and risks associated with money laundering and “terrorism” financing, according to a report by The National (UAE).

During a visit by a Syrian delegation to Washington, the transitional government’s Minister of Economy, Mohammed al-Shaar, affirmed his country’s readiness to cooperate with US authorities to ensure financial compliance. However, experts believe that the Syrian banking system remains opaque and crippled by war and sanctions, while the country remains on the Financial Action Task Force (FATF) grey list.

Analysts predict that financial activity from the Gulf, Turkey, and Europe may resume before the United States follows, amid government efforts to convince investors that Syria is ready for economic openness.

Economic recovery stalled by sanctions and bureaucracy

Meanwhile, the transitional government in Syria is struggling to implement its ambitious economic plans, despite promises of reconstruction and openness to foreign investment, due to the persistence of sanctions and the bureaucratic laws inherited from the Baathist regime, according to a report by the Financial Times.

Although most US and European sanctions have been lifted, investors remain hesitant to enter the Syrian market due to instability and weak rule of law. Economists point out that most memoranda of understanding signed by the government have not materialized into actual projects.

According to the World Bank, economic growth will not exceed 1% this year, while two-thirds of the population remain below the poverty line, and the GDP is about half of what it was before the war in 2010.

The banking sector is undergoing a severe crisis due to the war and the collapse of Lebanon’s financial system, leaving companies unable to access loans. Excessive compliance with US sanctions has also made dealings with foreign banks difficult.

At the same time, some industrialists who had left the country have returned to invest again, but they face fierce competition from cheaper Turkish and Chinese goods, prompting the government at times to reinstate certain customs protections.

Economic circles also accuse a council run by the president’s brother and one of his former partners in “Hayat Tahrir al-Sham” of controlling the granting of contracts and licenses with limited transparency.

A-H 

ANHA