Tag: Syria

Value of the Syrian Pound Hits an All-Time Low

As I have documented previously, the economic devastation and international sanctions that have accompanied Syria’s civil war have wreaked havoc on the country’s currency, the Syrian pound (SYP). In a desperate, wrong-headed attempt to save its troubled currency, the Assad regime has imposed harsh penalties for currency trading on the black-market. This strategy proved wildly unsuccessful when it was utilized by the Iran in October of 2012.

Indeed, as was the case in Iran, attempts to suppress currency exchange have sparked a panic – a run on the Syrian pound. As of 10 July 2013, the value of the Syrian pound on the black market has hit an all time low, with the current black-market exchange rate now sitting at 295.00 SYP/USD.

As the accompanying chart shows, this has sent the implied monthly inflation rate in Syria skyrocketing.

Yes, Syria’s implied monthly inflation rate is now 91.9%. This means that Syria has exceeded the threshold for hyperinflation (an inflation rate of 50% per month).  Only time will tell if this run on the Syrian pound will continue. But, for the time being, we can be sure that the Syrian pound will remain a troubled currency.

I have established a page to track current black-market exchange-rate and implied inflation data for the Syrian pound, as well as for troubled currencies in Iran, Argentina, North Korea, and Venezuela. For more, see: The Troubled Currencies Project.

Syria’s Annual Inflation Hits 200%

In an attempt to beat Western sanctions and halt the fall in the Syrian pound, the Assad regime – with the help of Iran, Russia, and China – has begun conducting all of its business in rials, roubles, and renminbi. This decision supplements other existing arrangements between Syria and its allies that are keeping the Syrian economy on life-support. These include transfers of $500 million per month in oil and an unlimited credit line with Tehran for food and oil-product imports.

According to Kadri Jamil, Syria’s prime minister for the economy, this life support is necessary because Syria’s devastated economy is the target of an elaborate plot, hatched by the U.S. and Britain, to “sink the Syrian pound.”

So, what about the sinking pound? As the accompanying chart shows, the Syrian pound has lost 66.2% of its value in the last twelve months.

The rout of the Syrian pound has been widely reported in the press.  But, Syria’s inflation problems that have accompanied the collapse of the pound have gone largely unreported.  That’s because, beyond the occasional bits of anecdotal evidence, there has been nothing to report by way of reliable economic data.

To fill that void, I employ standard techniques to estimate Syrian’s current inflation. Currently, Syria is experiencing an annual inflation rate of 200% (see the accompanying chart).

Indeed, Syria is experiencing a monthly inflation rate of 34%. To facilitate the monitoring of the quickly deteriorating situation in Syria, I am creating a resource which will allow readers to view up-to-date data on the Syrian pound and the country’s inflation problems. Soon, black-market exchange-rate data and ­inflation estimates for countries with troubled currencies like Syria will be made available via the “Troubled Currencies Project” – a joint Cato Institute-Johns Hopkins collaboration under my direction. In consequence, the days of Syria’s plunging pound and raging inflation being covered in a shroud of secrecy are soon coming to an end.

Only Wusses Go to War Without Cause

President Barack Obama has been evidently reluctant to go to war in Syria, but has started down the long and winding road by deciding to provide weapons to the insurgents. Why he is risking involvement in another conflict in another Muslim nation is hard to fathom.

However, the president did act only after former president Bill Clinton warned that Obama could end up looking like a “total wuss” and “a total fool” if the latter did not drag America into war. If there is anyone who should not be giving war-related advice, it is Bill Clinton.

His “splendid little war” in Kosovo left a mess in its wake, including ethnic cleansing by America’s putative allies. Indeed, he always had a curious view of the purpose of war. He once expressed his frustration that he likely would not be considered a great president without prosecuting a major conflict. 

Moreover, why is Clinton of all people accusing another president of looking like a “total wuss” and “a total fool” for hesitating to go to war? After all, as I relate in the American Spectator, he engaged in all manner of personal maneuvering to avoid being drafted to fight in Vietnam. 

