Is Russia Aiding Assad's Regime in Syria?
Russia may be discreetly propping up Bashar al-Assad's regime in Syria by helping to print bank notes that pays for Assad's soldiers and civil servants, claimed investigative website ProPublica on Monday, citing flight records, which detailed cargo shipment from Moscow's Vnukovo airport to Damascus international airport via Iran and/or Iraq.
The records obtained showed that more than 200 tons of bank notes were delivered to Syrian from Moscow between July and September this year, while at least eight round-trips were made - deliberately avoiding Turkish airspace after tensions arose between Syria and Turkey since the spring.
Though the logs did not specify the type, nor value, of currency that was being delivered, unconfirmed reports earlier this year suggested that Russia had agreed to print the Syrian pound for Assad, after Syria's previous printer, Austrian bank Oesterreichische Banknoten- und Sicherheitsdruck GmbH, annulled an agreement with the government in September 2011.
Syrian and Russian officials did not respond to questions about the authenticity and accuracy of the flight records and it is not possible to know whether the logs accurately described the cargo, ProPublicasaid. But ProPublica confirmed that nearly all the flights did take place after verification through international plane tracking services, photos by aviation enthusiasts and air traffic control recordings.
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If Syria is indeed receiving currency from Russia, the bulk of it is being used to pay off soldiers and employees in Assad's regime, said Daniel Glaser, Assistant Secretary of the Treasury for Terrorist Financing and Financial Crimes.
"Having currency that you can put into circulation is certainly something that is important in terms of running an economy and more so in an economy that is become more cash-based as things deteriorate," Glaser told Propublica. "It is certainly something the Syrian government wants to do, to pay soldiers or pay anybody anything."
Ibrahim Saif of the Carnegie Middle East Centre added that the alleged volume of Syrian currency being printed and delivered was a significant amount for a country of Syria's size.
"I truly believe it's not only that they're exchanging old money for new notes. They are printing money because they need new notes," Saif said.
"Most of the government revenue that comes from taxes, in terms of other services, it's almost now dried up. [Yet], they continue to pay salaries. They have not shown any signs of weakness in fulfilling their domestic obligations. The only way they can do this is to get some sort of cash in the market," he noted.
David Butter, a Middle East expert at Chatham House, also believed that Syria may be trying to combat hyperinflation by printing currency in such large quantities. This month, rumours that the Central Bank was running low on hard currency caused Syrians to rush to change their money into dollars and gold, with inflation rising by around 38 percent.
"Tax collection is down and oil revenues are perhaps only 10 per cent of what they were before the conflict started. Even by official government figures, they are running a huge deficit," Butter said to The Independent.
Juan Zarate, an Assistant Secretary of the Treasury for Terrorist Financing and Financial Crimes during the Bush administration, however raised the possibility that Russia may not be printing Syrian currency, but rather just delivering other foreign currencies to Assad as a form of a loan.Before the unrest broke out, Syria had about $17 billion in foreign currency reserves, but most estimates place the sum around $6-8 billion today.
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"It's possible the Syrians are acquiring foreign currency reserves, either Euros or US dollars, which they would need to conduct any serious commerce," Zarate said, noted how other countries, when faced with economic sanctions, have leaned on allies for foreign currency reserves. China supplied North Korea with such funds in the past and Venezuela agreed to sell reserves to Iran.