Investigation by: Ali Al Ibrahim, Ahmed Haj Hamdo, Mohammad Bassiki (SIRAJ), Hala Nasr Aldeen (Daraj)
As 2012 began, the war in Syria entered a new phase, with the Syrian regime continuing its military campaign against the opposition, which had gained control over extensive parts of the country. Around November 2015, Russia officially intervened to support the Syrian regime in its battles and open fronts to shift the balance of power in its favor.
Simultaneously, Western economic sanctions imposed in September 2011 by the European Union and the United States on economic and political figures, including President Bashar al-Assad and his family, significantly weakened the financial position of the Syrian regime. At that time, the Syrian regime heavily relied on paper currency to facilitate transactions, pay salaries to government employees, and manage public spending in the face of sanctions.
Amidst these challenges, in early 2012 the Syrian government established a new way to replenish the country’s treasury with “cash” or physical money. Previously, the Syrian government printed Syrian currency (both paper and metal) in collaboration with a subsidiary of the Central Bank in Austria, but this cooperation ceased due to sanctions. This new currency-printing operation utilized two companies in Cyprus to facilitate the printing process. Despite official government assurances that this step would not affect the economic situation, there remained considerable mystery surrounding the details of this operation.
The printing operation occurred at a time when the Syrian government had an increasing need for liquid cash to finance ongoing government spending, military efforts, and the payment of salaries to government employees, including security forces and the army. A researcher familiar with the printing operation stated: “The current financial policy of the regime relies on financial deficit, and it is believed that this policy is the reason behind resorting to currency printing after the depletion of the foreign currency reserves of 20 billion Syrian pounds in 2011. This trend led to a reduction in foreign currencies in the markets, which were beyond government control in northern and eastern Syria.”
At that time, the general state budget was 27 billion dollars, the largest in the country’s history. However, it later declined due to the continuation of the security situation, the escalating impact of international sanctions on the regime, and the lack of financial income from exports, constituting 25% of the government’s budget and reaching 16,550 billion Syrian pounds (about 5.489 billion dollars at the official exchange rate).
Economic advisor and head of the Syria Economic Working Group, Dr. Osama Al-Qadi, explains that when the value of the currency decreases, the central bank finds itself compelled to print large amounts of money to cover the increasing inflation and rising wages.
A new investigation by SIRAJ reveals the behind-the-scenes actions of the Syrian currency-printing operations under the supervision of the Central Bank of Syria, through the use of services provided by two companies based in Cyprus, an EU member. A Syrian-Russian businessman who owns the printing operation has been described by the U.S. Department of the Treasury as being subject to sanctions. This information comes from the “Cyprus Confidential” project, conducted by the International Consortium of Investigative Journalists (ICIJ) in collaboration with SIRAJ, Paper Trail Media, and 68 media partners worldwide.
“Cyprus Confidential” Revelations
ICIJ’s project, which also included the Syrian Investigative Journalism Unit – SIRAJ – reveals how Russian elite, including those close to President Vladimir Putin, used financial service companies based in Cyprus to protect their wealth. It further details how, following Russia’s invasion of Ukraine in 2022, these entities safeguarded assets worth billions of dollars from imminent sanctions.
The ICIJ’s analysis of over 3.6 million leaked documents found nearly 800 companies and credit funds registered in secretive jurisdictions owned or controlled by Russians subjected to sanctions since 2014. The investigation also uncovered dealings between the Syrian regime of President Bashar al-Assad and a registered intermediary in Cyprus regarding the purchase of American oil-drilling equipment during the peak of the Syrian civil war, despite U.S. and EU sanctions.
These companies include over 650 Cypriot entities, serving as parent companies for Russian properties, subsidiaries of Russian conglomerates, and mysterious entities used to conceal investments in globally renowned real estate, yachts, and artwork.
Funding Assad’s Military Efforts
In the summer of 2012, Joznak, the government-controlled Russian Mint company responsible for currency printing, Joznak,, conducted a secret operation to print new Syrian banknotes, weighing a total of 240 tons.
