Despite
the United States and European Union’s economy sanctions against Syria
is in place, the Russian government has sent plane load of cash to the
country’s president Bashar-al-Assad, a report published here said.]
The Syrian plane mentioned in the flight manifests obtained by ProPublica. (Flickr user Jerome_K)
The report published in
ProPublica
said that Russian government sent 200 tons of Bank notes to Syria after
the Austrian bank which printed the bank notes halted operations under
pressure from the European Union.
The report authored by Dafna Linzer, Michael Grabell and Jeff Larson
said that the shipments occurred during a period of escalating violence
in a conflict that has left tens of thousands of people dead since
March 2011.
This past summer, as the Syrian economy began to unravel and the
military pressed hard against an armed rebellion, a Syrian government
plane ferried what flight records describe as more than 200 tons of
“bank notes” from Moscow.
The records of over flight requests were obtained by ProPublica. The
flights occurred during a period of escalating violence in a conflict
that has left tens of thousands of people dead since fighting broke out
in March 2011.
The regime of Bashar al-Assad is increasingly in need of cash to stay
afloat and continue financing the military’s efforts to crush the
uprising. U.S. and European sanctions, including a ban on minting Syrian
currency, have damaged the country’s economy. As a result, Syria lost
access to an Austrian bank that had printed its bank notes.
“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,”
said Daniel Glaser, Assistant Secretary of the Treasury for Terrorist
Financing and Financial Crimes. “It is certainly something the Syrian
government wants to do, to pay soldiers or pay anybody anything.”
According to the flight records, eight round-trip flights between
Damascus International Airport and Moscow’s Vnukovo Airport each carried
30 tons of bank notes back to Syria. There are records relating to the
flights in Arabic and English as well as copies of over-flight requests
sent to Iran, which are in Farsi.
Syrian and Russian officials did not respond to ProPublica’s
questions about the authenticity and accuracy of the flight records. It
is not possible to know whether the logs accurately described the cargo
or what else might have been on board the flights. Nor do the logs
specify the type of currency.
But ProPublica confirmed nearly all of the flights took place through
international plane-tracking services, photos by aviation enthusiasts,
and air traffic control recordings.
Each time the manifest listed “Bank Notes” as its cargo, the plane
traveled a circuitous route. Instead of flying directly over Turkish
airspace, as civilian planes have, the Ilyushin-76 cargo plane, operated
by the Syrian Air Force, avoided Turkey and flew over Iraq, Iran, and
Azerbaijan.
Tensions have been rising between Syria and Turkey since the spring.
Last month, Turkey forced down a Syrian passenger plane traveling from
Moscow. Turkey suspected the flight of carrying military cargo but
officials have not said what, if anything, was confiscated.
If the flight manifests are accurate, a total of 240 tons of bank
notes moved from Moscow to Damascus over a 10-week period beginning July
9th and ending on September 15th.
U.S. officials interviewed said evidence of monetary assistance, like
military cooperation, point to a pattern of Russian support for Assad
that extends from concrete aid to protecting Syria from U.N. sanctions.
In September, 2011, six months into the violence, the European Union
imposed sanctions that prohibited its members from minting or supplying
new Syrian coinage or banknotes. In a statement, the EU said the
sanctions aimed “to obstruct those who are leading the crackdown in
Syria and to restrict the funding being used to perpetrate violence
against the Syrian people.” At the time, Syria’s currency was being
minted by Oesterreichische Banknoten- und Sicherheitsdruck GmbH, a
subsidiary of Austria’s Central Bank.
President Obama has issued five Executive Orders that prevent members
of the Assad regime from entering the United States and accessing the
U.S. financial system.
“Increasingly, it is more difficult to finance the war machine and
the cost of the war is becoming more expensive for the Assad regime,”
said one U.S. official who spoke on the condition of anonymity.
“Targeted sanctions on those leading the violence are working and start
to bite into their pocket books.”
Russia appears to be helping Syria blunt the impact of the sanctions.
This past June, Reuters reported that Russia had begun printing new
Syrian pounds and that an initial shipment of bank notes had already
arrived. The report was denied by the Syrian Central Bank, which
claimed the only new money in circulation were bills that had replaced
damaged or worn bank notes. Such a swap, the bank contended, would have
no effect on the economy.
On August 3rd, the official Syrian news agency SANA, reporting from a
news conference in Moscow with Syrian and Russian economic officials,
quoted Syrian officials acknowledging that Russia is printing money.
Qadr Jamil, Syria’s deputy prime minister for Economic Affairs, was
quoted by SANA as calling the deal with Russia a “triumph,” over
sanctions.
Syrian Finance Minister Mohammad al-Jleilati said that Russia was
providing both replacement notes and additional currency to, as SANA put
it, “reflect the country’s changing GDP.”
Al-Jleilati said the money would have no effect on inflation.
Printing new notes beyond simply replacing old ones could undermine
Syria’s already battered currency.
At the time of the meeting, at least 30 tons of currency had already
been delivered, according to the flight records, and another 210 tons
would be delivered in subsequent flights.
In its regional economic outlook released earlier this month, the
International Monetary Fund noted that Syria’s currency has lost 44
percent of its value since March 2011, trading for about 70 pounds to
the dollar compared with about 47 pounds when the conflict began.
Ibrahim Saif, a political economist based in Jordan and a resident
scholar at the Carnegie Middle East Center said 30 tons of bank notes
twice a week is a significant amount for a country like Syria.
“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,” noted Saif. 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.”
Before the unrest broke out, Syria had about $17 billion in foreign
currency reserves. Saif said he and other economists in the region
estimate they now have about $6-8 billion in reserves, dwindling about
$500 million a month for salaries and supplies to keep the government
running.
In Moscow, the Syrian finance minister had said that his country
required additional foreign currency reserves, which Russia may provide
in the form of loans.
“It’s possible the Syrians are acquiring foreign currency reserves,
either Euros or US dollars, which they would need to conduct any serious
commerce,” said Juan Zarate, who served as Assistant Secretary of the
Treasury for Terrorist Financing and Financial Crimes during the Bush
administration.
Zarate noted that 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.
Syria’s currency is still traded on open markets, but there is
limited on-the-ground information about the economy, including
inflation.
Officials at the IMF “have not been able to get direct information
about Syria for at least a year,” Masood Ahmed, director of the group’s
Middle East and Central Asia department, told reporters at a conference
in Tokyo last month.
Glaser, at Treasury, declined to put a figure on Syria’s current
reserves but said the Syrian economy is suffering in part from a lack of
tourism and a ban on oil sales, both of which provided Damascus with
foreign currency. “There is significant inflation in the country. It can
be caused by adding new currency or not having foreign reserves to prop
up the existing currency.”
Quinn Norton contributed to this story.
