Legal Briefing- October 2020

International Relations

President Bashar Al-Assad and Foreign Minister Walid Mouallem accepted the credentials of Oman’s Ambassador to Syria Turki bin Mahmoud Al-Busaidy, who was appointed to his position back in March by royal decree issued by Sultan Haitham bin Tarek.

The breakaway state known as the Republic of Abkhazia, which seceded from Georgia and was once part of the Soviet Union, opened its embassy in Damascus in the presence of both a diplomatic delegation from Abkhazia and senior members of the Syrian government. Relations between Syria and Abkhazia have been steadily growing since the 2008 war between Russia and Georgia that witnessed fighting over Abkhazia. Back then, President Bashar Al-Assad was the first world leader to visit Moscow in the aftermath of the conflict.

Minister of Presidential Affairs Mansour Azzam led a Syrian delegation to Moscow to meet with its counterpart to discuss and set in place the mechanisms to implement the economic agreements reached in Damascus last month during the visit of the high-level Russian delegation.

The Chairman of the Joint Syrian-Iranian Chamber of Commerce announced the inauguration of an Iranian commercial center in the free zone in Damascus.

The fate of the US presidential election could determine whether Russia maintains its current rate of influence in Syria or whether Iran starts to gain more than it currently has. A Donald Trump victory could mean continued sanctions against Iran, thereby limiting its capacity. A Joe Biden victory could potentially mean the US rejoining the Joint Comprehensive Plan of Action (JCPOA) with Iran and subsequent sanctions relief, giving Iran more financial capability to expand its involvement in Syria.

A White House official authorized by US President Donald Trump reportedly traveled to Damascus earlier this year for meetings with the Syrian government seeking the release of at least two US citizens thought to be held in Syria.

The European Union imposed sanctions on seven newly appointed ministers in the Syrian government.

President Bashar Al-Assad accused Turkish President Recep Tayyip Erdoğan of igniting the war between Armenia and Azerbaijan over the mountain enclave of Nagorno-Karabakh and asserted that Damascus can confirm that Syrian mercenaries are fighting on Azerbaijan’s side.

International Trade

According to European traders, Syria’s General Foreign Trade Organisation issued an international tender to purchase and import approximately 85,000 tons of refined white sugar.

Commerce

1,511 merchants registered with the Damascus Chamber of Commerce voted in elections to select 12 of their peers out of 27 candidates to sit on the Board of Directors. Elections have been taking place in the chambers of commerce and industry throughout the provinces. Representatives from the Ministry of Internal Trade and Consumer Protection, the Federation of Syrian Chambers of Commerce and the Federation of Syrian Chambers of Industry have been observing the elections.

The Ministry of Economy and Foreign Trade raised the value of Syrian raw materials that may be delivered to manufacturers based in the free zones from SYP 50 million to SYP 150 million on an annual basis with a limit of SYP 1 million per day to reduce import and transport costs. The free zones in Syria are carved out of Syrian law and are treated as foreign territories. They serve as industrial and re-export havens where Syrian taxes, customs duties and tariffs are not applicable unless goods cross Syrian territory into the free zones or vice versa.

Industry

The Council of Ministers deliberated on a bill to modernize the Chambers of Industry in Syria as well as the Federation of Syrian Chambers of Industry.

A local newspaper reported that the Customs Directorate prevented an industrialist from relocating their tire factory to a neighboring country for maintenance purposes despite receiving approval to do so from the Economic Committee affiliated to the Council of Ministers.

The Board of Commissioners of the Sheikh Najjar Industrial Park in Aleppo presided over by the Governor of Aleppo granted a deadline to manufacturers and freight businesses until next March to obtain building permits for their allocated plots. There are reportedly 660 industrial establishments in the Sheikh Najjar Industrial Park and 4,208 plots, 411 of which were allocated during the current year. Total investment amounted to SYP 257.9 billion, of which SYP 19.7 billion was invested during the current year.