That’s fine by me. It was a stupid war in which tens of thousands of fine Americans died as a result of dumb decisions by foolish Washington policymakers. But it is striking how reluctant he was personally to go to war.  Why, some people might consider him to have been a “wuss.”

As I pointed out:

Intervening in Syria is a serious mistake.  The U.S. has no interest at stake that warrants entanglement in another Middle Eastern civil war.  President Ronald Reagan learned that lesson three decades ago and responded appropriately, by getting out fast.

It’s bad enough if President Obama made his decision because he genuinely believes that the U.S. needs to fight another war in another Muslim nation.  It’s far worse if the president acted to ensure that he doesn’t look like a wuss and a fool.  For there’s no bigger wuss and fool than someone who allows Bill Clinton to manipulate him into going to war.

Read the rest here.

 

Washington Foolishly Tilts Towards War in Syria

The bitterest fights tend to be civil wars. Today, Syria is going through such a brutal bloodletting. 

The administration reportedly has decided to provide arms to Syria’s insurgents. It’s a mistake.

This kind of messy conflict is precisely the sort in which Washington should avoid. Despite the end of the Cold War, the U.S. armed services have spent much of the last quarter century engaged in combat. At the very moment Washington should be pursuing a policy of peace, policymakers are preparing to join a civil war in which America’s security is not involved, other nations have much more at stake, many of the “good” guys in fact are bad, and there would be no easy exit.

Military action should not be a matter of choice, just another policy option. Americans should have something fundamental at stake before their government calls them to arms.

No such interest exists in Syria.

Intervention against Damascus means war. Some activists imagine that Washington need only wave its hand and President Bashar Assad would depart. However, weapons shipments are not going to oust a regime which has survived two years of combat. Intervening ineffectively could cost lives and credibility while ensuring heavier future involvement.

There is no serious security rationale for war. Damascus has not attacked or threatened to attack America or an American ally. America’s nearby friends, Israel and Turkey, are capable of defending themselves.

Another concern is the conflict spilling over Syria’s borders. But this does not warrant U.S. intervention. Maintaining geopolitical stability rarely approaches a vital interest justifying war.

Moreover, intervening would not yield stability. Washington foolishly attempted to sort out Lebanon’s civil war three decades ago and was forced into an embarrassing retreat. There’s no reason to believe joining the Syrian killfest today would yield a better result.

Another claim is that ousting the Assad dictatorship, allied with Tehran, would weaken Iran. Likely so, but then Iran would have a greater incentive to emphasize ties with Shia-dominated Iraq, which also has been aiding Assad.

Moreover, a chaotic, fragmented, sectarian Syria likely would do more to unsettle Iraq, Israel, and Lebanon, allied or friendly to America, than Iran. Tehran’s divided elite also might close ranks in response to an increased feeling of encirclement.

Advocates of U.S. action point an accusing finger at Iran, Lebanon’s Hezbollah, and Russia for helping Damascus. However, Qatar and Saudi Arabia are providing money and weapons to the rebels. Turkey is offering sanctuary for insurgents. The international nature of the struggle is a good reason for Washington to stay out.

Syria’s chemical weapons stockpiles also argue against intervention. Chemical agents are the least effective and most geographically constrained of so-called weapons of mass destruction. Thus, “leakage” is more likely to threaten Syria’s neighbors than America.

Weakening or overthrowing the Assad regime is more likely to release chemical agents to potentially hostile governments or groups. Air strikes would loose chemicals against surrounding civilians. Boots on the ground would mean regime change, leaving Damascus no reason not to use chemical weapons as a last resort defense.

The most pressing concern is humanitarian. But Syria is not a case of genocide committed by an armed government against an unarmed people. There are two forces ready to kill. Defeating one does not mean peace. Rather, it means the other gets to rule, perhaps ruinously.

In both Kosovo and Rwanda the U.S.-backed victors committed atrocities. In Syria reprisals are certain whoever wins. Neither Afghanistan nor Iraq offer reasons for optimism—extended blood-letting, interminable involvement, disappointing outcome.

The result in Syria actually could be far worse, because of the rise of Islamic radicalism among insurgents. These fine folks recently executed a 15-year-old boy for blasphemy in front of his parents.

