The head of the Central Bank of Syria, Adiba Mayalekha, arrived in Moscow this week with a long face, desperate for urgent Russian help to bypass the calamitous European Union sanctions crushing his country.
The EU keeps on tightening the screws. Its members boycott Syrian oil, Syrian Commercial and mortgage bank assets are frozen and travel bans are clamped down on senior Syrian officials. Brussels has also slapped a moratorium on investments in the Syrian oil sector, and on credit and investment in Syrian company stock. Most biting of all is the ban on carrying euro cash to Damascus.
DEBKA-Net-Weekly’s sources in Moscow report that after first obtaining Iran's consent, the Russians showed their Syrian guest a mechanism they had developed for handling Iran's world trading and oil deals and helping the Iranian national bank circumvent US and UN sanctions.
For example, the Iranian Oil Bourse – IOB has been transacting petroleum, petrochemicals and gas deals in various currencies other than the United States dollar.
Up until now, the IOB traded mostly in the euro, the Iranian rial and a basket of other major (non-US) currencies. But in the wake of the eurozone crisis, Iran has switched its trade with Russian banks to rubles and yuans.
At least 30 domestic companies and 30 foreign firms are to be found contracting business in Iranian oil and petrochemicals from Iran's Kish Island.
Funnel all business through Moscow
The Russians explained to the Syrian bank governor the complicated currency exchange system which determined the rates governing receipts to Iran for the petroleum and other export goods sold on international markets mainly through Russian agents.
Mayalekha came away from his visit to Moscow much more cheerful than when he arrived. The news he brought home enabled Damascus to announce this week that its foreign trade would henceforth be safe from European sanctions. Syria would now be doing business with its primary trading partners, Russia, China, India and Turkey, in their own currencies, including the ruble and the yuan.
Moscow has thus solved the cash flow crisis paralyzing the Syrian economy and President Bashar Assad. From November, Russian will start buying Syrian petroleum through the Iranian Oil Bourse. Russian banks will handle the finances, calculating sales and income in rubles and yuans. Damascus can choose in which currency to accept payment and purchase goods on world markets on one condition – Russian agents and banks will handle its business.