Legal Briefing – October 2018

National Administrative Reform Program (NARP)

• The government is looking at activating and expanding the authorities of the board of directors of public sector entities rather than relying solely on the executive decision-making powers of general managers or directors of entities.

Judiciary

• President Bashar Al-Assad issued Law 38/2018 prescribing that the Supreme Judicial Council shall in exceptional circumstances consider certain cases at the request of the Minister of Justice when they cannot be heard by a competent court. The Law was passed subject to Articles 499-501 of the Civil Procedure Code provided for in Law 1/2016. Law 38/2018 was approved by the People’s Assembly on October 22nd and ratified by President Al-Assad on October 28th.

Urban Renewal

• Damascus Cham Holding, which is spearheading property developments in Marota City and Basilia City in the capital, has incorporated a wholly-owned subsidiary in the form of a limited liability company called ‘Damascus Cham Management’ (DCM). DCM will serve as the executive management arm of Damascus Cham Holding. Its scope of work will include managing, overseeing and supervising areas subject to planning, including providing citizen service centers, infrastructure, alternative housing, electronic systems and so forth. It was announced that the rationale behind the incorporation of DCM was to allow Damascus Cham Holding as a corporation wholly owned by the Governorate of Damascus to strengthen its role as a counterpart to the government sector by contributing to the development of the capital.
• A member of the executive committee of the Governorate of Damascus revealed that the capital has not had a proper zoning plan in place since 1968 and that only 17% of that plan was implemented, which is one of the main reasons why there was a proliferation of informal settlements.

Property

• The slight decline in house prices appears to have been as a result of some buyers who were monopolizing the property markets by purchasing residential units, waiting for the Syrian Pound to stabilize and then selling them.
• According to sources, power of attorneys granted to prove ownership over real estate properties are now exempt from the need to obtain security clearances.
• President Bashar Al-Assad issued Law 34/2018 exempting public sector employees who subscribed to the employee housing scheme linked to the Public Housing Establishment from payment obligations stemming from the monthly installment schedules. The Law was approved by the People’s Assembly on October 11th and ratified by President Al-Assad on October 15th.

International Relations

• Bahrain’s Foreign Minister confirmed that his meeting with Syrian Foreign Minister Walid Mouallem in New York on the sidelines of the UN General Assembly was not their first meeting and he held that the authority of the Syrian government should extend over the whole state. Furthermore, Syria’s ties with its Arab neighbors appear to be on the mend.
• The new Iraqi government looks set to maintain strong bilateral relations between Baghdad and Damascus as the Iraqi Foreign Minister arrived in Syria for talks with his counterpart Walid Mouallem. President Bashar Al-Assad welcomed the Iraqi delegation and emphasized the strong bilateral relations enjoyed between Baghdad and Damascus. The talks also focused on the reopening of the Syrian-Iraqi border crossings to the movement of persons and goods.

