| AMMAN, March 14
AMMAN, March 14 In the alleyways of the
old market in Damascus, an exchange dealer gets a phone call
from an anxious client looking to transfer his savings out of
Syria's rapidly sinking currency.
"Is it true the dollar reached 95 pounds today?" asks the
jittery caller, before selling his Syrian money close to the
record low it hit after a year of unrest and economic turmoil.
The fall in the pound accelerated last week as the currency
slumped to around half the value it had on March 15 last year -
when it stood at 48 to the dollar before protests erupted
against President Bashar al-Assad, pushing up prices and
deepening hardship for the 23 million Syrians.
Foreign reporters are frequently barred from entering Syria
but members of the business community contacted from
neighbouring Jordan described to Reuters through anecdotes and
hard facts the day-to-day problems of carrying on their work.
As the crisis drags on, Syrians say dollars are ever more
scarce as people try to protect their savings from collapse.
"A currency trader has 10 people asking for dollars and ...
ends up supplying one of them," said Wael Dahbour, a dealer in
Damascus-based United Exchange firm.
A lawyer in a prominent legal firm said many middle class
Syrians have already switched savings into foreign currency and
smuggled them abroad to banks in neighbouring Lebanon or Jordan.
"Affluent Syrians transferred most of their income into
dollars and their spending is now coming from dollars changed to
Syrian pounds," said the lawyer who runs a firm in the heart of
the commercial district of Saba Bahrat in Damascus.
But millions of poorer Syrians, with no savings to cushion
them against the economic crisis, are struggling more than ever
to make ends meet as the pound's plunge pushes up the cost of
imported goods. A 15,000 pound monthly salary, typical of
lower-paid public and private sector employees, has fallen in
dollar terms from over $300 to barely $150.
"The working class ... are in a much worse situation. The
pound's purchasing power has eroded," said Salameh Ali, an
industrialist who imports plastic and whose plant in the
industrial centre of Homs has stopped working.
Bankers say Syria's central bank is reluctant to continue
the kind of major intervention in support of the pound that it
is believed to have carried out in the first eight months of the
unrest, as it seeks to reduce depletion of its foreign reserves,
estimated at $17 billion before the protests began.
One diplomat who recently visited Damscus said top officials
were discussing an idea for issuing new currency notes, though
it was unclear how that might arrest the pound's fall.
The uncertainty has further eroded trust in the pound and in
the banking system itself, pushing more people to resort to
age-old practices of hoarding cash under the pillows or tiles.
Bankers say another aspect of the unrest has been a rise in
delinquency rates of payment of personal loans.
Lawyers have been pressing thousands of cases against
clients who either tried to take advantage of the unrest or were
defaulting on loans because of hardship or business losses.
"We have many bank customers who are saying 'Why pay for
something today that is worth $150 and in less than a few months
will be $100?'" said one Damascene banker.
"Today I owe 10 million in Syrian pounds and I have $3,000
in the bank. I am not going to pay. I am going to wait until
those $3,000 are worth 10 million pounds and then pay back the
loan," a Damascene banker said.
Others were simply unable to pay back their debts, including
tourism firms hardest hit by collapse in visitors to Syria, an
important source of foreign revenue.
As many Syrians hold back on repaying debt others have
stopped paying taxes or utility bills, especially in troubled
areas, compounding the pressures on state finances already
strained by a heavy subsidies on fuel and some basic
In rural regions which have been at the heart of the
uprising, widescale economic disruption has cut the flow of
goods. Army road blocks, shelling of towns and prolonged siege
of restive areas has paralysed business activity, residents say.
"Our livelihoods have been shattered. I am living on my
small savings and a year of disruption has left me with little
disposable income to pay for my family of seven," said Husam
Huri, a shopkeeper in Herak, a town in southern Syria and scene
of regular clashes between protesters and security forces.
Yahya al-Bahra, an Aleppo-based industrialist in the textile
trade, said the troubles had severed parts of the sprawling
northern city from markets in the adjoining rural districts.
"Now there is no movement. If I want to even make a deal
with someone in the rural towns it's become physically
impossible with the security risks and the many checkpoints.
Banks are not operating except in large cities and in rural
areas they have almost stopped," said Bahra.
Businessmen say that a prolonged conflict could bring
full-scale economic disaster, but believe that the country can
still hold out for now.
"Investors are shunning investing and a lot of projects have
stopped. People are waiting to see where they are heading," said
Nabil Sukkar, a leading economist who worked with World Bank.
"But I don't see economic collapse in the foreseeable future."
CRISIS ALSO BRINGS OPPORTUNITY
Not everyone has lost from the crisis. Alaa al-Shalah, a 49
year-old businessman, bought a flat in the once bustling central
Damascus district of Maydan a few weeks ago after the fall in
the Syrian currency brought the asking price within his reach.
"I wanted to buy the flat before the crisis but the 15
million pounds that the owner offered was too high for me then.
Now with the depreciation of the pound, it is affordable," said
the father of six who has moved into the small three-room flat.
Real estate agents say property prices have plunged in
restive cities such as Homs in central Syria and Deraa, once a
thriving border town in southern Syria.
By contrast prices in parts of old Aleppo and affluent
neighbourhoods of Damascus have been resilient and even risen to
offset the drop in the local currency, although few contracts
have been exchanged recently.
"Only real estate that is offered at bargain prices by
distressed sellers is seeing movement, but these are few and far
between," said one businessman.
"For wealthy Syrians who can afford to buy property and
sleep on it, it's the best investment because everyone expects a
housing boom after the end of the crisis," said Jamal
Jaleelati, who owns a small furniture workshop in Aleppo, the
country's largest city and economic hub.
Some investors who used to trade on the fledgling Damascus
stock exchange - where daily turnover has slumped to 10 million
pounds from 35 million a year ago - have switched their
attention to currency speculation, traders say.
"After investors saw they can make over 200 percent return
in just a few days in the currency market they have deserted the
(share) market," said Hussein Faisal, an investor.
Some businessmen have also profited from selling old stock
imported at lower exchange rates, prompting accusations of
profiteering by a business class that learnt long ago how to
survive in adversity.
Many others say they are still able to get hold of the
foreign goods they need, despite shortages caused by the unrest,
Western sanctions, and rising costs.
"At least in Damascus, businessmen are still getting what
they want," said one affluent Damascus trader. He said material
could take longer to arrive and he had to adapt his finances,
but "there is no product that I used to able to get last year
that I cannot get".
"Yes, they are more expensive, but they are still so far