The Ministry of Industry has decided to independently secure the wages and salaries of its public sector employees rather than resort to disbursements from the Ministry of Finance. There are eight public sector establishments affiliated to the Ministry of Industry, which include: 1) the Engineering Industries Corporation, 2) the Textile Industries Corporation, 3) the Chemical Industries Corporation, 4) the Food Industries Corporation, 5) the Cement and Construction Materials Corporation, 6) the Cotton Ginning and Marketing Corporation, 7) the Sugar Corporation and 8) the Tobacco Corporation.

Real Estate

The Ministry of Internal Trade and Consumer Protection ratified the resolution of the extraordinary general assembly of Syria Towers Co., which is affiliated with Souria Holding, to liquidate the company that planned to develop two towers in Damascus, and dispose of its assets.

The Council of Ministers approved the licensing of an environmentally friendly residential suburb in the Damascus district of Dummar with 39 towers, 5,000 residential units and vertical gardens after permits were granted by the Governorate of Rural Damascus pursuant to Legislative Decree 5/1982. The project is being developed by a joint association. The Housing Cooperative Law 17/2007 permits the establishment of joint associations, which consist of two or more associations, and they can purchase land, equip the public facilities and build residences for their members.

The Minister of Local Administration confirmed that his Ministry issued a directive barring local authorities from settling the status of additional floors in buildings in violation of Legislative Decree 40/2012 and voiding their decisions to this effect.

Tourism

Since the Tourism Investment Forum in Tartous at the end of October 2019 where the state proposed 40 projects for private sector investment, nine contracts with total values of SYP 900 billion have been signed covering locations in Damascus, Aleppo, Lattakia and Tartous.

Finance

In an interview with a Russian media outlet, President Bashar Al-Assad confirmed that while there may be ongoing discussions with Russia to obtain loans given the current economic situation, Syria would proceed on the basis that it could repay its debts to avoid further burdens.

President Bashar Al-Assad issued Legislative Decree 23/2020 to exempt from interest and penalties loans previously granted by the state-owned Agricultural Cooperative Bank to persons affected by the fires that erupted in the provinces of Homs, Tartous, Lattakia and Hama.

President Bashar Al-Assad issued Legislative Decree 25/2020 authorizing a disbursement of a one-time grant amounting to SYP 50,000 to civil servants and military personnel, which is exempt from applicable taxes, as well as SYP 40,000 to pensioners, which is also exempt from tax.

President Bashar Al-Assad referred the draft 2021 national budget, amounting to SYP 8.5 trillion, to the People’s Assembly.

Taxation

President Bashar Al-Assad issued Legislative Decree 24/2020 amending Articles 68 and 69 of the Income Tax Law 24/2003 so that the minimum tax-exempt limit on salaries and wages is amended to SYP 50,000 instead of SYP 15,000. Each progressive tax bracket is increased by SYP 30,000 and a two percent tax rate. Tax rates now begin at four percent and go up to a maximum of 18% instead of five percent up to 22%. Taxes on salaries and wages are therefore reduced accordingly.

The Minister of Finance predicts that an overhaul of the taxation system so that it relies on electronic solutions to accurately control taxes and prevent tax evasion should be operational by early 2021. The main cause of tax evasion was officially attributed to the old tax system in place, which has been in effect since 1949 and is comprised of 27 tax laws that have not been updated, as well as the high tax rates not keeping pace with economic reality. The trend appears to be towards abolishing all tax legislation currently in place and to maintain only the income and sales taxes, with the latter replacing the consumer spending tax, while implementing billing and electronic payment solutions.

Energy

The Minister of Internal Trade and Consumer Protection agreed with some MPs about a proposal to liberalize gasoline prices in Syria while offering financial support to citizens who would be affected by the price increases. In line with what was proposed in the People’s Assembly, the Ministry of Internal Trade and Consumer Protection raised the price of 95 octane gasoline. The price of 95 octane went up from SYP 575 per liter to SYP 850 per liter. Accordingly, any attempt by vendors not to abide by this new pricing regulation would in theory subject them to sanctions under the Consumer Protection Law 14/2015.