International Trade

• The combination of the Idlib Backstop deal that should reignite trade on the international highways linking Syria and Turkey by the end of 2018 along with the reopening of the Nassib crossing on the Syrian-Jordanian border will allow Syria to resume its historic transit hub role.
• The month of October was all about border crossings and cross-border trade in Syria with the reopening of the Nassib crossing; the reopening of the Quneitra crossing on the Golan Heights; Syria and Iraq agreeing to reopen their border crossings; and the Idlib Backstop coming into effect which should resume trade between Syria and Turkey.
• Damascus and Amman agreed to reopen the Nassib crossing on the Syrian-Jordanian border, which was closed due to rebel activity in April 2015. The decision eases the movement of persons and goods for the first time since 2015 and in significantly greater numbers since 2013. The reopening will also facilitate cross-border trade between Europe and the Gulf region. The cheaper mode of transporting goods by road is an integral factor as well. While the Nassib border crossing reopened for the first time since 2015, significant trade has not been witnessed on that route since 2013 since it shrunk to a trickle then due to the security situation. The other border crossing between the two countries was shut by Jordan in 2011.
• The Council of Ministers also tasked the Ministry of Economy and Foreign Trade with rehabilitating the free zone at the Nassib crossing on the Syrian-Jordanian border in order to resume operations. The free zone opened in 1975 but became inactive in 2015 after being overrun by rebels.
• The reopening of the Nassib crossing on the Syria-Jordan border should help the Syrian Pound to appreciate in value as demand by Jordanian and Gulf consumers for Syrian products is expected to rise. In fact, demand by Jordanians for Syrian Pounds increased following the reopening of the Nassib border crossing. In the Jordanian foreign exchange market, there has been a notable increase in the value of the Syrian Pound. Despite initial concerns among Syrian consumers that the reopening would lead to inflation in the marketplaces affecting consumers due to an increased demand for Syrian goods by Jordanians, such fears do not appear to have been realized.
• Reports suggest that following the reopening of the Nassib border crossing, Jordanian vegetable sellers are replacing their own local stock with Syrian produce since the latter is cheaper to procure and thus, increases their profit margins.
• Jordanian industrialists are complaining that the reopening of Nassib border crossing is not benefiting them as they cannot export many of their goods to Syria due to import controls imposed by the government in Damascus. The Jordanian industrialists are urging their government to negotiate with their counterparts in Damascus to resume frictionless trade under the provisions of the Greater Arab Free Trade Agreement (GAFTA) agreed to by Arab states but not fully adhered to at all times.
• While Aleppo’s industrialists want to benefit from the reopening of the Nassib border crossing, the need to renovate their factories, their inability to import machinery from Europe due to sanctions and delays in reopening Aleppo International Airport are all causing setbacks.
• Syrian exporters are calling for the reopening of the border crossings with Iraq in order to export surpluses of Syrian citrus products to foreign markets.
• Just as the Nassib crossing on the Syrian-Jordanian border formally opened to cross-border trade linking Europe with the Gulf region, the authorities in Damascus informed their relevant counterparts in Beirut that the crossing was also open to the export of Lebanese goods.
• Syria is building strong economic and trade relations with Crimea as the Crimean President arrived in Damascus for a meeting with President Bashar Al-Assad. Given that both are situated on the Mediterranean Sea and the Black Sea respectively, expectations for trade ties are high.
• President Bashar Al-Assad issued Law 36/2018 ratifying a treaty with the Republic of Abkhazia. Law 36/2018 was approved by the People’s Assembly on October 11th and ratified by President Al-Assad on October 15th.
• Germany and Italy imported Syrian products last year worth a modest $13 million (US). In terms of trade ties, including past oil supplies and cooperation, Syria enjoyed better relations historically with these two top four EU countries than it did with the other two the UK and France.

Commerce

• President Bashar Al-Assad issued Law 37/2018 amending the functions and competences of the Ministry of Internal Trade and Consumer Protection to grant it the powers to address the current economic realities in the Syrian marketplaces that have arisen after almost eight years of war. Law 37/2018 was approved by the People’s Assembly on October 21st and ratified by President Al-Assad on October 24th.
• The historic Orient Club in Damascus has been sold to a new prominent businessman.

Industry

• The Minister of Industry faced questioning in the People’s Assembly. The Ministry is underfunded and cannot rehabilitate all its factories that were damaged during the war. While privatization has been ruled out, bringing in strategic private sector investors to rehabilitate factories was discussed.

Investment

• A group of Spanish businessmen have declared their interest to search for reconstruction investment opportunities in post-war Syria.

Corporate

• The Companies Directorate in Syria has been receiving numerous requests from dormant commercial companies with high capital shareholdings to reactivate their corporate licenses, including those that have strategic investors from Kuwait, the UAE, Egypt and Jordan.

Finance

• The Syrian national budget for 2019 is expected to anticipate government spending of around $8.3 billion (US), an increase of more than 30% of the previous budget for 2018.
• The Central Bank is preparing to circulate the SYP 50 coin because it is a regularly traded amount. Coins are cheaper to produce than printing paper money in the long run. Although it costs more to mint coins, they last longer than paper bills, which are replaced often.
• Hazem Qarfoul, the Governor of the Central Bank of Syria, has been appointed by President Bashar Al-Assad as Assistant Minister of Finance, a post that enables him to take up the position of Governor of Syria at the International Monetary Fund (IMF). Syria joined the IMF back in April 1947.
• The infrastructure for electronic payments is set to be completed soon.

