Legal Briefing – April 2021
The Speaker of the People’s Assembly formally announced that the 2021 presidential elections will be held on May 26th while expatriate voting is scheduled for May 20th. Nominations had to be submitted to the Supreme Constitutional Court within 10 days starting from April 19th. The presidential elections will be conducted in accordance with the Electoral Law 5/2014.
Official nominees must be members of the Muslim faith, at least 40 years of age, 10-year residents of Syria, not hold dual nationality, have been Syrian nationals since birth, and such condition shall apply to their parents, and married to a Syrian national if not single.
A presidential term is valid for seven years and a president is limited to two terms. According to the Constitution of 2012, President Bashar Al-Assad is entitled to only one more term.
Once the election cycle begins, a candidate will only get to participate in the presidential elections if they comply with the aforementioned conditions and obtain the written approval of 35 MPs in the People’s Assembly, who can only pledge their support to one candidate each.
With 250 MPs sitting in the People’s Assembly, a maximum of seven candidates can run for president. A minimum of two candidates must contest the election, or else the process must be repeated. The winner must obtain an absolute majority in a popular vote to avoid a second round where the two candidates with the most votes compete.
Once candidacy papers are filed with the Supreme Constitutional Court, the latter informs the People’s Assembly in writing and the Speaker makes a public announcement to MPs. Several candidates filed, including the incumbent Bashar Al-Assad and the first women to run.
The Speaker of the People’s Assembly already commenced the nomination process whereby MPs began endorsing a single eligible candidate to stand in the presidential elections. As mentioned, a candidate requires the written support of 35 MPs to ensure their name on the ballot.
It is unclear why the Speakers of the People’s Assembly both in 2014 and 2021 did not wait for the deadline for the submission of presidential candidacy papers before starting the nomination process. Eligible candidates who file later may therefore miss out on key votes from MPs.
The two key institutions of state that vet candidates before their names are listed on the presidential ballot are the Supreme Constitutional Court, which qualifies them from a legal perspective, and the People’s Assembly, which endorses them from a political standpoint.
As nominations for the presidential election concluded, the People’s Assembly delivered the ballot box containing the endorsements of candidates for the post by MPs to the Supreme Constitutional Court, which tallied them and announced the names of those who garnered 35 votes.
A total of 51 candidates, including seven women, put their names forward to stand in the presidential election during the 10-day nomination period. The Speaker of the People’s Assembly was the last to pledge his written support to a candidate and sealed the ballot box.
Apart from the incumbent, the other presidential candidates are generally not well known to the public. Whether prior to or after the nomination process before the People’s Assembly, candidates highlight their own campaign manifestos without demeaning those of their opponents.
Although Bashar Al-Assad represents the ruling Baath Party in the presidential poll, it is unclear whether the other eligible and endorsed candidates will be supported by the other political parties sitting in the People’s Assembly, or whether independents will be on the ballot.
The People’s Assembly formally invited parliamentary representatives from Algeria, Oman, Mauritania, Russia, Iran, China, Venezuela, Cuba, Belarus, South Africa, Armenia, Ecuador, Nicaragua and Bolivia to visit Syria and observe the presidential election process.
As a new wave of Covid infections emerges, placing further strain on health facilities, and prompting the transfer of patients to other provinces for hospital treatment, fuel shortages across Syria has led to less traffic on the streets and fewer occurrences of people mixing.
The Emirates Red Crescent sent a shipment of Covid vaccine doses and aid to Syria to assist frontline medical workers, elderly people and those with chronic diseases, as well as internally displaced persons.
The Covax platform administered by the World Health Organization has delivered more than 200,000 jabs of the AstraZeneca vaccine to Syria while China donated a batch of 150,000 jabs from its vaccination program to support inoculation efforts by Damascus against Covid infections.
President Bashar Al-Assad issued Presidential Decree 114/2021 exempting investors in the Aleppo Free Zone from fines incurred on unsettled occupancy fees accumulated until the end of 2011 as long as paid within six months while all obligations are deemed terminated as of the start of 2012.
US control over Syria’s oil fields, US pressure on the SDF to prevent oil sales to Damascus and the Caesar Act are the main reasons for fuel shortages. However, informal trade networks exist between Damascus and the US and Turkish-controlled regions, giving the former leverage. Damascus was reportedly able to get the SDF to sell it oil to ease the fuel crisis by imposing trade sanctions on the latter. While trading in goods exists between Damascus and the Turkish-controlled region, Turkey is believed to be holding it back from its full potential. While northwestern Syria benefits from trade routes with Turkey, northeastern Syria and the SDF depend to a greater extent on Damascus, as does trade between the US and Turkish-controlled regions. Humanitarian routes blocked by the UN allegedly serve to maintain the status quo.