The final pitch for war is camouflaged as a call for American leadership. However, whether leader or follower, the U.S. would lose by attacking Assad.

Although diplomacy looks forlorn after two years of combat, it remains the best hope. Despite recent gains, Assad’s forces remain unlikely to reassert control over the northern half of the country. The opposition’s divisions and Assad’s outside assistance make a complete rebel victory unlikely. All of the surrounding states have much to lose from continuing war. A second best modus Vivendi might be possible.

Even if diplomacy fails, however, Washington should stay out of the war.

Syria is a tragedy. There is no reason to make it America’s tragedy. President Barack Obama should ask: does he want his administration to be defined by involvement in an unnecessary and unpopular no win war, as was that of his predecessor?

Political Bloviation in Doha, Qatar

The 13th Doha Forum has convened, with your loyal correspondent in attendance. It is an impressive gathering, filling the luxurious Ritz-Carlton. Cars are checked for bombs before approaching the hotel. Guests have to go through a metal detector both entering the hotel and inside heading to the conference. The meeting room was full, with just about every citizen of Qatar (who only make up something like 15 percent of the population) seeming to line the hallway before the Emir arrived.

There are few more tragic figures than onetime national leaders who have fallen away from the centers of power. For instance, after the Qatar royals, who still do matter, opened the gathering, to the stage strode a frustrated former British prime minister trying to remain relevant. The Right Honorable Gordon Brown, who finally grabbed the premiership from his frenemy Tony Blair only to lose it in the 2010 election, twice quoted John F. Kennedy while chattering on about the importance of interdependence.

Brown also urged the creation of a North African-Middle Eastern development bank to promote economic growth in such nations as Egypt—which, he failed to note, has been buried in foreign aid for years without generating economic growth. The former PM was introduced as preventing a new Great Depression (who knew!) and later lauded for his “profound” ideas (apparently defined as previously advanced by his hosts in Qatar).

Francois Fillon, a former prime minister of France, followed, telling us that we needed to solve the Syrian conflict, create a Middle Eastern financial institution, and “defend European civilization,” whatever that means. The moderator declared his ideas to be “fascinating” and his mention of Europe to be an example of “self-reflection.”

Amadou Bondou, the vice president of Argentina—which has made a practice of looting the productive and stealing people’s retirement savings—denounced austerity. These policies are having “negative repercussions” on poor people, he complained. No doubt, they are. However, if you have a wild party, you can’t very well expect everyone else to pay the clean-up costs. Next time countries, especially his own, should think before blowing their budgets to enrich favored interests and win votes.

Wolfgang Ischinger, chairman of the Munich Security Conference, concluded the first session with a discussion about the importance of solving the Syrian conflict. He suggested a comprehensive conference to end the fighting and conduct of proxy wars in the region. Alas, what evidence is there that the parties are prepared to settle or that their backers are prepared to stay out? He also urged more humanitarian assistance for Syrians. He worried that if the Europeans fail to give more aid they may be left with no friends at all in Syria. Given the way that conflict is going, why would that be such a bad thing? Trying to make friends is about the dumbest reason one can imagine for getting involved in such a war.

Well, that’s the start here in Doha. I just can’t wait for additional “fascinating” observations from more “profound” thinkers like Messrs. Brown, Fillon, Bondou, and Ischinger!

Our Astrategic Syria Debate

Only a terrifically secure country could have as poor and astrategic a debate about war as the one we’re having about taking sides in Syria’s civil war. 

Actually, we’re not having a debate about taking sides in Syria’s civil war. That’s the problem. We’re debating Syria as though it’s an engineering question—an electrical outage, or a bit of erosion in the backyard. Doing so removes the most vexing aspects of the issue, leading us to the delusion that military action can easily make things better. 

Too much of the discussion has focused on moral arguments and too little of it on the very real political problems beneath the war. Take the advocacy of Shadi Hamid of the Brookings Institution. As Hamid wrote of his thinking on Syria in January 2012, he was pro-intervention “emotionally, and from a purely moral perspective,” but had some nagging non-emotional, non-moral concerns: “I cannot say whether military intervention would work.” By June, though, the emotional and the moral took over, with Hamid declaring that it was “not the job of civilian think tanks” to figure out how military intervention would produce the desired outcome. 