The Ministry of Internal Trade and Consumer Protection authorized further fuel price increases. The cost of a liter of subsidized petrol rose from SYP 250 to SYP 450 while the price of a liter of unsubsidized petrol and industrial fuel oil rose from SYP 296 to SYP 650.

According to the Ministry of Petroleum and Mineral Resources, weekly gasoline allocation limits for automobiles have been increased to 40 liters from 30 liters when their fuel tanks are filled up at petrol stations in line with the current schedules in place.

Local sources suggested that an Iranian oil tanker discharged 1 million barrels of crude oil at Banias Refinery upon its reopening following maintenance works. A source in the Ministry of Petroleum and Mineral Resources revealed that two gas tankers with a quantity of approximately 2,200 tons and a crude oil tanker containing approximately 1 million barrels, equivalent to 130,000 tons, arrived in Syria.

There were reports that the Lebanese Customs Directorate arrested a vessel off the Lebanese coast apparently loaded with 4 million liters of gasoline and believed to be destined for the Syrian markets so as not to contravene the US Caesar Act and risk secondary sanctions.

Fuel shortages are reportedly negatively affecting production output at factories throughout Syria, and in particular Aleppo, due to reduced transmission of electrical power.

The People’s Assembly approved a contract between the General Corporation for Geology and Mineral Resources and a Serbian company for the latter to extract phosphate from the eastern mines in Palmyra and export the product, minus 30% for Syria, to Serbia. The Minister of Petroleum and Mineral Resources asserted that there are 3 billion tons of phosphate in Syria but exporting capabilities are limited due to the international sanctions imposed on Syria, thus limiting the generation of foreign exchange for the country.

Transport

Following the reopening of Damascus International Airport on October 1st after regular flights were suspended back in March as part of the COVID-19 precautionary measures, Syrian Airlines operated two flights to Beirut and Cairo in line with new health measures.

Telecommunications

The Minister of Communications and Technology Eyad Al-Khatib informed MPs that he is optimistic about the licensing of the third mobile phone operator, which will be run by a Syrian company, before the end of the year. The Minister added that his Ministry does not interfere in setting the prices of calls of mobile phone companies but rather its role is limited to approving or rejecting proposed pricing schedules. Al-Khatib confirmed that there are 16.5 million subscribers signed up to the current two operators Syriatel and MTN Syria, 73% of whom are subscribed to Syriatel and 27% to MTN Syria. He also mentioned that neither operator is able at this time to provide the 5G internet service. 4G was launched in Syria in August 2017, which allows surfing the internet at speeds of up to 150 megabits per second.

Health

According to President Bashar Al-Assad, Syria will discuss with Russia the means to obtain its COVID-19 vaccine when it becomes available on the international markets.

The Ministry of Health equipped an emergency hospital facility in the Al-Fayhaa Sports City in Damascus dedicated specifically to COVID-19 patients with supplies apparently from the UNHCR in anticipation of another spike in cases with the onset of the winter season.

The Ministry of Finance issued provisional attachment orders against the movable and immovable assets of several pharmaceutical and medical companies on allegations of import smuggling.

Education

In statements before the People’s Assembly, Minister of Higher Education and Scientific Research Bassam Ibrahim called for the Higher Education Council, which partly overseas the activities of his Ministry, not to get involved in routine matters that should not concern it

The Ministry of Internal Trade and Consumer Protection licensed the first Syrian company to manage and operate schools.

Agriculture

While 2020 marks a year of low-intensity conflict in Syria’s war with limited skirmishes in the northwest and the emergence of tribal resistance in the northeast, sanctions, earthquakes, a pandemic, and now forest fires have taken the lead in causing hardships. It is no coincidence that while US policy in Syria is leading to a fuel shortage crisis in the country through occupying the oil fields and discouraging petroleum imports through the threat of secondary sanctions, forest fires take their toll on the agricultural sector.

