Legal Briefing – January 2021
Citrus fruit production is down to 800,000 tons compared to 1.1 million tons in previous years due to several factors, including weather conditions, while prices rose to SYP 1,000 per kilogram, thereby creating incentives for farmers. 300,000 tons are exported to Iraq and Russia.
The state-owned Syrian Bakeries Establishment, which utilizes 2,730 tons of flour daily to produce 2.86 million bundles of bread per day, revealed that the public sector provides 60% of bread demand among Syrians while the private sector accounts for the remaining 40%.
Russia donated $20 million to the World Food Programme (WFP) to provide food assistance for up to 2.3 million Syrians. Food prices have soared, and the cost of staple foods is now 247% higher than one year ago. The WFP provides monthly support to 4.8 million people across Syria.
The Minister of Agriculture indicated that around 1.303 million hectares, or 84% of the planned area, for the harvest of the wheat crop were cultivated in the preceding year, of which 96% were rain-fed and 71% irrigated.
The Damascus and Rural Damascus Chamber of Agriculture announced that 8,188 certificates of origin had been granted last year until December 20th to export agricultural products with a total value of $96.8 million to countries in the Arab world, Asia, Europe and Australia.
The quantity of cotton to be marketed for the coming season is not expected to exceed 30,000 tons due to shortages of cotton seeds, fuel and fertilizer despite protests by the Peasants Union while it exceeded 45,000 tons last season. The SDF also seeks to control cotton harvests.
The Ministry of Agriculture estimated olive production in 2020 at 850,189 tons and olive oil at 160,000 tons. There are 103 billion olive trees in Syria distributed over 693,227 hectares. The price of 17-kilogram olive oil cans exceeded SYP 100,000, more than four times in 2019.
According to the Ministry of Agriculture, there has been a 50-60% decrease in livestock and a drop of 50% in poultry farms while cows, sheep, goats and buffalos produced a combined total of 1.8 million tons of milk, mostly from cows, and 203,000 tons of meat, mostly from sheep. The Ministry of Agriculture announced that the Syrian market required more than 30,000 dairy cows and will facilitate imports for the first time in 31 years since shortages were never an issue. The volume of livestock has recently been threatened due to fires and skin diseases.
The Minister of Electricity confirmed a signed contract with a friendly country to build a solar power plant in the Sheikh Najjar Industrial Park in Aleppo at a value of €36 million. Syria currently has a capacity for 3,200 megawatts but needs 7,000 megawatts to avoid rationing.
Sources in the Ministry of Petroleum and Mineral Resources revealed a decision to reduce the distribution of diesel fuel by around 20% per day to all provinces. The reduced quantity is estimated at 220,000 liters per day in the provinces of Damascus and Rural Damascus.
The Ministry of Electricity granted two licenses to investors to establish renewable energy projects in Damascus and Suwaida for 25 years. Both have a capacity of approximately 100 kilowatts but one will not link up to the national grid as it does not intend to sell electricity.
The Ministry of Electricity revealed that the total production of renewable solar and wind power by the public and private sectors combined is around 28.9 million kilowatts, of which solar accounts for 22.2 million kilowatts and 6.7 million kilowatts from a wind turbine.
The Minister of Electricity explained that of the 11 power stations, seven are utilized, which suffer from gas shortages and require spare parts due to frequent breakdowns. Sanctions, including the Caesar Act, prevent Mitsubishi, Siemens and Ansaldo from maintaining the plants.
The three vessels belonging to the state-owned Syrian Maritime Corporation, which was incorporated in 1961 and ships goods for the benefit of both the public and private sectors, transported 220,000 tons of cargo in 2020, with revenues exceeding SYP 3.5 billion.
The first passenger flight to arrive at Aleppo International Airport after departing Beirut Rafic Hariri International Airport has taken place and it is the first Beirut-Aleppo flight since 2011.
According to the Central Bureau of Statistics, the inflation rate in general increased between 180-200% in 2020 compared to 2019. The basic cost of living in Damascus is around SYP 660,000 per month for a family of five individuals compared to SYP 325,000 in 2018.
A poll conducted by Al-Iqtisadi found that 67.6% of Syrian households depend on remittances sent mainly from European and Arab countries to secure their basic living requirements, five percent of families depend on humanitarian aid and 27.4% work additional jobs to make ends meet.
A local banking report estimated that the losses of the Syrian economy during the war amount to more than $530 billion, equivalent to 9.7 times the country’s GDP in 2010, and include more than 80% poverty among the population and damage to infrastructure in excess of 40%.
According to the Ministry of Economy, the value of Syrian exports in 2020 reached €1 billion, up from €523 million in 2019. The number of export markets reached 117 countries, up from 109 in 2019. Imports accounted for €4 billion in 2020 after they reached €5 billion in 2019.
122,000 tons of citrus fruits carried in 4,500 refrigerators were exported from Syria to Iraq via the border crossing between Abou Kamal and Al-Qaim, which reopened on September 30, 2019 after a six-year closure. Goods are transferred from Syrian to Iraqi trucks at the border.