According to the “Cyprus Confidential” documents obtained by SIRAJ, the Syrian regime relied on companies and brokers in Moscow for banknote printing in 2012 to circumvent international sanctions, violating both U.S. and EU sanctions and the Caesar Act.
The Caesar Act, signed in December 2019, aims to impose sanctions on the Syrian regime and individuals associated with it, as well as entities supporting its activities, targeting specific industries such as aviation, oil and gas production, central bank, and currency printing operations.
By January 2014, a draft contract was established between Joznak and the Cyprus-registered company Frumineti Investments LTD, facilitating the printing of hundreds of millions of Syrian pound-denominated banknotes.
The U.S. Treasury Executive Order further revealed that two registered Cypriot companies, Piruseti Enterprises LTD and Frumineti Investments LTD, served as executive interfaces for the Syrian regime in 2014. They assisted in facilitating the banknote printing process, thereby violating international sanctions and the Caesar Act.
Jihad Yazigi, a Syrian economic analyst, noted that Lebanon, although officially ceasing official dealings with the Syrian regime due to Western sanctions, still serves as a primary location to evade sanctions. He highlighted the strong historical and familial ties between Syria and Lebanon, facilitating joint ventures and partnerships, even though efforts decreased significantly after the Lebanese economic collapse.
The investigation also sheds light on the extensive network of financial transactions and hidden assets orchestrated by the Russian elite through Cypriot entities and the complicity of Lebanese partners in facilitating these operations. The involvement of Cyprus and Lebanon in such financial activities raises concerns about their roles in enabling and supporting regimes facing international sanctions.
The revelations in the “Cyprus Confidential” project underscore the intricate web of financial operations involving Russian elites, Syrian regime figures, and international entities. The investigation not only exposes the exploitation of financial loopholes but also highlights the need for more robust measures to combat illicit financial activities that undermine international sanctions and contribute to the perpetuation of oppressive regimes.
Financial fronts for the Syrian Regime
Before the signing of the contract between Joznak and the Central Bank of Syria, in late 2012, Tempbank, a Russian bank sanctioned by the United States issued a letter of credit on behalf of the Cypriot company Piruseti on behalf of the Central Bank of Syria. This company had previously played a similar role in facilitating transactions for the Syrian government through the sanctioned Central Bank of Syria.
In July 2013, Syrian banking and business officials participated in paying Piruseti over $4 million for a European energy company. In this transaction, a Russian bank, acting on behalf of Piruseti, paid the authorization document to the energy company. Piruseti acted on behalf of the Central Bank of Syria to initiate this deal, complying with the sanctions order issued by the U.S. Treasury.
To identify the owners of the Cypriot companies that facilitated this process, SIRAJ scrutinized the records of these two Cypriot companies.
The Secret Work of Shell Companies
Front companies play a vital role in facilitating operations for internationally sanctioned entities such as the Syrian regime. They provide a legal and commercial interface to engage with the international market despite reservations against these governments. These companies typically operate in complex and non-transparent ways, allowing sanctioned governments to achieve their objectives without drawing international attention.
The open corporates platform, an international company registration database, provides more information about these two Cypriot companies and their owner, Syrian-born businessman Issa Al Zaidi, who holds Russian citizenship. Al Zaidi was sanctioned by the U.S. Treasury in 2014, subjecting him to asset freezes and property bans, according to the U.S. Treasury. The two companies were also sanctioned in the same year.
Piruseti Enterprises LTDwas founded on July 26, 2011, while Frumineti Investments LTD was officially established a day later. Issa Al Zaidi, born in Syria and holding Russian citizenship, graduated in 1964 from Bauman Moscow State Technical University, where he studied engineering. He is the owner and CEO of several small companies with “no significant capital,” according to the records. Al Zaidi has international connections with the Center for Scientific Studies and Research, believed to be the Syrian government agency responsible for developing and producing non-conventional weapons and ballistic missiles, according to the U.S. Treasury’s Office of Foreign Assets Control (OFAC).
SIRAJ directed questions to Issa Al Zaidi about his role in the currency-printing process through his Cypriot companies, but he did not respond to the inquiries.
Two Cypriot companies that facilitated the printing of Syrian banknotes were dissolved in 2016, even though they and their founders remain on the U.S. sanctions list.
