The Syrian government has a new problem on its hands, besides its on-going two year long conflict with homegrown rebel forces, a debilitating currency is threatening to create financial crisis.
Taking advantage of the falling Syrian pound, Russia has taken to expecting hard currency for defense purchases. A source from Rosoboronexport, the state-owned Russian arms exporter told Defenseworld.net that all arms transfer are on hard currency (US dollars or Euros). The Syrian government prefers U.S. dollars so that is our choice too, he added.
Anatoly Isaikin, head of Rosoboronexport, had said in February that Russian will continue delivering weapons, including light attack jets, to Syrian despite the civil war. "We are continuing to fulfil our obligations on contracts for the delivery of military hardware," he was quoted as saying by the Interfax news agency. He also denied allegations that Russia was planning to supply advanced MiG29-M fighters to Damascus but confirmed it had a deal outstanding for Yak-130 light attack jets.
Russia, this year, drew criticism for delivering repaired attack helicopters to the regime but insist that the sales are legitimate because Syria's armed opposition has received both covert and open financial and military support from some Arab world governments. Deliveries from Moscow reportedly include the S-300 air missile system, AK-7s, mortar rounds, grenade launchers and ammunition.
In 2008, Syria ordered MiG29SMT fighters, Yak-130 aircraft, Iskander tactical missile systems, Pantsir air-defense system and two Amur-1650 submarines from Russia. In 2011, the Russian-Syrian arms deal was reportedly worth atleast $4 billion. According to the New York Times, from 2000-2010 Syria purchased weapons worth $1.5 billion thus becoming Moscow’s seventh-largest client.
The Syrian pound to fell to a whopping 315 against the dollar on the black market last month compared with 47 pounds to a dollar two years ago. The official exchange rate, currently 105 pounds to the dollar, is generally ignored by currency traders, according to the Washington Post. It is not known how much money actually got transferred to Moscow from Syria for arms purchases.
The U.S. dollar has become the defacto currency in Syria with everyone from taxi drivers to groceries preferring the greenback to the Syrian pound. Alarmed at the loss of confidence in the official currency, a new law is likely to impose a three year sentence for exchanging money without a licence, while exporting food items overseas has been deemed illegal, the report added.
Syrian President, Bashar al-Assad, said earlier in March, “Russia is committed with Syria in implementing these contracts. What we agreed upon with Russia will be implemented, and part of it has been implemented over the recent period, and we are continuing to implement it.”