Apple farmers in Suwaida are complaining after Egypt rejected 500 Syrian refrigerators due to pesticide issues. Suwaida exported 4,800 tons of apples to foreign markets, 90% of them to Egypt, while production in 2020 was estimated at 40,824 tons distributed over 15,783 hectares.
The state-owned Tobacco Corporation sold SYP 78.3 billion worth of locally produced cigarettes as well as 709 tons of imported cigarettes worth SYP 5.6 billion. Total sales amounted to SYP 84.6 billion. There are reportedly almost 5 million smokers in Syria.
Industrialists are lamenting the recent decision of the Ministry of Economy and Foreign Trade to ban the importation of palm oil, which they fear will put 500 factories that depend on the product at risk and cause prices to jump by 30%.
The Damascus Securities Exchange witnessed 31 significant transactions in share trading of listed companies worth SYP 4.67 billion in 2020 that were conducted privately while 48 significant transactions were executed in 2019 at a value of SYP 16.4 billion.
According to the Central Bank, the deposits in the Syrian banking sector exceeded SYP 6.9 trillion, or $2.4 billion, by the end of August 2020.
The shareholders of Banque Bemo Saudi Fransi approved the purchase of 22 million shares or 49% of Bank Audi – Syria without the need for a share capital increase or contributions from any of the 1,232 shareholders. The sale will be conducted via the private placement rules. Prime Minister Hussein Arnous subsequently issued Resolution 85/2021 ratifying a change of name decision for Bank Audi – Syria, which shall now be known as Al-Ahli Credit Bank.
The Central Bank launched the SYP 5,000 note in response to unprecedented inflation during 2020 that witnessed a drop in the value of the Syrian Pound from SYP 1,000 to approximately SYP 3,000 to the US Dollar. The SYP 2,000 was issued in mid-2017 and the SYP 1,000 in the late 1990s.
The Monetary and Credit Council, which oversees the Central Bank, licensed the Bemo Saudi Fransi Microfinance Institute, in which Banque Bemo Saudi Fransi has a 45% shareholding. The share capital of the new entity is SYP 2 billion distributed over 20 million shares.
A tax expert revealed that the current amount of tax evasion in Syria is estimated at approximately SYP 2 trillion and caused in part by an outdated tax system conceived over 70 years ago. The tax burden in 2010 was around 12%, which represents the ratio of tax revenues to GDP.
The total number of cases investigated by the Customs Directorate in 2020 amounted to 2,713 and resulted in the issuance of fines for the smuggling of cars, clothes, alcohol and other consumer items worth approximately SYP 60 billion, SYP 18 billion of which have been collected.
According to an expert, 30% increases in real estate prices caused by higher construction and administrative costs coupled with a lack of mortgages mean that mainly expatriates are purchasing properties on a speculative basis given the lack of alternative investment opportunities.
The Ministry of Education delegated most authorities of the Minister of Education to manage daily affairs to Governors and Directors of Education throughout the provinces. The move comes within the framework of the National Administrative Reform Program and decentralization.
The Bar Association launched the new power of attorney template used by lawyers and their clients which costs between SYP 14,000 and SYP 22,000 and is printed on paper similar to financial instruments to avoid forgeries. There are 30,000 lawyers in Syria, of which 20% are women.
According to the Chief Justice of the Council of State Administrative Court, decisions of the former Prime Minister and some ministers were annulled while bills and public contracts that exceed valuations of SYP 150 million are scrutinized by the body to ensure legal compliance. He explained that arbitral awards rendered pursuant to public contracts are treated as final and enforceable within one month of issuance without recourse to appeal, as was previously the case, to encourage investment. The number of judges in the Council of State amount to 65.
President Bashar Al-Assad issued two decrees implementing two resolutions of the Supreme Judicial Council to impeach two judges in Lattakia and Aleppo respectively on the grounds of wrongdoing in carrying out their judicial duties.
The Suwaida Provincial Council criticized some ministerial decisions which violate existing law while asserting the need for more coordination between ministers and cited the example of a grant ordered by the Minister of Education being revoked by the Minister of Finance.
OFAC issued an $8.6 million fine against Union de Banques Arabes et Françaises SA, a Paris-based bank, to settle its civil liability for processing 127 transactions worth $2.08 billion on behalf of sanctioned Syrian financial institutions via the US financial system in late 2011.
New US President Joe Biden revoked the travel ban applicable to Syrians and persons from other nationalities that was previously imposed by former President Donald Trump early on in his term, meaning that Syrians can start applying for visas to travel to the US.
After the Biden Administration took office, the page on the US State Department website pertaining to the Caesar Act secondary sanctions regime imposed against Syria was archived. The significance of this move is yet premature to analyze as it may be a technical measure.
The Biden Administration is reportedly expected to review economic sanctions imposed on some countries, including Syria, with the declared intention of possibly easing them to help the global response against the COVID-19 pandemic.