Syrian Law Journal

Legal Briefing – December 2017

by · 09/01/2018

Reconstruction

  • SLJ Advisory, a reconstruction consultancy so to speak, has been established to provide analysis and reporting on business, economic and legislative developments concerning Syria to small and medium-sized enterprises and multinational corporations. There has been a significant increase in requests for information about Syria lately as the country enters a transitional post-conflict reconstruction phase.

Finance

  • The Central Bank issued Resolution 1602/2017 on December 6th. Accordingly, any person can remit cash in foreign currency to Syria and it can be received or deposited in that foreign currency by the person receiving it, or it can be exchanged into Syrian Pounds. Resolution 1602/2017 overturns a more than five-year old policy by the Central Bank dating back to 2012 that required remittances from overseas to be received in Syrian Pounds regardless of the foreign currency in which they were transferred. The new decision indicates an improvement in the value of the Syrian Pound. The Resolution also amended the threshold for the exchange of banknotes, which was set at $100 (US) per month, to bring it in line with another measure on remittances. Thereafter, the exchange of banknotes not exceeding $500 incurred no restrictions. If the amount was more than $500, then it would be subjected to a freeze or a commission payment. However, since January 2018, the Central Bank has further amended the ceiling on remittances by removing the limitation.
  • The Central Bank permitted travelers to carry SYP 50,000 out of Syria on departure after it was previously SYP 10,000.
  • The Central Bank obliged the banks licensed to deal in foreign currencies and the foreign exchange businesses operating in the country to continue to process the personal transfers received in favour of public sector entities in accordance with the laws and regulations in force.
  • The state-owned Real Estate Bank is awaiting approval from the Central Bank before resuming its provision of housing loans to customers.
  • The People’s Assembly approved a report prepared by the Budget and Accounts Committee on the national budget for 2018. Discussions touched on easing automobile import restrictions, holding corrupt individuals to account, reforming the taxation regime and introducing the long-awaited billing system. The national budget was formally ratified and given effect by President Bashar Al-Assad through Law 43/2017. It fixes the amount of government spending for 2018 at an estimated value of SYP 3.187 trillion.

Taxation

  • The Reconstruction Tax Law 46/2017 amends both Article 1 of Law 13/2013 and Legislative Decree 3/2016, which increases the reconstruction tax on consumers from five percent to 10%. The issue of doubling the reconstruction tax caused much controversy in the People’s Assembly as a big portion of MPs opposed it at first while eventually accepting it. However, others vehemently challenged the measure on the grounds that it would further pressure people with limited incomes.
  • The Minister of Finance acknowledged that his Ministry began reviewing the files relating to major traders and that taxation legislation was being prepared. The Ministry is focusing on tens of thousands of tax evasion cases, some of which date back 30 years.
  • The Council of Ministers approved the latest draft of the Customs Bill following its second discussion on the draft law and referred it through the proper channels to be issued formally. The Bill seeks to transform the Customs Directorate into a public authority run by a board of directors. It also provides for the pricing of imported goods, the re-exportation of rejected goods, and tighter fines on smugglers and violators. It also permits the establishment of customs clearance companies. The Bill is 30 articles less than the current Customs Law and seeks to accommodate the economic situation emerging in the transitional post-conflict reconstruction phase.
  • Syria and Russia concluded a customs agreement as per the conditions stipulated in Legislative Decree 3/2015. The agreement provides customs facilities and reductions in customs duties between the two countries. It also includes all the goods allowed for import and export. The Syrian and Russian sides discussed mechanisms to establish a customs union and the possibility of Syria joining the Eurasian Economic Union.
  • During 2017, there were fines worth SYP 1 billion that were collected by the Customs Directorate for cases involving fraud and data manipulation.

Commerce

  • A member of the Board of Directors of the Damascus Chamber of Industry acknowledged that a decline in the value of the US Dollar in relation to the Syrian Pound does not mean an immediate drop in the prices of goods.
  • As the Syrian Pound appreciates against the US Dollar, Syrians will be expecting consumer prices to drop. A stronger Syrian Pound means less expensive access to imports of raw materials, which should translate to lower prices for goods in the markets. Measures taken by the Central Bank, a general improvement in the security situation across Syria and the extension of state control over much territory in 2017 has created a demand for Syrian Pounds, which helped boost its value.
  • A fair assessment of Syria today would be to describe it as entering a transitional post-conflict reconstruction phase. As the Syrian Arab Army secures more territory and access to natural resources increases, businesses are restarting operations, a fact which is leading to demand for Syrian Pounds. As expatriates slowly start returning to Syria to restart operations, demand for Syrian Pounds is leading to an appreciation of the local currency. Even though the conflict is not officially over yet, Syria is entering a recovery stage evidenced by the uptick in business activities. Another indicator of Syria entering the transitional post-conflict reconstruction phase is recognition among world powers that engagement with the Syrian government will be the preferred policy moving forward. All these factors suggest Syria is gradually moving into this phase.
  • The Ministry of Internal Trade and Consumer Protection announced the start of sales and discounts in the fashion markets in light of the Christmas holiday season.
  • Goods imported into Syria during the last 10 months were worth €6 billion in spite of the international sanctions enforced by the US, EU, Canada, Australia and other countries and the domestic import controls imposed by the Ministry of Economy and Foreign Trade to protect the value of the Syrian Pound.
  • Prime Minister Imad Khamis issued Cabinet Resolution 77/2017 authorizing the competent authorities to grant administrative licenses to existing establishments and investors who do not hitherto possess licenses, thereby allowing them to operate temporarily for a period of two years.