Princeton’s Anne-Marie Slaughter, who until recently occupied George Kennan’s old office at the State Department, has similarly assumed away Syrian politics, making the case for intervention much easier. As she tweeted Sunday, “Suppose US goal in #Syria were simply to STOP THE KILLING. Forget who might/might not win down the line. What’s fastest/best way to do that?” 

But forgetting who might win down the line waves off the central problem: the killing is happening for a political reason. Bashar al-Assad and his enemies are not engaged in wanton, nihilistic slaughter; they are struggling over political control of Syria. Any analysis that removes that basic fact from the discussion of how to “STOP THE KILLING” turns a complex political question into a technical, scientific project, creating the delusion that it can be readily fixed by the U.S. government. 

In fairness to Hamid and Slaughter, they are carrying the torch of a time-honored American tradition of foreign policy thinking. Historically, debates over foreign intervention in the United States have featured liberal analysts against realists and the military. In the 1950s, President Eisenhower reportedly had to admonish his activist Secretary of State John Foster Dulles to calm down: “Don’t do something, Foster, just stand there!” 

In the 1990s, apolitical liberal thinking on war reached its pinnacle. When Chairman of the Joint Chiefs of Staff Colin Powell expressed hesitation about the Clinton administration’s intervention ideas, Secretary of State Madeleine Albright lashed out: “What’s the point of having this superb military you’re always talking about if we can’t use it?” And President Clinton’s lack of understanding of war caused him to ruminate, accurately, to General Hugh Shelton that it would “scare the shit out of al Qaeda if suddenly a bunch of black ninjas rappelled out of helicopters into the middle of their camp.”

In the 1990s, realists like Richard Betts were warning Americans not to fall victim to the “delusion of impartial intervention.” Admonishing policymakers for their newfound enthusiasm for limited, ostensibly apolitical intervention, Betts reminded readers of a ground truth: “A war will not end until both sides agree who will control whatever is in dispute.” This is as true in Syria as it is anywhere. Alternatively, if analysts want to use the U.S. military to regime-change Assad, they have every obligation to explain how they intend to shepherd the country toward whatever political order they seek.

More honest hawkishness can be found at the Institute for the Study of War, whose recent paper advocating aiding the Syrian opposition admitted that politics matter

The goal behind U.S. support to the opposition should be to build a force on the ground that is committed to building a nonsectarian, stable Syria, with a government more likely to respect American interests. 

That outcome is presumably what all analysts urging intervention desire. The trick is to acknowledge the problems of connecting military means to our political desiderata. Anyone who doesn’t deal with the underlying political problems at stake is threatening to push the country into another ill-considered, potentially costly war.

Obama’s Perilous Foreign Policy Path

To both a greater and lesser degree of success, foreign policy scholars have tried to explain the disconnect between President Obama’s soaring idealism of America’s role in the world and his halting political caution about it in discrete situations. That vacillation has drawn criticism, both for being too meddlesome and for not being meddlesome enough. 

Daily Caller contributor Adam Bates ably sums up the president’s incoherence as “not based on any particular logic or worldview beyond the president’s own desire to distance himself from America’s foreign policy past without bothering to actually change any policies.” Indeed. As this author has written in the past, specifically on counterterrorism policies, 

On the one hand, Obama openly rejected Bush’s ‘with us or against us’ approach to foreign affairs. On the other hand, Obama’s sophisticated demeanor opened him to criticism, with hawks condemning him as too weak and easily manipulated by America’s enemies. 

The administration has supported policies that have failed to deliver tangible benefits to the American people (Libya), continued to prop up brutal regimes (Bahrain, Saudi Arabia, and Egypt), and helped tether our country to the region’s parochial quarrels (Afghanistan, Pakistan, and perhaps ever-more-so in Syria). Despite seemingly courageous attempts to distance itself from failed policies of the past, the Obama administration has managed to drift into strategic purgatory.