Gold Reserves in Syria Amidst Civil War

By Timour Azhari

DAMASCUS (Reuters) – The vault of Syria's central bank holds nearly 26 tons of gold, the same amount it had at the start of its bloody civil war in 2011, even after the chaotic fall of Bashar al-Assad's despotic regime, four people familiar with the situation told Reuters.

However, the country has only a small amount of foreign currency reserves in cash, according to the same sources.

Syria's gold reserves stood at 25.8 tons in June 2011, according to the World Gold Council, which cites the Central Bank of Syria as its data source. At current market prices, that is worth $2.2 billion, according to Reuters calculations.

Syria's central bank's foreign exchange reserves amount to just around $200 million in cash, one source indicated, while another mentioned that U.S. dollar reserves were "in the hundreds of millions."

Although not all reserves would be held in cash, the drop is substantial compared to before the war. At the end of 2011, Syria's central bank reported $14 billion in foreign reserves, according to the International Monetary Fund. The IMF had estimated Syria's reserves at $18.5 billion in 2010.

The dollar reserves have been nearly depleted because the regime increasingly used them to fund food, fuel, and Assad's war effort, former and current Syrian officials told Reuters.

Media representatives for Syria's new ruling administration and for the Central Bank of Syria did not respond to requests for comment regarding the size of the central bank's reserves.

Following the Assad regime's crackdown on pro-democracy protests in 2011, Syria ceased sharing financial information with the IMF, the World Bank, and other international organizations. After Assad fled to Russia on December 8, Syria's new government, led by former rebels, is still taking stock of the country's assets. Although looters briefly accessed parts of the central bank, the main vault remained untouched, Reuters reported.

Some of what was stolen was later returned by Syria’s new rulers, Syrian officials claimed. The vault is bomb-proof and requires three keys, each held by different individuals, along with a combination code for access, according to one source.

The vault was inspected by members of Syria's new administration last week, just days after rebels took control of Damascus in a swift operation that ended over 50 years of Assad family rule.

Led by the Hayat Tahrir al-Sham group, a former Al Qaeda affiliate that has since disavowed those ties, the new administration is rapidly establishing a government and consolidating control over state institutions.

BACK AT WORK

The central bank's headquarters, a prominent white building in central Damascus, fully reopened on Sunday, marking the first day of the working week in Syria. The building was bustling with employees and individuals seeking access to dollars, while others carried sacks of Syrian pounds.

Despite its meager U.S. dollar reserves, the Syrian central bank can currently count on several hundred million dollars' worth of Syrian pounds in its reserves, according to one source.

Foreign currency inflows have dwindled since Syria lost its primary source of income, crude oil, when Kurdish fighters and other armed groups seized the eastern fields during the war.

Syria has also faced strict Western sanctions, with the U.S. imposing sanctions on the central bank and blacklisting several of its governors. Nevertheless, the sources informed Reuters that the gold has never been liquidated to ensure sufficient collateral for the Syrian pounds in circulation.

The local currency has depreciated dramatically from around 50 pounds per dollar before the war to approximately 12,500 as of Monday.

The new administration in Syria has requested the lifting of international sanctions to revitalize the economy, rebuild the country after years of war, and encourage millions of refugees to return. However, U.S. and European officials stated that they would wait to see what kind of administration the new Islamist rulers would establish.