A tanker carrying one million barrels of oil reportedly arrived at Banias Port for unloading, refining and then distribution to the petrol stations and the general population, thus helping to alleviate some of the severe congestion seen on the roads caused by fuel shortages. Three tankers loaded with crude oil reportedly arrived at Banias Port only days later, which should cover the local market’s needs of gasoline, diesel, fuel and gas for nearly two months. Shortages have impacted transport networks and industrial facilities, fueling inflation.
An oil tanker off the Syrian coast of Banias came under a reported drone strike as it delivered much needed fuel to the country, which is suffering from oil and gas shortages. Tankers bound for Syria have been requiring Russian naval escorts to ward off such frequent attacks.
The Minister of Electricity revealed the drafting of contracts with friendly countries for wind energy cooperation and spare parts for power stations affected by international sanctions, including an agreement with Iran worth €124 million to rehabilitate several power stations. Since late 2019, the Syrian government has been actively promoting investments in renewable energy pursuant to the Electricity Law 32/2010 whereby electricity generated would be transmitted through the national grid or sold to manufacturers, yielding wider margins to sellers. Syria’s daily production of electricity amounts to 2,700 megawatts whereas it requires 7,000 megawatts per day. Total production from solar and wind energy is about 28.9 million kilowatts, of which 22.2 million kilowatts are from the sun, and 6.7 million kilowatts from the wind.
It was reported that a Russian-Iranian-Syrian operations room was established with a mission to coordinate and secure the safe and stable flow of oil supplies, wheat and other goods to the Syrian ports on the Mediterranean Sea.
President Bashar Al-Assad ratified the Uber-style Ride-Sharing Law 16/2021, which is anticipated to ease traffic congestion in Syria, alleviate pressures on fuel demand, create new job opportunities, and promote further electronic and technological practices among the population.
The People’s Assembly earlier approved the Ride-Sharing Law to permit owners of private cars and minibuses, via companies licensed by the Ministry of Transport, to utilize mobile technology applications for Uber-style services supervised by the Telecommunications Regulatory Authority.
The ride-sharing company that owns the “Move It Syria” brand obtained a preliminary license to operate in Syria though it must receive final approvals from the Ministry of Transport and the National Network Services Authority affiliated to the Ministry of Communications.
There are presently two ride-sharing applications being utilized in Syria but the Ministry of Transport recently confirmed that they are operating unlawfully and will have to adjust their status in line with the new legislation.
President Bashar Al-Assad issued Legislative Decree 9/2021, amending Article 67 of the Telecommunications Law 18/2010 to increase the penalty imposed on whoever fraudulently obtains or assists another to obtain telecommunications services to avoid paying the applicable fees. The punishment shall be imprisonment from one to three years and a fine ranging from SYP 1 million to SYP 4 million whereas previously it was imprisonment from three months to two years and a fine of not less than SYP 50,000 and not more than SYP 500,000.
Homs City Council, which owns the real estate property operated as the Safir Hotel Homs, signed a three-year extension annex to the original management agreement with the Ministry of Tourism-affiliated Syrian Arab Hotels and Tourism Corporation, the franchisee of the Safir brand. Royalties payable to Homs City Council amount to SYP 1 billion per annum, or a total of SYP 3 billion for the extended period, starting from next year. The Sheraton and Dama Rose in Damascus, La Mira in Lattakia, and Shahba Aleppo are all hotels affiliated with the Ministry.
President Bashar Al-Assad remitted the Investment Bill back to the People’s Assembly after the latter’s Constitutional and Legislative Affairs Committee and Economic and Energy Affairs Committee approved amendments surrounding the composition of the Syrian Investment Agency. The amendments included revoking the memberships of the representatives of the General Federation of Trade Unions and the General Peasants Union from the Board of Commissioners of the Syrian Investment Agency. The People’s Assembly must now reconsider these provisions and vote again.
The Council of Ministers exempted several categories of persons from the potentially unconstitutional measure requiring citizens returning to Syria to exchange $100 or its equivalent into Syrian Pounds at the loss-making official rate in a bid to shore up dwindling foreign reserves. The categories exempted include displaced citizens returning to the country, students studying abroad, delegates on official assignments, persons under 18 years of age, passengers travelling by air, and vehicle drivers operating on international transport lines.
Speculation is rife among manufacturers about the possible return of regulations that require exporters to sell their foreign exchange earnings to the Central Bank at the official Syrian Pound rate of SYP 1,262 to the US Dollar in a bid to shore up the reserves of the Public Treasury. Such measures were first introduced in 1988 following an economic crisis in Syria, and were reapplied during the war but halted in mid-2016. In 2019, stakeholders insisted that the unofficial rate must be applied under such circumstances, or otherwise production costs would rise. Given that transfers of export earnings to Syria are difficult, exporters will have to purchase fresh foreign exchange at the unofficial rate to sell to the Central Bank at a loss, which will restrict their capacity to import raw materials and also drive up the unofficial rate. Despite such complaints by exporters, some are facing criticism for being content to purchase foreign exchange at the subsidized Central Bank rate to finance the import of essential raw materials but refusing to sell their export earnings at the same official rate.
