Turkish lira becomes unofficial currency in Syria as economy sinks

Turkish lira banknotes and Syrian pounds are pictured near gold rings for sale at a jewellery shop in Azaz, Syria February 3, 2020. Picture taken February 3, 2020. (Reuters)

In Turkish-controlled parts of northern Syria, people have started to use the Turkish lira, rather than the local Syrian currency as the economy and the value of the Syrian lira plummets.

In recent weeks, Syria has faced a growing economic crisis where it has seen the value of the Syrian lira drastically drop and inflation soar. Currently, the lira is trading between 2,000-3,000 to $1, where it is officially valued at 435 to $1.

Turkey has begun delivering currency to Turkish-controlled areas in Syria, known as Euphrates Shield and Olive Branch areas, and opposition-controlled areas, including Idlib, as residents have started to rely on the stronger Turkish lira to survive.

“People in northern Syria are looking for a very stable currency because the Syrian lira is deteriorating quickly,” Abdulkafi al-Hamdo, a teacher in northern Syria, told Al Arabiya English. “They started using the Turkish lira because they have PTT,” he said. PTT is the Turkish postal service that is used to transfer money from Turkey to Syria.

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Additionally, some organizations have started paying salaries in Turkish lira and money must be transferred in Turksih lira, al-Hamdo said.

Accelerated use

While the use of the Turkish lira predates the economic crisis in Syria, the need for it has increased rapidly as the Syrian lira devaluates. According to al-Hamdo, the use of Turkish currency has accelerated in the last week as workers’ salaries are no longer enough to sustain themselves or their families when they receive payment in Syrian lira.

He added that people are asking Turkey to send more lira, but this has not happened yet.

In addition to the Syrian and Turkish liras, some people are also using dollars, despite the fact that it is a crime in Syria to use any currency other than the Syrian lira for commercial use. Some shops have even begun putting their prices in dollars or Turkish lira to accommodate the growing use of the two currencies.

“In Idlib, most people are putting prices in dollars,” al-Hamdo said. “But, nevertheless, when you want to buy something and you don’t have dollars, they will make their calculations and get you the amount in Syrian lira.”

Turkey’s intentions

By sending Turkish cash to Syria, Ankara is hoping to prevent another wave of refugees seeking to cross over into Turkey, according to Elizabeth Tsurkov, a fellow at the Foreign Policy Research Institute.

“The Syrian pound is collapsing,” Tsurkov told Al Arabiya English. “The population is already malnourished. If they continue to rely on the Syrian pound, the population is going to starve much quicker, and Turkey may be faced with the prospect of hungry displaced persons rushing toward the border and trying to enter Turkey just to try and feed themselves.”

Internally displaced Syrians hold Syrian opposition flags during a protest in support of the Turkish army and Turkey backed Syrian rebels at the Bab el-Salam border crossing between the Syrian town of Azaz and the Turkish town of Kilis, in Syria, February 25, 2020. (Reuters)

Internally displaced Syrians hold Syrian opposition flags during a protest in support of the Turkish army and Turkey backed Syrian rebels at the Bab el-Salam border crossing between the Syrian town of Azaz and the Turkish town of Kilis, in Syria, February 25, 2020. (Reuters)

Al-Hamdo also argues that those living in northern Syria are being forced to rely heavily on Turkey because of the war and economic collapse that the country is facing.

“[Turkey] is not the good solution,” al-Hamdo explained, but said it was the lesser of two evils when forced to choose between the Syrian regime or Turkey, where the latter provides some security.

“On one side [Syria] it means their humiliation and their death. The other side [Turkey] is that you’re not dealing with your own people. It’s not only a matter of [the Syria lira] deteriorating. It is because people want a stable life,” he said.

Potential boost for Turkish lira

Beyond preventing another refugee crisis, Turkey’s currency could see a boost in value, as well as the Turkish economy.

“Turkey definitely has something to gain from this because the moment that you increase the demand for the currency, you can immediately print money without it losing its value,” Tsurkov said. “So expanding the market is incredibly beneficial.”

Al-Hamdo agreed that this could help the Turkish economy, especially because “people are going to depend more and more now on the Turkish lira” as the economic crisis in Syria worsens.

With a new round of crippling US sanctions expected to hit June 17 when the Caesar Act is implemented, the Syrian economy is likely to take another blow.

According to Tsurkov, this could lead to the “overall collapse of the Syrian economy.”

To sustain the economy in northern Syria, Turkey will have to continue to send lira to areas under its control, as well as areas under opposition control. Once the need for the Syria lira ceases, then Turkey’s direct involvement in the local economy could significantly lessen.

Read more: What is the role of Turkey in Syria?

“Money will need to be brought in based on the growth rate of the economy,” Tsurkov stated. “But the area is a war zone full of impoverished, malnourished displaced persons. It seems that once they’ve filled in the area with enough money to take out the Syrian lira, then they won’t need to do much else.”

However, with such a large portion of Syria’s population switching from the Syrian lira to the Turkish lira, this could also have a negative impact on the Syrian economy, but, according to Tsrkov, the impact of this would be delayed.

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Last Update: Monday, 15 June 2020 KSA 15:09 - GMT 12:09
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