'We don't need pineapples': Syria to halt food imports to save foreign reserves

Published April 3rd, 2015 - 11:00 GMT

Importers require government licences that allow them to request a favourable exchange rate at the Syrian central bank.

But the government has in recent months issued fewer licences, and the central bank has increasingly declined to offer importers the favourable conversion rate.

"A month ago, I got a text message from the economy finance ministry telling me that because of the shrinking foreign currency reserves, I would no longer get the preferential dollar rate at the central bank," one importer of consumer goods told AFP.

"I've been left to fend for myself."

An official at Syria's economy ministry, quoted by the Al-Watan daily, said two-thirds of import licences granted in the last quarter of 2014 went to industries considered essential, including fuel, agriculture and pharmaceuticals.

That quarter, the government received import requests worth $2.7 billion, but only granted licences worth $1.2 billion, the official told the newspaper, which is close to the regime.

And the central bank offered preferential exchange rates to just 13 percent of those granted licences.

The measures come as Syria's economy suffers the ravages of more than four years of conflict that began with an anti-government uprising in March 2011.

The Syrian Centre for Policy Research (SCPR) estimates losses to the Syrian economy totalling $202.6 billion, equivalent to 383 percent of GDP in 2010, the year before war broke out.

"A decision was taken to increase exports and limit imports," Fares Shehabi, president of the Syrian Federation of Chambers of Industry, told AFP.

"What can be produced locally, will be, and what can be produced here will not be imported. We can provide the market with many products," he said.

- 'We don't need pineapples' -

But that assessment may be optimistic, considering the decline in local manufacturing along with the other economic consequences of the war.

By 2013, the SCPR estimated manufacturing output had fallen to just 18.6 percent of its 2010 levels.

Last year, it rebounded somewhat, but was still at just 21.7 percent of 2010 levels by the end of 2014.

The country's key agriculture sector has been similarly ravaged, contracting 31.9 percent in 2013 compared to the previous year, according to the SCPR.

"We asked the government to reduce imports and encourage local industry and exports," said Mazen Hammour, secretary general of the Syrian Federation of Exporters.

"If local industry is solid, then exports will increase and so will foreign reserves," he told AFP.

"The country doesn't need to be importing luxury products like pineapples and French cheeses," he added.

"We should be importing primary materials necessary for local industry to produce merchandise that is export quality."

According to Al-Watan, Syria's exports in 2014 were worth just $1.8 billion, down from $11.3 billion in 2010.

The ratio of exports to imports deteriorated from 82.7 percent in 2010 to 29.7 percent in 2014, according to SCPR.

Iyad Mohamed, the exporters association treasurer, said measures to protect domestic manufacturing were desperately needed.

"We want our industry to be protected, like a newborn," he said, while acknowledging that a return to the closed economy over which former president Hafez al-Assad ruled was impossible.

"We can't go back in time, particularly as we have to respect the commercial deals we have with other countries," he said.

- Difficult export routes -

Before the conflict, oil exports constituted a significant part of the country's economy.

But a Western embargo and the loss of key oil fields to the jihadist Islamic State group has decimated crude sales.

Now the country's main exports are agricultural products, textiles and leather, medicine, flowers and ceramics.

The sanctions largely apply to state-run enterprises, with private entrepreneurs still able to trade internationally.

Most exports go to Iraq, with Lebanon coming in second, largely as a transit point.

But exporting the goods is not always easy, with money needed to smooth passage on the more difficult routes.

To reach Iraq, exports must go through the Al-Tanaf border crossing, which is held by the government on the Syrian side, but the Islamic State on the Iraqi side.

To reach the Gulf, goods go through Jordan, and to Europe they pass through Lebanon.

Businessmen joke that they are reactivating old routes from the time of Hafez al-Assad, but in reverse.

Then, the routes were a way to smuggle in foreign products, now they are a way to get them out.

With all the measures being taken to protect foreign reserves, the actual amount available in the central bank remains a mystery,.

"It's a well-kept secret. The only thing that's sure is that the Syrian pound has lost 80 percent of its value against the dollar in four years," said Mohamed.

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