The forest fires in western Syria not only impacted human life, livelihoods, ecosystems, animal and plant life, nature and air quality but also had devastating consequences on agricultural produce and the infrastructure for electrical power. They had similar effects as wars.

As a result of the forest fires, the Ministry of Internal Trade and Consumer Protection in cooperation with the Federation of Syrian Chambers of Commerce opened an account with the Commercial Bank of Syria under the name ‘Aid for Fire Victims’ to receive financial donations. Furthermore, the Syria Trust for Development opened an account with Byblos Bank to collect donations for the benefit of families affected by the forest fires. The Syria Trust for Development also plans to survey the damages in the villages and towns caused by the fires.

Another round of unprecedented wildfires unseen before in Syria destroyed at least 9,000 hectares of agricultural and forested land in the provinces of Homs, Tartous and Lattakia this month according to the UN Office for the Coordination of Humanitarian Affairs (OCHA). OCHA coordinates the international response to complex emergencies and natural disasters. OCHA estimates that the fires affected up to 140,000 people, 25,000 of whom were displaced, by destroying their homes, factories, farmlands and crops, including olive oil products. The Ministry of Agriculture and Agrarian Reform predicted an olive crop harvest of 850,000 tons this season, up from 665,000 tons last year, but such estimates are not likely to be realized following the eruption of the forest fires. Olive oil is a key export.

The forest fires in Syria that have been gripping the country since the summer and beyond have mainly been extinguished by the fire brigades linked to the Ministry of Agriculture, the Civil Defense and the Syrian Arab Army, both of which are overseen by the Ministry of Defence.

President Bashar Al-Assad, accompanied by ministers and government officials, and First Lady Asma Al-Assad both travelled to northwestern Syria to tour areas affected by the horrific wildfires for days, meet locals, and discuss with them the means to remedy damages caused to livelihoods and agricultural produce.

The Minister of Agriculture and Agrarian Reform announced that on the directives of President Bashar Al-Assad, a formula will be devised to provide financing to farmers to reinvest in their lands following the devastating wildfires.

Under the directives of President Bashar Al-Assad, the Ministry of Local Administration and the Environment allocated SYP 2.37 billion to the provinces of Lattakia and Tartous to implement service projects in the villages and towns affected by the wildfires.

Following countless forest fires that have been lit in Syria, some of which are believed to be deliberate acts, the Public Prosecutor is intending to charge suspects under Article 29(b) of the Criminal Code, which imposes the death penalty if such fires cause deaths of persons.

According to the Ministry of Agriculture and Agrarian Reform, the damages from the wildfires caused to citrus crops is not as big when compared to the damages sustained by olive harvests. For the first time in more than 10 years, citrus farmers in the coastal region were satisfied with the selling prices of their crops, which ranged between SYP 250 and SYP 500 per kilogram, thereby allowing them to compensate for the losses of the previous seasons. There are reportedly 50,000 families working in citrus cultivation within Syria, in addition to hundreds of thousands of individuals who undertake picking, transporting, marketing and other activities. Syria is believed to rank 18th in the world for citrus production. The local consumption of citrus fruits does not exceed half of the annual production of 1 million tons, so what remains will be wasted and spoiled unless exports are expanded to more foreign markets.

The Supreme Committee for the Transition to Modern Irrigation allocated SYP 7 billion pounds to convert 1,000 hectares in a number of provinces to modern irrigation systems by 2021.

Public Administration

The People’s Assembly gave its backing to Legislative Decree 22/2020, which revokes Legislative Decree 19/2018 and consequently dismantles the National Reconciliation Commission established first as a ministry during the height of the Syrian War in 2012.

President Bashar Al-Assad issued a number of decrees appointing new provincial governors.

Judiciary

The Minister of Justice ordered a number of restructurings within the judiciary by transferring judges, merging customs courts and establishing courts in new districts.