Syria faces food crisis; conflict wrecks crops
Damascus, August 2, 2012
Up to 3 million Syrians are likely to need food, crop and livestock aid in the next 12 months as the conflict has prevented farmers harvesting crops, the World Food Programme and UN Food and Agriculture Organization said on Thursday.
Citing a joint assessment carried out by the United Nations and the Syrian government, they said the Syrian agricultural sector had lost $1.8 billion this year, with wheat and barley badly affected.
The report, which was dated June 2012, said harvesting of wheat had been delayed in Deraa, rural Damascus, Homs and Hama due to lack of labour and reluctance of owners to rent out farm machinery due to insecurity.
"There is thus a great risk of losing part of the crop if there is further delay," it said.
Meanwhile, since rebels have carried Syria's civil war from remote villages to the capital and the commercial hub, a banking system that survived 16 months of unrest will face its biggest test, a report said.
In most of the country, banks have been managing to stay open, thanks to strenuous efforts by their managers and the needs of desperate customers who continue to deposit money because they can find no safer place.
But the spread of major fighting to Damascus last month, and then to Aleppo, Syria's biggest city and top commercial centre, marks a new, more destructive period for the economy, putting banks under fresh pressure.
"Aleppo will hurt the real economy - the disruption of production, inputs reaching plants. How long it will last - a few days, a week, two weeks - no one knows," said Nabil Sukr, a Damascus economist who previously worked at the World Bank.
Like Syria's economy as a whole, its banking industry is severely damaged and some parts of it have almost stopped functioning. There is little corporate lending or trade finance, but deposits and withdrawals continue.
The banking sector, which is dominated by four state-owned banks but includes 14 privately owned institutions, mostly subsidiaries of banks in Lebanon and other Arab countries, has largely been cut off from the global financial system by international sanctions against Assad's regime.
Deposits at the banks, which had total assets of 2 trillion Syrian pounds ($29 billion) before the revolt, shrank by roughly a third in the uprising's first year as panicky companies and individuals sent money abroad, much to Beirut, bankers said.
But thanks mainly to a windfall from their foreign currency holdings as the Syrian pound's exchange rate plunged, the banks posted strong profits last year. Net profit at Chambank, one of three Islamic banks in Syria and 32 percent owned by Commercial Bank of Kuwait, soared 553 percent last year.
In the last several months, the banks have been hit harder as the fighting has become more intense. For example, the Syrian subsidiary of Jordan's Arab Bank suffered a net loss of 141 million pounds in the second quarter of this year, after a profit of 825 million pounds in the first quarter.
"There is no lending and demand for money itself is low. Operations and decisions are being made on a day-to-day basis," said a Damascus-based banker, who asked not to be identified because of the political sensitivity of the issue.
A senior Gulf Arab banker who operates in Syria said banks there were still extending credit lines to some of the wealthiest companies and merchants, but that otherwise "banking has been reduced to the bare minimum".
"There are no banking operations such as letters of credit for imports...and that applies to collection of debts," said a banker working in the Syrian subsidiary of a Lebanese bank.
Nevertheless, the outflow of deposits from banks appears to have slowed greatly or even stopped in the last few months, perhaps because most people who want to transfer money overseas have now already done so, several bankers said. - Reuters