Taxation

• President Bashar Al-Assad issued Law 33/2018 exempting municipal taxpayers from fines if they settle their debt obligations by March 31, 2019. The Law was approved by the People’s Assembly on October 9th and ratified by President Al-Assad on October 13th.
• A series of tax relief initiatives are being issued that would benefit merchants involved in the selling of alcohol beverages whose businesses were affected by the conflict.

Energy

• Russia, China and Iran all began considering serious investments in the electricity sector in Syria as the war winds down and demand for energy increases. Iran is looking to build power plants in Lattakia and Aleppo.
• According to the Syrian Petroleum Company, exploration for oil and gas has begun in Syrian territorial waters. International companies are also expected to be invited to collaborate on these projects.

Telecommunications

• SyriaTel, the privately-owned mobile operator, may have cleared its first hurdle to list on the Damascus Securities Exchange, the local stock market in Syria. SyriaTel is one of two mobile operators in the country, the other being MTN Syria.
• Syrian MPs criticized the indecisiveness of the Minister of Communication and Technology, who hesitated as to whether he would block free WhatsApp calls and Facebook calls while raising internet bundle prices in an effort to boost government revenues. The idea appears to have been scrapped.

Transport

• Syria and Saudi Arabia resumed land transport links for the first time in years. Following the reopening of the Nassib crossing on the Syrian-Jordanian border, buses have started to depart from Riyadh and travel towards Damascus via Jordan, which separates the two countries.
• The Syrian government considered imposing reciprocal measures on Jordanian citizens entering Syria that mirror those that Jordan imposes on Syrian citizens. Syrians wishing to travel to Jordan require prior security clearance from the Jordanian embassy in Damascus and Syrians are also not allowed to travel into Jordan in their private cars. Jordanians travelling into Syria do not face such restrictions, so changes could have been on the way. However, the Assistant Minister of Transport said that the Jordanian measure preventing the entry of Syrian private cars into Jordan is temporary as the Land Transport Treaty signed between both countries in 1999, which provides for the principle of reciprocity, is being activated. The Assistant Minister also denied reports that Syria planned to prevent Jordanian private cars from entering Syria but rather that the opposite will happen whereby Syrian private cars will be granted entry into Jordan. The Land Transport Treaty of 1999 signed by Syria and Jordan allows all public, private and tourist vehicles in both countries to cross each other’s land borders under certain conditions. The Treaty also prohibits the movement of persons or goods belonging to a country that is not a signatory to the Treaty in order to transit through the borders unless permission is granted by the relevant authorities. The issue came about following the reopening of the Nassib crossing on the Syrian-Jordanian border for the first time since April 2015. Traffic between both countries has not been witnessed on such a large scale since 2013.
• Amendments to the Road Transport Law could see the maximum penalty for reckless speeding downgraded from imprisonment to a fine.
• Some amendments contained in Law 35/2018 were made to the Maritime Code provided for by Law 28/2003. They touch on issues dealing with the territorial integrity of Syrian waters. Law 35/2018 was approved by the People’s Assembly on October 11th and ratified by President Bashar Al-Assad on October 15th.

Local Councils

• Local councils throughout Syria elected their mayors and other officers who sit in executive committees that lead municipalities and execute their programs and policies. The newly elected local councils will have new powers to corporatize their assets and redevelop lands. The two main Laws that will empower the new local councils in Syria are Legislative Decree 19/2015 which allow them to incorporate companies to manage their assets and Law 10/2018 which allows them to undertake urban renewal projects to redevelop areas affected by the war. In addition to villages, towns and cities on a municipal level where local councils are led by mayors selected from among the members of the executive committees, an executive committee exists for each of the provincial councils, which assist provincial governors appointed by the President of the Republic. At the provincial level, the President of the Republic appoints the Governor of the Province. The people elect the members of the Provincial Council. Councilors appoint members to the Executive Committee, including the Chairman and Deputy Chairman of the Provincial Council who assist the Governor.
• Two elections were held in Aleppo. The local council of Aleppo city elected its Mayor, Deputy Mayor and Secretary along with the members of its Executive Committee for a four-year term. The Chairman, Deputy Chairman and Secretary of the Aleppo Provincial Council were also elected. In other parts of Syria, municipal councils elected the officers of their executive committees including mayors, deputy mayors and secretaries. Provincial councils likewise elected the officers of their executive committees including chairmen, deputy chairmen and secretaries who assist provincial governors.

