Monday, March 13, 2006
SYRIA SWITCHES TO EURO
Arabic news.comThe Syrian government is to use euros instead of US dollars in its budgets upon the decision of the US treasury that stipulates barring any transactions between American banks and the Commercial Bank of Syria. The US Treasury Department said Thursday that US banks must close any accounts they have with two Syrian banks, as part of an effort to crack down on terrorist financing. The order covers the Commercial Bank of Syria and its subsidiary, the Syrian Lebanese Commercial Bank. The Syrian government's said the decision is to protect its export, import and services payments, and to protect the national economy. Syria has switched all of the state's foreign currency transactions to euros from dollars upon political confrontations with the United States, the head of state-owned Commercial Bank of Syria, Duraid Durgham said. Durgham said, adding that this decision is important and necessary at a moment when the Americans are threatening Syria in a way that could complicate banking operations between Syria and European countries.
This decision represents the strong Syrian relation with the European Union, that is considered the first commercial partner to Syria, he said. The United States has been leading international pressure on Syria for its alleged role in the assassination of former Lebanese Prime Minister Rafiq al-Hariri and aiding the crisis in Iraq which Syria denies.Syria has been under US sanctions since May 2004, meaning it can not import American products other than food and medication. Syria surprised world financial markets when it announced that it would stop dealing in dollars in all official institutions and in import-export contracts replacing them with euros in case the US intensifies sanctions on Damascus. Euros are also to be used in paying back sums owed by state institutions to foreign parties.
Minister of Finance Mohammad al-Hussein said that this action comes in the framework of continuing pressure on Syria for political considerations, adding that Syria was not surprised by the American treasury decision. Hussein added that the Central Bank of Syria, as any government bank, is implementing international laws against money laundry and support of terrorism. He pointed out that all Iraqi government accounts were transferred to Iraq last September according to an Iraqi-Syrian understanding memorandum.
Hussein asserted that the Syrian Central Bank will continue in its transactions with its international partners and clients, adding that the bank is supported by the government. Syrian governmental sources said that this decision is an attempt "to keep the Syrian economy from being at the mercy of the American dollar," as American laws stipulate that any conversion into dollars must go through the American banking system. US threats against Syria would result in complicating the banking transactions and the transfer operations into the country from corresponding international banks in Europe.
Arab central banks move assets out of dollar
By Philip Thornton, Economics Correspondent
Published: 14 March 2006
Middle Eastern anger over the decision by the US to block a Dubai company from buying five of its ports hit the dollar yesterday as a number of central banks said they were considering switching reserves into euros. The United Arab Emirates, which includes Dubai, said it was looking to move one-tenth of its dollar reserves into euros, while the governor of the Saudi Arabian central bank condemned the US move as "discrimination".
Separately, Syria responded to US sanctions against two of its banks by confirming plans to use euros instead of dollars for its external transactions. The remarks combined to knock the dollar, which fell against the euro, pound and yen yesterday as analysts warned other central banks might follow suit. Last week the US caused dismay after political opposition to the takeover of P&O by Dubai Ports World forced DPW to agree to transfer P&O's US port management business to a "US entity" .
The governor of the UAE central bank, Sultan Nasser al-Suweidi, said the bank was looking to convert 10 per cent of its reserves, which stand at $23bn (£13.5bn), from dollars to euros. "They are contravening their own principles," he said. "Investors are going to take this into consideration [and] will look at investment opportunities through new binoculars." Hamad Saud al-Sayyari, the governor of the Saudi Arabian monetary authority, said: "Is it protection or discrimination? Is it okay for US companies to buy everywhere but it is not okay for other companies to buy the US?"
Syria has switched the state's foreign currency transactions to euros from dollars, the head of the state-owned Commercial Bank of Syria, Duraid Durgham, said. Last week the White House told US financial institutions to terminate all correspondent accounts involving the Commercial Bank of Syria because of money-laundering concerns. Mohammad al-Hussein, Syria's finance minister, said: "Syria affirms that this decision and its timing are fundamentally political."
The euro rose a quarter of one percentage point against the dollar to a one-week high of $1.1945, although it retreated in later trading.