Syria switches to euro amid confrontation with US
DAMASCUS, Feb 14 (Reuters) - Syria has switched all of the state's foreign currency transactions to euros from dollars amid a political confrontation with the United States, the head of state-owned Commercial Bank of Syria said on Monday.
"This is a precaution. We are talking about billions of dollars. Switching to the euro will help us avoid settlement problems in the United Sates," Duraid Durgham told Reuters.
"The move is also needed to avoid complications with our correspondent banks, which have expressed a preference to deal in euro under these circumstances," he said.
Most of the government's foreign currency flows goes through the Commercial Bank, whose U.S. assets were frozen by Washington in 2004 as relations with Syria deteriorated.
The bank, which dominates the Syrian market, also stopped dealing with dollars for international private flows, such as imports, exports and letters of credit, Durgham said.
He said the switch would mean euro pricing for crude oil sales, a major foreign currency earner for Syria.
The latest official figure show Syria imported $6.7 billion goods in 2004 and exported $5.4 billion. Oil output is around 400,000 barrels per day.
In 2004, Washington imposed sanctions that prohibited certain U.S. exports to Syria, severed financial ties with the Commercial Bank of Syria, and froze the assets of Syrians believed linked to terrorism.
After the assassination of former Lebanese Prime Minister Rafik al-Hariri a year ago, the United States led foreign pressure on Syria for its alleged role in the killing.
Damascus denies involvement in the killing but faces the possibility of more sanctions if it is found uncooperative with a U.N. investigation into the killing of Hariri.
Regional financiers said the Syria managed to minimise the damage of U.S. sanctions and deal with economic uncertaintCoy that followed the Hariri assassination, including pressure on the Syrian pound.
The government, controlled by the Baath Party for the last for 40 years, has proceeded with steps to open up the economy after decades of central planning, naming on Monday a board to head up a stock exchange under formation.
"To its credit, the government managed to keep the economic cycle going; imports, exports and tourism did not suffer a major blow. The have reacted effectively to pressure," said Joe Sarrouh, a senior executive at Fransabank in Beirut.
One economist said euro move by the Commercial Bank of Syria "looked like a kind of pre-emptive action aimed at making their foreign assets safer and preventing them from getting frozen in case of any conflict."
"This is a precaution. We are talking about billions of dollars. Switching to the euro will help us avoid settlement problems in the United Sates," Duraid Durgham told Reuters.
"The move is also needed to avoid complications with our correspondent banks, which have expressed a preference to deal in euro under these circumstances," he said.
Most of the government's foreign currency flows goes through the Commercial Bank, whose U.S. assets were frozen by Washington in 2004 as relations with Syria deteriorated.
The bank, which dominates the Syrian market, also stopped dealing with dollars for international private flows, such as imports, exports and letters of credit, Durgham said.
He said the switch would mean euro pricing for crude oil sales, a major foreign currency earner for Syria.
The latest official figure show Syria imported $6.7 billion goods in 2004 and exported $5.4 billion. Oil output is around 400,000 barrels per day.
In 2004, Washington imposed sanctions that prohibited certain U.S. exports to Syria, severed financial ties with the Commercial Bank of Syria, and froze the assets of Syrians believed linked to terrorism.
After the assassination of former Lebanese Prime Minister Rafik al-Hariri a year ago, the United States led foreign pressure on Syria for its alleged role in the killing.
Damascus denies involvement in the killing but faces the possibility of more sanctions if it is found uncooperative with a U.N. investigation into the killing of Hariri.
Regional financiers said the Syria managed to minimise the damage of U.S. sanctions and deal with economic uncertaintCoy that followed the Hariri assassination, including pressure on the Syrian pound.
The government, controlled by the Baath Party for the last for 40 years, has proceeded with steps to open up the economy after decades of central planning, naming on Monday a board to head up a stock exchange under formation.
"To its credit, the government managed to keep the economic cycle going; imports, exports and tourism did not suffer a major blow. The have reacted effectively to pressure," said Joe Sarrouh, a senior executive at Fransabank in Beirut.
One economist said euro move by the Commercial Bank of Syria "looked like a kind of pre-emptive action aimed at making their foreign assets safer and preventing them from getting frozen in case of any conflict."
posted by Marko at 2/13/2006 11:09:00 PM
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