Property

  • The Marouta City development in Al-Razi in southern Damascus is expected to start witnessing construction in 2018. The land was expropriated by the state and its management was taken over by a holding company – Damascus Cham Holding – owned by the Governorate of Damascus. Private investors bought shares in the land to develop it.
  • Damascus Cham Holding signed contracts with an expatriate Syrian businessman based in Kuwait worth SYP 108 billion to invest in a mall and six buildings in Marouta City. The move gives the larger share in the joint venture to the private investor over the public sector for the first time apparently. The joint venture is an example of the direction of public-private partnerships that the Syrian economy is heading towards on the road towards reconstruction.
  • The People’s Assembly passed a bill to remove the rubble of damaged buildings from public and private properties. Local councils will be responsible for determining the needs and valuations for the removal of the debris. Provincial governors will form committees to verify the ownership of properties.
  • Law 42/2017 extends the time period for landlords to evict political parties and public entities from their private properties to January 1, 2021 from January 1, 2018 as long as the landlords pay them 40% of the value of the leased premises. The date originally was January 1, 2015.

Transport

  • The Ministry of Transport is preparing to restore services at Aleppo International Airport. The Ministry is also focusing on plans to build a new airport in Damascus since the current one was opened in 1970 and is not expected to have the capacity to serve the reconstruction phase. Prior to the breakout of conflict in Syria, the public-private partnership program had the aviation sector in mind where airports would be managed by private companies. Today, state-owned Syrian Air is undergoing a corporatization process that could see private sector participation.
  • The Economic Committee linked to the Council of Ministers retracted its decision to suspend licenses for private airline companies. The move by the Economic Committee follows a memorandum submitted by the Ministry of Transport concerning an increase in domestic and foreign demand for air transport to Syria and the urgent need for additional aviation capabilities to meet such demand.
  • An expatriate Syrian businessman based in Kuwait incorporated an airline and air transport company in Syria called ‘National Airlines’.
  • Frustration grows at the sight of modern cars entering the Syrian market in what appear to be violations of local import controls. Questions being asked are whether automobile parts are being imported and then assembled in Syria.

Telecommunications

  • The Ministry of Communications and Technology and the Ministry of Finance signed a memorandum of cooperation to benefit from the legislative and technical environment available to develop an electronic system for attachment orders in financial transactions.

Energy

  • Syria has signed contracts for electricity projects worth SYP 2 trillion with Russia and Iran.
  • Syria and Iraq moved forward on the completion of the electricity connection agreement signed in November between the two countries and Iran.
  • The Ministry of Petroleum and Mineral Resources will seek to raise oil production to 25 million barrels in 2018.
  • According to the Minister of Petroleum and Mineral Resources, a Syrian-Russian company specialized in providing oil services has been incorporated in Damascus. Such a move follows similar initiatives undertaken by the Syrian and Omani governments in the Syrian oil and gas sector.
  • The Russian Deputy Prime Minister acknowledged his country’s intention to establish an operator to invest in the largest phosphate field in Syria. Before the war, Syria was one of the top five exporters of phosphate in the world.

Health

  • Law 41/2017 contains the new Rules of Procedure for the Veterinarians Syndicate.
  • President Bashar Al-Assad ratified Law 44/2017, which amends Article 3 of Law 17/1980, on granting physical therapists employed in public hospitals, clinics and medical centres compensation with a maximum limit of 75% of their monthly wage.
  • According to Law 45/2017, doctors, dentists and pharmacists are exempt from performing mandatory services in rural areas. The new Law made the necessary amendments to Article 4 of Law 8/2008.

