Political Ties Help Reduce Financial Constraints

The Syrian government is using its many remaining allies of the emerging world to try to reduce the financial constraints weighing on it.

One recent example is a deal with Cuba, which involves the cancellation by Syria of the interest payments on an overdue debt of USD 157 million owed by Cuba. In exchange, the Caribbean island will pay back the capital. Because Cuba faces financial difficulties of its own, it has the option to pay back either in cash or in kind.

Another deal that was announced recently is the suspension of electricity imports from Turkey and Jordan, and a shift to another supplier, Iran. There is little doubt that Tehran provided its ally with better pricing and payment terms at a time Damascus is facing a decline in its foreign currency reserves.

The government has also concluded a barter deal with Venezuela to exchange crude oil for refined products, while, as the Financial Times recently revealed, an agreement was inked with Iraq for the purchase of fuel oil at a strong discount. The transfer of the country’s foreign assets to Russian banks, after an asset freeze was imposed by Arab countries, the EU and the US, is another good example of this capacity to better leverage the country’s political ties.

While there is little doubt that the country’s financial position is continuing to weaken very gradually, the Syrian government has shown that when it comes to managing its relations with the outside world it is still a skilled political actor and negotiator. It is a pity that it has shown none of these skills when dealing with its own population.