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Syria, wracked by years of war, about to be hit by punitive U.S. sanctions

In scenes not witnessed for years in government-controlled parts of Syria, dozens of men and women marched through the streets this week, protesting a sharp increase in prices and collapse of the currency, some even calling for the downfall of President Bashar al-Assad and his ruling Baath party.

Rare protests against the Assad regime took place this week over soaring prices, shortages

A man holds up a sign as he joins others gathering for a demonstration in support of Syria's President Bashar al-Assad and against U.S. sanctions on the country. But the government itself has also faced protests, in Sweida. (Louai Beshara/AFP/Getty Images)

In scenes not witnessed for years in government-controlled parts of Syria, dozens of men and women marched through the streets this week, protesting a sharp increase in prices and collapse of the currency, some even calling for the downfall of President Bashar al-Assad and his ruling Baath party.

"He who starves his people is a traitor," some of the protesters chanted at the protest in the southern city of Sweida.

Peaceful protests in 2011 were met with a brutal government crackdown and turned into a civil war that has devastated the country, with more than 400,000 killed.

In Syria nowadays, there is an impending fear that all doors are closing. After nearly a decade of war, the country is crumbling under the weight of years-long Western sanctions, government corruption and infighting, a pandemic, and an economic downslide made worse by the financial crisis in Lebanon, Syria's main link with the outside world.

Syria faces near complete isolation as the toughest U.S. sanctions, known as the U.S. Caesar Syria Civilian Protection Act, are to begin June 17. While Assad may have won the military war against his opponents with the help of allies Russia and Iran, he now faces an even bigger challenge of governing while more than 80 per cent of his people live in poverty.

In government-held areas, prices go up several times a day, forcing many shops to close, unable to keep up with the chaos. This week, the Syrian currency dropped to a record 3,500 pounds to the dollar on the black market — compared to 700 at the beginning of the year. Some staples such as sugar, rice and medicine are becoming hard to find.

"The Syrian economy has spiralled out of control and the regime cannot control the Syrian pound anymore," said Osama Kadi, a Canada-based Syrian economic adviser.

The pain is likely to grow under the new U.S. sanctions, which Washington says aim to punish Assad and his top lieutenants for crimes committed during the country's conflict.

New sanctions look to block smuggling from neighbours

Effectively, the sanctions prevent anyone around the world from doing business with Syrian officials or state institutions or participate in the war-ravaged country's reconstruction. They also target anyone involved in smuggling to Syria, mostly from Iraq and Lebanon.

Experts say the new sanctions will be a heavy blow to a country where eight out of 10 people make less than $100 a month, according to the United Nations. The Syrian government called the sanctions "economic terrorism."

A protester wearing a face mask raises his fist in front of a burning building in large-scale protests in Beirut. The Lebanese pound has lost 70 per cent of its value since October when protests began, and the country's own significant problems are having a ripple effect in Syria. (Diego Ibarra Sanchez/Getty Images)

Some of the repercussions have already been profound.

Bread prices increased nearly 60 per cent in the rebel-held northwestern province of Idlib, even though the territory with a population of over three million is not included in the new sanctions. Its population, many of them unemployed and living in displaced camps, have also been hit hard by the collapse of the pound, since it is the main currency used in Idlib.

The Syrian pound — which had been at 47 to the dollar at the start of the conflict — had held steady at around 500 to the dollar from 2014 until last year.

It started crumbling from a number of factors: the coronavirus lockdown, Lebanon's financial crisis, new rules requiring use of the Syrian pound, and a feud between Assad and his cousin Rami Makhlouf, one of Syria's richest men.

The Syrian government has lost major income from resources in areas outside its control, including oil fields in the east held by U.S.-backed fighters and farmlands that produced much of the country's wheat.

WATCH | Renewed anxiety for refugees:

Hamzeh Alnas and Hassan Al-Kontar describe how they're dealing with job losses and uncertainty. Al-Kontar says his feelings of anxiety and unease remind him of living in Syria in 2011, during the civil war. 1:39

Most damaging, perhaps, has been the financial turmoil in Lebanon. Banks there have served as a gateway to the world for Syrian businessmen, officials and average people. Now, Lebanon's tight capital controls lock away billions of dollars in their accounts.

"Lebanon was not only Syria's economic get-out-of-jail card, but it is the beating heart of Syria's business community," Danny Makki, a Britain-based Syrian journalist and political analyst, wrote recently for the Middle East Institute.

Blame Assad's war: U.S. embassy

Lebanon is also panicking about losing Syria, particularly the electricity it still buys from the war-torn country. In recent weeks, the Lebanese army has begun closing some smuggling routes to and from Syria where fuel, diesel, medicine and other goods flow.

Syria and its allies say the Caesar Act aims at starving the Syrian people. The U.S. Embassy in Syria — closed since the beginning of the conflict — tweeted on Sunday: "The regime's destructive war has crushed the Syrian economy, not U.S. or EU sanctions."

Syrians inspect their damaged house on Wednesday following reported bombardment by pro-government forces on the village of Balyun in the last rebel-held area, the northwestern province of Idlib. (Mohammed Al-Rifai/AFP/Getty Images)

Amid the turmoil, Assad fired Prime Minister Imad Khamis on Wednesday in a move that appeared aimed at deflecting public anger. Khamis told parliament this week that the government was discussing with allies ways to boost the pound's value. He said the government was also taking steps to avoid any shortage of pharmaceuticals.

Samer Aftimos, a pharmacist in Damascus, said shortages are already taking place, in part because of people hoarding medicine. Drug companies have stopped supplying some medicines, he said.

Syrian legislator Muhannad Haj Ali, who has been under European and American sanctions for years, said Syria survived past economic crises and will overcome the Caesar Act.

"What the terrorists and the Americans couldn't take on the battlefield, where we paid with our blood and wounds, they won't be able to gain politically, no matter how much pressure they exert," he said.

With the respect to the coronavirus, the true toll is not known. Testing is lacking and authorities have reported only 152 cases and six deaths in government-controlled parts of the country.

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