Employment

  • According to the Ministry of Social Affairs and Labour, Syrian workers living overseas have the right to subscribe to the General Establishment for Social Security to benefit from its services.
  • An initiative is underway to amend the Employment Law and the Social Security Law. The potential amendments could look at filling gaps between the two laws while protecting the interests of investors and employees in the post-conflict reconstruction phase. Issues such as the dismissal of employees are expected to be looked at in detail to ensure balanced interests.
  • President Bashar Al-Assad ratified Law 40/2017, which amends certain provisions of the Foreign Domestic Workers Law provided for in Legislative Decree 65/2013.
  • The Minister of Social Affairs and Labour stated that the Basic Workers Law is being reviewed as part of the Administrative Reform Program. Delays in issuing an amended version of the Law have been as a result of disagreements over articles of the new version.

Media

  • The President of the Journalists Union called for the law regulating his syndicate to be reviewed and modernized to reflect current realities and that legislation governing the media profession should be updated to face the ongoing challenges in the country. There will be more focus on developing private sector media outlets. Amendments to the Journalists Union Law will focus on the admission of private media journalists into the syndicate alongside their state media counterparts. Other details will become clearer with time.

Immigration

  • The US Supreme Court has agreed to allow the full enforcement of President Donald Trump’s travel ban on Syrians and other nationals. The latest and third version of the Trump travel ban comes into effect following a decision by the Supreme Court regardless of the legal challenges taking place in the lower courts. There will be uncertainty whether Syrians with family connections will be caught by the ban. The Supreme Court has not ruled on the legality of the latest and third version of the Trump travel ban but rather allowed it to come into effect while legal challenges take place in the lower courts. The Supreme Court could eventually rule on its legality at a later stage.
  • Meanwhile, a US appeals court held that the latest Trump travel ban targeting Syrians and other nationals violates federal law and exceeds the US President’s constitutional powers. The Court of Appeals for the Ninth Circuit ruled that the ban should not be applied to people with strong US ties. The appeals court judgment will be put on hold pending a decision on the latest executive order by the US Supreme Court. The court ruled that the indefinite suspension of entry of those citizens constitutes “nationalist discrimination in the issuance of immigrant visas”. The court held that while the US President has broad powers to regulate the entry of immigrants into the US, those powers are not without limits. It concluded that the executive order once again exceeds the scope of his delegated authority.

Administration

  • The Ministry of Justice began issuing powers of attorney electronically in Rural Damascus.

Military

  • Discussions continued on the decision to raise the discharge age for military personnel currently serving to 52 years in the Military Service Law while not affecting the cutoff age for reservists, which remains set at 42 years. The decision is seen in light of a final push by the Army to retake remaining territory not under government control.

Lawyers

  • The number of Syrian lawyers currently registered on the roll of attorneys is estimated at 27,000.

Judiciary

  • The Ministry of Justice continues with its efforts to support the implementation of automation throughout the Syrian judiciary. In addition, much focus is being put on cybercrime and the means to train the judiciary to deal with it. Information technology can no longer be overlooked.
  • The Judicial Conference focused on proposals to develop the work of the judiciary to adapt to the shifting circumstances that have faced Syria over the last few years, especially with respect to training and specializations.

Parliament

  • Syrian MPs tried unsuccessfully for a second time to push through legislation that would transfer authority over the Central Supervisory and Inspection Agency from the Council of Ministers to the People’s Assembly or to formally make it an independent body to support its impartiality as much as possible.

Family Law

  • Syrian refugees face legal problems when trying to get married and have children according to local customs in countries like Lebanon. Lebanon will not register a marriage without an official certificate. Without registration, the child is unable to obtain a Syrian passport or identity card. Whereas Syria is more lenient in registering customary, tribal and religious marriages, the process is more bureaucratic in Lebanon. Children born in Lebanon have to be registered within one year unlike in Syria.

International

  • The Council of Ministers approved a plan to strengthen economic relations with friendly countries as preparations get underway to transition towards the reconstruction phase.
  • According to reports, Russian President Vladimir Putin stated that the peace process in Syria will include presidential and parliamentary elections.
  • The Office of Foreign Assets Control (OFAC), which falls under the authority of the Department of the Treasury in the United States, has published a report confirming that approximately $149 million (US) in assets relating to Iran, Sudan and Syria had been blocked as of 2016.
  • Former Lafarge Holcim CEO Eric Olsen was placed under formal investigation and charged with funding terrorist groups as part of a French criminal inquiry into the company’s operations in Syria. The cement giant is believed to have paid off such groups to keep its Syrian factory operating.
  • Switzerland opened a humanitarian office in Damascus apparently aimed at improving aid distribution and at monitoring and coordinating assistance programs on the ground. The new office opened a few weeks ago and does not constitute a political or diplomatic presence in Syria. Switzerland has imposed sanctions against Syria simultaneously with the EU. As Switzerland tries to carve out a bigger role for itself in the transitional post-conflict reconstruction phase in Syria, it will become incumbent on Swiss authorities to reconsider the sanctions.