War-torn Syria moves to shore up currency

BEIRUT — War-battered Syria moved Thursday to protect its battered currency, proposing new laws to criminalize dealings in other nations’ bank notes.

The new statutes would subject violators to fines and prison terms of up to 10 years, state media reported.

The move comes as concern mounts about the plummeting value of the Syrian pound and the use of the U.S. dollar in its place. With the Islamic fasting month of Ramadan having begun, some Syrians say they are having difficulties buying sufficient food.

Damascus is also contemplating new subsidies for food staples, the government said, as the nation suffers from galloping inflation after more than two years of civil war.

The new laws seek to “prevent manipulation of prices in the market and curb exploitation of citizens’ needs,” said a release from the state media.

Earlier this week, the government announced increases in prices for medicines and said it had fired hundreds of workers in a crackdown on corruption.

The plunge of the local currency accelerated last month after the U.S. and some of its allies signaled their intention to arm Syrian rebels, igniting a round of panic buying of dollars by nervous Syrians.

The Syrian currency is reported to have hit a record low this week, trading on the black market for more than 300 pounds to the dollar. The rate was about 50 pounds to the dollar when the uprising against President Bashar Assad began in March 2011.

Since then, rebels and government forces have battled throughout the nation, leaving large swaths of the country in ruins and destroying much of Syria’s once extensive industrial infrastructure. Agricultural production, long a mainstay, has also been hard hit.

The northern city of Aleppo, once the nation’s industrial hub, has been divided for almost a year between government and rebel forces. Thousands of factories have been destroyed, abandoned or looted, authorities say. Hundreds of thousands of residents have fled the city.

Syria’s two biggest foreign currency earners — oil production and tourism — have been devastated. More than 90,000 people have died in the fighting, according to the United Nations. The fighting has forced millions to flee the country and left millions more displaced inside of Syria’s borders.

European and U.S. sanctions against the Syrian government have also battered the economy. Syria’s closest regional ally, Iran, is reported to have lent billions of dollars to Damascus in a bid to keep the economy afloat.

The government’s hope is that the criminalization of foreign currency dealings will help stabilize the pound. But many outside experts say such efforts have failed in other countries, including Iran, and may have the opposite effect — causing more panic buying of dollars as people seek some measure of stability.

Despite its severe economic problems, Syria continues to provide paychecks to hundreds of thousands of civil servants and to finance its well-trained army, which has made advances against rebel forces in recent months. The government also funds pro-government militias that have taken on a key role in the battle against rebels backed by the U.S. and its allies, including Saudi Arabia and Qatar.

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