Merchants confirmed the issuance of a government resolution to help lower consumer prices by requiring foreign exchange bureaus to sell hard currencies to traders and manufacturers to finance their imports at the rate of SYP 3,375 to the US Dollar, but delivery may be within 10 days.
The US Dollar exchange rate applicable to those persons arriving via airports and land borders has reportedly increased to SYP 2,500 per US Dollar from SYP 1,256 per US Dollar.
President Bashar Al-Assad issued Presidential Decree 124/2021 relieving Hazem Karfoul of his duties as the Governor of the Central Bank of Syria, where he was charged with implementing the country’s monetary policy as overseen by the Monetary and Credit Council. Karfoul was appointed to his post in September 2018, just over a year before the Syrian Pound began to significantly depreciate in value due to the onset of the Lebanese financial crisis, followed by the imposition of the US Caesar Act and the coronavirus pandemic. Karfoul, like his predecessors, took decisions approved by the Monetary and Credit Council. A memorable moment from his term was his oversight of the Lira Support Fund launched in October 2019, which called on Syrian business personalities to transfer funds from Lebanon to Syria.
President Bashar Al-Assad issued Presidential Decree 126/2021 appointing Mohammed Issam Hazimah as the new Governor of the Central Bank of Syria, replacing Hazem Karfoul who served in the post since 2018.
Following the dismissal of Hazem Karfoul as its Governor, the Central Bank adjusted the official rate of the Syrian Pound by devaluing it from SYP 1,256 to the US Dollar to SYP 2,512 to the US Dollar, bringing it closer to the unofficial rate of just over SYP 3,000. The measure is anticipated to encourage Syrian expatriates to transfer money from overseas to their relatives inside Syria using official channels, thereby increasing the foreign exchange reserves of the Central Bank, as opposed to informal networks that bypass the state.
During the latest currency crisis and with an upcoming election, the government realized it needed to compete with the black market by paying more Syrian Pounds for US Dollars, so the Central Bank devalued the Syrian Pound to SYP 2,500 per US Dollar to draw closer to the unofficial rate. In addition, the Central Bank started to cooperate more with the private sector, particularly the foreign exchange bureaus, by legally recognizing the unofficial rate as a parallel rate to be utilized. A public-private partnership pertaining to monetary policy is developing. By raising the official rate to SYP 2,500 to the US Dollar and luring remittances to official channels, the Central Bank was able to increase its control and influence over the value of the Syrian Pound whereas before, the black market more or less dictated its depreciation.
Hyperinflation in the markets last month was caused in part by merchants predicting that the unofficial value of the Syrian Pound would continue to drop, so they fixed the prices of their goods based on future forecasts and not the actual exchange rate on the date of sales.
Remittances from overseas expatriates to families in Syria via licensed money transfer businesses have reportedly doubled during Ramadan as the official and unofficial rates of the Syrian Pound draw nearer to each other, thereby increasing the Public Treasury’s foreign reserves.
The sale of foreign exchange, such as US Dollars in Syria to finance imports, especially of raw materials by manufacturers, is being conducted in tranches over days and not necessarily in one instance to avoid heightened demand at one point in time and arrest inflation.
The government authorized remittances of overseas funds to traders and manufacturers based in Syria via licensed foreign exchange bureaus to be delivered in either US Dollars or Syrian Pounds as requested by senders to ensure access to hard currency for the concerned parties. As for persons other than traders and manufacturers, they can receive remittances from overseas via licensed foreign exchange bureaus in funds denominated in Syrian Pounds, which will be exchanged at the rate of SYP 2,825 to the US Dollar, drawing nearer to the official rate.
Starting on May 1st, all importers must obtain proofs of payment for goods they purchase for their records alongside customs declarations that evidence the transfer of funds from their respective bank accounts or via licensed foreign exchange bureaus to their foreign vendors. Such proofs of payments must be obtained from banks or licensed foreign exchange bureaus within 90 days from the date their respective goods enter Syrian territory. The measure is to ensure that import licenses are complied with accordingly and the funds used appropriately.
By April 10th, the unofficial rate of the Syrian Pound had appreciated to approximately SYP 3,200 to the US Dollar after starting the month of April at approximately SYP 3,500 to the US Dollar.
The unofficial rate of the Syrian Pound dropped under the SYP 3,000 to the US Dollar mark on April 18th, bringing the value of the local currency closer to the official rate of SYP 2,500 to the US Dollar recently set by the Central Bank.