Religious Affairs

• In an unprecedented move not seen before, the People’s Assembly rejected Legislative Decree 16/2018 issued by President Bashar Al-Assad in its current form as MPs voted to impose a range of amendments that would curb any new powers enjoyed by the Ministry of Religious Endowments. Such activity on this scale has not been witnessed in Syria’s Parliament since the early 1960s and it certainly is an unprecedented move to challenge a law issued by the President. It will be very difficult for its detractors to now characterize it as a rubber stamp legislature. Consequently, President Bashar Al-Assad ratified the new Law 31/2018 governing the Ministry of Religious Endowments. By doing so, he accepted the first ever challenge of a Syrian parliament to a law issued by a president since the 1960s – in this case by repealing Legislative Decree 16/2018. Law 31/2018 was approved by the People’s Assembly on October 10th and ratified by President Bashar Al-Assad on October 11th.

Families

• Couples in Idlib are being forced to wed by customary marriages because the armed groups have shut down the court system in the province. In order to register their marital contracts with the courts so as to make them legal, couples who have the means travel to nearby Hama province.

Military Affairs

• President Bashar Al-Assad issued Legislative Decree 18/2018, which grants a general amnesty to soldiers of the Army and the Armed Forces who deserted their posts and have avoided mandatory military service. The general amnesty includes soldiers located inside Syria or overseas. The passage of this Law could hasten and facilitate the return of a number of Syrian refugees living outside the country to Syria. The general amnesty does not apply to fugitives on the run from the law unless they turn themselves in to the authorities within four months for those located inside Syria and within six months for those based overseas. The general amnesty also covers soldiers who contravened provisions contained in the Military Service Law provided for in Legislative Decree 30/2007 and its amendments. The amnesty covers soldiers who contravened provisions contained in the Martial Criminal Code provided for in Legislative Decree 61/1950 and its amendments before October 9, 2018. Legislative Decree 18/2018 was issued by President Al-Assad on October 9th.
• The Deputy Commander-in-Chief of the Army and the Armed Forces and Minister of Defence General Ali Abdullah Ayoub issued a circular discharging individuals called up for reservist military service based on the General Amnesty Law provided for in Legislative Decree 18/2018. The circular, which was forwarded to the Ministry of Interior and the Military Police on October 28, 2018, prohibits the arrest of individuals who were called up for reservist military service and releases all those persons who were arrested during the previous 48 hours. An estimated 800,000 reservists are expected to benefit from the circular issued by Minister of Defence Ali Ayoub, which had been sent to the country’s border control authorities to facilitate the entry of Syrian expatriates who were designated as reservists. The names of the mothers of the concerned individuals were added to the relevant database to ensure that there are no cases of mistaken identity in order to facilitate the return of Syrian expatriates. Minister of Defence Ayoub informed the People’s Assembly that the General Command of the Army and the Armed Forced was preparing a process of demobilization to allow soldiers to return home from the frontline. Demobilization will begin with the units that have served the longest.
• The Director of the General Conscription Department announced that following consecutive military victories by the Syrian Arab Army and due to an increase in the number of soldiers enlisted, army units across the country will begin to be demobilized.
• The Council of Ministers is intending to move forward with its plans to give soldiers who undertook mandatory or reservist military service in the Syrian Arab Army and the Armed Forces priority recruitment status when it comes to public sector employment.

International Sanctions

• A UN report on Syria implies that only large businesses with sufficient legal resources can navigate the complex web of international sanctions imposed on Syria, thus giving them preferential access to the Syrian market and the power to set high prices due to a lack of competition.
• J.P. Morgan Chase and the US Department of the Treasury reached a settlement agreement after the investment bank voluntarily disclosed that it had violated US sanctions on Syria when it processed 85 transactions totaling $46,127 (US) and maintained accounts for six sanctioned individuals.
• Russian official Vladimir Jabbarov stressed that Moscow will take measures to respond if the US imposes sanctions against Russian companies participating in the reconstruction of Syria, signaling that such sanctions will not deter Russian companies.