The Central Bank of Syria signed an agreement with Mastercard on Sunday, which analysts say is a milestone for Syria’s banking sector as it seeks to reintegrate into global payment networks.
The deal, reported by two Syrian banking sources, is to cover the development of digital payment infrastructure and the issuance of local and international bank cards.
The signing comes 14 years after the US company left Syria as western sanctions squeezed the government of president Bashar Al Assad for his repression of peaceful public protest.
“It is the first time a company of this size has signed an agreement with the Syrian central bank,” Benjamin Fève, senior analyst at Karam Shaar Advisory, told The National, stressing that the deal is a declaration of interest and not binding.
“Still, it sends a very strong signal, and it is not only about issuing Mastercards in Syria but also about offering macro-level solutions for the digitalisation of the country’s payment systems,” he added.
He said the deal, if it materialises, would modernise Syrian banks’ payment systems and improve their credibility abroad.
“For customers, it would allow the use of credit cards in Syria and overseas, giving them access to modern financial services after years of reliance on cash,” he added.
Sanctions have left Syria’s financial sector in tatters, with its banks barred from dealings with foreign lenders except in a handful of tightly monitored cases. Since 2011, payments and withdrawals for Mastercard and Visa cardholders were blocked in Syria, leading to it becoming one of the Middle East's cash economies.
These far-reaching sanctions have contributed to an economic crisis which has pushed nine out of 10 Syrians below the poverty line, according to the UN.
Now, with most US sanctions lifted after the fall of Mr Al Assad's regime in December, Syrian banks are seeking to reintegrate into the global system, a move it regards as crucial if reconstruction investments are to reach the country.
Mr Feve said that the deal could have broad impact on Syria’s economy, as it is not a bank-level agreement but involves the Syrian central bank.
“It would give the state and the entire financial sector access to a full digitalisation platform and a modernised system, potentially transforming Syria’s economy for all its people.”
In June, Syria's central bank governor Abdulkader Husrieh held an online meeting with US and local banks, as well as US officials in an effort to reconcile Syria with the American financial sector.
At the time, Mr Husrieh told The National the meeting went very well, and that it was the first such engagement after more than 50 years of boycotts.
But analysts and officials said that a full economic recovery will take time and face many challenges. This would include the need for Syrians banks to adapt to international regulations after decades of isolation, the end to all sanctions, and political stability in a country undergoing a political transition marked by sporadic violence.
