Syria to Join the Growing Trend of De-dollarization

The Lede: The Syrian President, Bashar al-Assad, has advocated using the Chinese yuan instead of the U.S. dollar for international transactions, aligning with the BRICS nations' efforts to move away from the currency in response to the sanctions imposed by the U.S. and its allies on Russia after invasion of Ukraine.

What we know:

• The Chinese government's special envoy for the Middle East, Zhai Jun, met with President Bashar al-Assad to discuss the shared views on the ties between Syria and China in the context of China's relationships with other Middle Eastern countries, Syrian state-controlled Syrian Arab News Agency (Sana) reported.
• Bashar al-Assad praised China for emerging as a major player with an increased political and economic presence to balance the global order. He acknowledged the strength of the Sino-Russian relations and the BRICS alliance, consisting of Brazil, Russia, India, China, and South Africa, in achieving the goal.
• The Syrian president highlighted the economic nature of the ongoing world conflict, emphasizing the need to move away from using the U.S. dollar in transactions, according to Sana. He suggested that the BRICS nations could lead the way in this effort and that considering the use of the Chinese yuan for trade transactions between countries could be a viable option.
• Meanwhile, Zhai Jun pledged continuous support, emphasizing that China considers its relationship with Syria as strategic, and views it from a comprehensive regional perspective.

The background: The statement from al-Assad follows recent remarks by his country's Foreign Minister, Faisal Mekdad, who accused the U.S. of imposing sanctions on Syria as a means of seizing its assets and maintaining control over the country. Mekdad made remarks while meeting with Alexander Yakovenko serving as the Rector of the Diplomatic Academy at the Russian Foreign Ministry. The Syrian Foreign Minister said the U.S. is the primary beneficiary of wars and conflicts around the world, intentionally fueling them to maintain the dominance of the U.S. dollar in the global economy and trade.

Some of the BRICS nations have already taken the lead in shifting toward the yuan at the expense of the dollar. Earlier this year, China and Brazil reached an agreement to trade using the Chinese yuan. In Russia, the yuan has become the most traded currency, overtaking the U.S. dollar because of Western sanctions. Additionally, the yuan surpassed the U.S. dollar for cross-border transactions within China in March, marking a significant milestone.

Likely Outcomes/Takeaway:

• Syria’s pivot away from the dollar might strengthen its economic and political ties with China, which has become a major player in the global economy. Syria could also potentially increase its trade ties with other countries that use the yuan, such as its main strategic partner – Russia.
• Increasing use of the Chinese yuan seems to be an ongoing trend in the Middle East, as Iran and Iraq have already made the decision. Both countries have been targeted by U.S. sanctions and are concerned about the potential risks of relying too heavily on the U.S. dollar. Once Syria adopts the Chinese yuan for international transactions, it could further expand the use of yuan, contributing to China's de-dollarization efforts.
• Strengthening economic and political ties with Syria could provide China with greater leverage in the Middle East, where it has been seeking to increase its influence in recent years. While increased use of the Chinese yuan could help promote its internationalization and increase its global status as a reserve currency.

Quotables:

• “The regime of unilateral coercive sanctions, slapped by Western countries against a number of world countries, including Syria and Russia, is aimed at stealing those nations’ assets, depriving them [of their natural resources] and keeping them under their hegemony. The United States of America is the biggest beneficiary of wars and fueling global conflicts, with the aim of maintaining the dominance of the dollar in the global economy and trade.” – Faisal Mekdad, the Syrian Minister of Foreign Affairs and Expatriates
• "The right to life of the Syrian people is being ruthlessly violated by the U.S." – Chinese Foreign Ministry spokesperson Wang Wenbin

Good Reads:

President al-Assad receives Special Envoy of the Chinese Government on the Middle East (SANA)

Rivals Saudi Arabia and Iran restore ties, with China's help. Here's why it matters (NPR)

Russia and China Step Up Effort to Challenge Dollar with the Yuan (The China Paper)