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Syria's Assad says billions locked in troubled Lebanese banks behind economic crisis

Syrian President Bashar Al-Assad attends the Arab Summit, 28 March 2007 in Riyadh. Arab leaders kicked off a two-day summit in Saudi Arabia today aiming to revive a dormant plan for peace with Israel and launch a diplomatic offensive to resolve the Middle East conflict [HASSAN AMMAR/AFP via Getty Images]
Syrian President Bashar Al-Assad attends the Arab Summit, 28 March 2007 in Riyadh [HASSAN AMMAR/AFP via Getty Images]

Syrian President Bashar al Assad said billions of dollars of deposits held by his countrymen in Lebanon's financial sector that was blocked after a major financial crisis were the main cause of Syria's deepening economic crisis, Reuters reports.

Lebanese banks, fearing capital flight and grappling with an acute hard currency crunch, have since last year imposed tight controls on withdrawals and transfers abroad, drawing outrage from local and foreign depositors unable to access their savings.

Assad said anywhere from $20 billion to $42 billion of Syrian deposits could have been lost in the once vibrant banking sector that held over $170 billion in foreign currency deposits.

"This figure for an economy like Syria is terrifying," he said

"It's the money they put in Lebanese banks and we paid the price this is the core of the problem that no one talks about," Assad added, speaking during a tour of a trade fair broadcast on state media.

Syrian businessmen say Lebanon's tight controls on withdrawals have locked hundreds of millions of dollars once used to import basic goods from oil to commodities into Syria.

READ: Syria survivor of torture in Assad prisons admitted to top US university 

Many Syrian front companies had also long circumvented Western sanctions by using Lebanon's banking system to import illicit goods into Syria by land, bankers and businessmen say.

The U.S. Treasury has blacklisted scores of such firms.

Assad said the current economic woes were not caused by the Caesar Act – the toughest U.S. sanctions yet against Damascus which came into force last June.

"The crisis began before the Caesar Act and years after long-imposed Western sanctions … It's the money (in Lebanese banks) that has been lost," Assad said.

Syrian authorities blame Western sanctions for widespread hardship among ordinary residents, where the currency's collapse since the start of the year has led to soaring prices and people struggling to afford food and basic supplies.

Last month the government faced severe fuel shortages and has been forced to raise bread prices as wheat stocks dwindle, leading to growing disenchantment by a weary population battered by a decade of war.

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LebanonMiddle EastNewsSyria
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