By April 22nd, the unofficial rate of the Syrian Pound was averaging around SYP 2,875 to the US Dollar, thereby drawing nearer to the new official rate set by the Central Bank of SYP 2,500 to the US Dollar.
On April 27th, the unofficial rate of the Syrian Pound crossed the SYP 3,000 to the US Dollar threshold and reached SYP 3,300 the following day. Analysts suggest that such depreciation of the local currency is due to speculators in regions of the country and expect a market correction.
The unofficial rate of the Syrian Pound was hovering around the SYP 3,000 to the US Dollar mark at the end of April. Demand for Syrian Pounds generally increases at the end of a month as salaries tend to be paid around this time, which helps the local currency to appreciate.
By the end of 2020, the total amount of deposits held by the banking sector in Syria, which consists of six state-owned banks and 14 private banks, reached approximately SYP 7.4 trillion, or roughly $2.5 billion. Despite this figure, the banks are suffering from excessive liquidity.
Syria International Islamic Bank launched its point of sale service for retailers to allow customers to pay using their bank cards. E-payments are currently limited to utility bills and fees by linking banks together in the network of the Syrian Electronic Payments Corporation.
The People’s Assembly approved the new Real Estate Fees Bill, which repeals and replaces Law 429/1948. The Bill determines the fees payable for the registration of real estate transactions on the basis of valuations commissioned by the Ministry of Finance.
It also sets the conditions for any potential exemptions from the fees, which are collected by the General Directorate of Real Estate Interests. The body is affiliated to the Ministry of Local Administration and the Environment, and oversees the Land Registry.
Among other items, the Bill is concerned with the payment of transfer fees by buyers of real estate properties who intend to register their names on the title deeds at the Land Registry after entering into sale and purchase agreements with the sellers of the respective units.
The provisions of the Bill stipulate for the imposition of a five percent stamp duty and a 10% local administration fee on the amount of the respective real estate transaction fee in addition to the fee itself. Like the Real Estate Sales Tax Law, it aims to increase revenues.
Following its approval by the People’s Assembly, the Bill was formally ratified as the Real Estate Fees Law 17/2021 by President Bashar Al-Assad.
President Bashar Al-Assad issued Legislative Decree 7/2021, exempting Syrian citizens from fines due to failing to update their Civil Registry record, or applying for their personal identity card or family book, within the statutory time limits imposed by the Civil Status Law. The said exemption period shall last for a period of six months. In July 2019, a similar law was issued but mandated an exemption period of one year. Some citizens were obliged to delay registrations of births, deaths, marriages and divorces, and so forth due to the conflict. Syrians who migrated overseas expressed difficulties in updating their Civil Registry records as a result of the high fees charged for attesting powers of attorney at the Syrian consulates abroad to name proxies to file the relevant documents on their behalf in Syria.
President Bashar Al-Assad ratified the new Consumer Protection Law provided for in Legislative Decree 8/2021, which replaces Law 14/2015, and includes harsher penalties for market manipulators. The Law reiterates mandatory guarantees for consumers that cannot be excluded.
The legal framework for administrative pricing whereby price controls are imposed on essential goods and certain services, which cannot be sold to consumers by vendors in excess of a maximum capped amount, is included in the new Law similar to the previous one.
Traders across the supply chain from importers to merchants are expected to maintain all documents pertaining to their commercial transactions, including but not limited to invoices, import licenses and customs declarations. Samples of goods may be subject to laboratory analysis.
Consumer rights include those relating to refunds, replacements and repairs depending on the circumstances. They also have the right to receive invoices upon sales and are protected against false advertising. Furthermore, consumer protection associations may continue to operate.
The passage of the new Law is in response to abuses committed against consumers in the markets caused by hyperinflation, speculation and manipulations in recent years, which carry prison sentences for guilty suppliers and fines ranging from SYP 25,000 to SYP 10 million.
In addition to the revised fines incorporated into the new Consumer Protection Law, it also provides for imprisonment of either two, five or seven years depending on the crimes, such as causing harm to consumers, price manipulations and fraudulent trading in subsidized goods.
The new Law maintains the practice of deploying inspectors from the Ministry of Internal Trade and Consumer Protection into the markets with the authority of law enforcement agents to police, monitor and search vendors and their premises to ensure compliance with the Law.
OFAC clarified that non-US persons, such as NGOs and foreign financial institutions, would not risk exposure to secondary sanctions pursuant to the Caesar Act for engaging or facilitating activities and transactions which are authorized for US persons under a general license.
OFAC also explained that the export of US food and most medicines to Syria is not prohibited and does not require a Bureau of Industry and Security or OFAC license. Therefore, non-US persons would not risk exposure to sanctions under the Caesar Act for engaging in such activity.