The Syrian business community went to bed Thursday night provoked, insulted, and boiling with rage. Unlike previous weekends, their troubles this time were not because of street demonstrations that have broken out around the country every Friday since mid-March, which have hit their businesses badly and crippled entire sectors like banking and tourism.
Rather, they were furious because of a controversial ban issued Thursday evening by the Ministry of Economy, banning importation of foreign consumer goods. In simple English, this means businessmen can no longer import cars, electronics, clothes, foodstuff and anything classified as “luxury items”.
The reason, explained the Minister of Economy Nidal Shaar, was to “preserve” Syria’s foreign reserves, adding that the ban was “only temporary”. Previously, the government said that Syria’s reserves stand at a strong $18 billion (Dh66 billion). Clearly from Thursday’s legislation, it is clear that that number was largely inflated, and Syria is in more trouble than its officials would like to admit.
Banning imports is not easy, because it will drive a permanent wedge between the Syrian regime and the business community which, to date, has been fully supportive especially in mercantile centres like Damascus and Aleppo. For 11 years, entire businesses were established on Syria’s new importation laws, passed after Bashar Al Assad came to power.
Designer brands invaded the markets, along with brand new automobile showrooms, malls, cafes and posh shopping districts like the Damascus Boulevard next to the luxurious Four Seasons Hotel. Not all of that investment was Syrian money, with UAE businessman Majid Al Futtaim, for example, investing in an $817 million shopping mall in Syria in March.
Today’s measures remind Syrians of haunting socialist policies that were imposed back in the 1980s, during the socialist government of prime minister Abdul Raouf Al Kassem. Back then, VCRs were banned in Syria, and so were new cars, clothes, in addition to basic commodities like bananas, and not-so-basic ones like Nescafe, for example.
The reason, Kassem would say, was to uphold Syria’s reserves of hard currency, for the sake of bankrolling the country’s war effort in the Lebanese Civil War. Syria at the time spearheaded a policy of “self-sufficiency”, strongly empowering the public sector and factories in the private one, which were encouraged to crank out “Made in Syria” products.
The quality of those products was often below average, but they flooded ordinary Syrian homes for an entire decade, whereas middle class and upper class families smuggled their foreign goods from Lebanon. Today’s ban, of course, will encourage Syrian factories to work again. Many of them had shut down as European electronics and clothes, and Turkish furniture flooded the Syrian market. The new ban also drew large grins on the faces of Syrian smugglers, who will now make a fortune — as they did in the 1980s — from smuggling these products on mules across the border with Lebanon.
Syria in 2011 is more exposed, more connected to the outside world, and more media savvy than Syria in the 1980s. Consumer behaviour has changed since Al Assad came to power 11 years ago, and so has the tolerance of Syrian businessmen. They are now saying: “It is not our fault if the government did not manage it resources and if they don’t have foreign currency in their coffers. There were similar disturbances in Egypt and Tunisia. Why didn’t authorities pass similar unjust legislation against the business communities there?”
The relative comfort and empowerment they have enjoyed for more than a decade makes it very difficult for the state to dictate ultimatums on them anymore, as it did in the 1980s. The present legislation will drive many heavyweights out of business who made fortunes lately through importing foreign consumer products. For six months, they have been complaining that the international community has wronged them by imposing trade and banking sanctions on Syria, not differentiating between the Syrian government and ordinary Syrians.
These banking restrictions now make it impossible for Syrians to receive or make transactions in hard currency. Even Lebanese banks have informed their Syrian clients that because of the sanctions, they can only make transactions related to “living expenses” and not for business profit. MasterCard, Visa, and American Express have all since stopped working in Syria. Nevertheless, businessmen stood firm, complaining, yet surviving. Now they feel that the regime is no longer on their side, adding to their misery rather than working to provide them relief from EU sanctions.
Income for the Syrian treasury usually came from the following sources: public sector industry (which has been in sharp decline for 30 years because of corruption), income taxes and oil revenue. Oil money usually comes from selling Syrian crude to the West — an outlet that shut down recently when an embargo was imposed on importing Syrian oil. Oil companies doing business in Syria now have to close down, strongly affecting Syria’s access to foreign currency.
Europe, after all, bought 95 per cent of Syria’s oil exports. That, of course, was in addition to the sanctioning of 50 Syrian personalities by the EU, along with companies Europe says are associated with the regime, like the Real Estate Bank and Cham Holding. Turkey, whose trade relations with Syria stood at a strong $2.5 billion, also imposed arms sanctions on Syria last Saturday, threatening to bring bilateral economic relations to a grinding halt.
The importation ban is yet another milestone in the Syrian crisis that has been snowballing since mid-March. It went into effect on September 25, the day universities opened throughout Syria, which will probably prompt pro-regime and anti-regime students to fight and even demonstrate on campuses, after a long summer break. Additionally, a cold winter is creeping in, where ordinary Syrians will have a hard time purchasing solar fuel (mazot) to keep warm, now that their government has ended its decades-long subsidy — precisely because its financial resources have been stretched to the limit. Will these three elements —universities, mazot and both an angry and insulted business community — turn a new chapter in the Syrian uprising?
Time will tell.
Sami Moubayed is editor-in-chief of Forward Magazine in Damascus, Syria.