New Syrian Banknotes and Money Transfer Methods
According to economic expert Dr. Karam Shaar, the most significant factor that led the Syrian regime to print banknotes is the substantial need for cash liquidity to cover expenses. This need has been evident in the recurring deficits in the Syrian budgets in recent years.
Dr. Shaar explains that the resources allocated for spending were much less than required, leading to the printing of additional amounts to fill this gap, mostly categorized under the “taken from reserves” section in the budget.
Budget expenditures are typically divided into current and investment expenditures. Current expenditures include ongoing expenses such as salaries, pensions, and administrative expenses. Dr. Shaar, a Senior Fellow at the New Lines Institute for Strategy and Policy Investigations, states that the printed money is primarily injected into the market by paying salaries, both for military personnel and civilians, along with the routine needs of the state for daily expenditures.
How Were the Funds Transferred to Damascus?
The Syrian Central Bank denied any money transfer operations in 2012 and affirmed that the new banknotes in circulation, particularly the 5,000 Syrian pound notes, were intended solely for replacing damaged or worn-out currency and had no impact on the economy.
But according to flight records reviewed by SIRAJ, a Syrian government aircraft transported a total of 240 tons of banknotes from Moscow to Damascus over a 10-week period from July 9 to September 15, 2012. The documents indicate that Syrian Air Force Ilyushin-76 cargo planes conducted eight round-trip flights between Damascus International Airport and Vnukovo Airport in Moscow, transporting 30 tons of banknotes on each return flight to Syria. These records have copies in both Arabic and English, along with copies of transit requests sent to Iran in Persian.
Each time “banknotes” were listed in the cargo, the plane took an indirect route. Instead of flying directly over Turkish airspace, as civilian planes do, the Ilyushin-76 cargo plane operated by the Syrian Air Force avoided Turkey, flying over Iraq, Iran, and Azerbaijan.
Over a period of 10 weeks from July 9 to September 15, 2012, the Syrian government was in urgent need of cash. The Syrian Ministry of Foreign Affairs sent eight urgent telegrams through the office of the minister, copies of which were obtained in Arabic, English, and Persian. These telegrams were addressed to the Syrian ambassador’s office in Tehran, urgently requesting the embassy to communicate with the relevant Iranian authorities to obtain permission for the Syrian cargo plane, the Russian-made Ilyushin IL-76T with the registration number YK-ATA, to fly over Iranian airspace for a round trip flight from Damascus to Moscow and back.
One of the telegrams, issued by the Ministry of Foreign Affairs and Expatriates, requested permission from the Iranians to allow the first round trip flight (4421/4422) on September 13, 2012, and the second round trip flight (4423/4424) on September 15, 2012.
These consecutive flights of the Syrian Ilyushin cargo plane were supposed to transport Syrian printed banknotes. A document attached to these telegrams, directed from the ministry to the embassy in three languages, indicated that these flights would transport 30 tons of banknotes from Moscow to Damascus.
The Syrian cargo plane, the Russian-made Ilyushin IL-76T, registered under the number YK-ATA, belonged to the Syrian Arab Airlines.
The 5,000 Syrian Pound Banknote: Addressing Inflation and Financial Challenges
In 2019, the Syrian government reintroduced new banknotes with a denomination of 5,000 Syrian pounds, which entered circulation in 2021. These new banknotes, equivalent to half a U..S.. dollar, were issued to counter the effects of inflation that occurred in previous years, according to a statement from the Central Bank.
The statement highlighted that printing these banknotes aimed to “meet the actual trading needs of banknotes, ensuring ease in cash transactions, reducing their costs, and contributing to addressing the effects of inflation that occurred in recent years. Additionally, it aimed to reduce the density of cash transactions due to the rising prices during the war years.”
Dr. Abdul Hakim Al-Masri, Minister of Economy and Finance in the Interim Syrian Government, told SIRAJ, “With the ongoing deficit, the Syrian regime has been printing new banknotes in Moscow since 2012 until today without productive cover or reserves of foreign currencies or gold. This has caused significant inflation, a decline in the value of the lira, and its collapse, as it was not accompanied by production or reserves of hard currencies and gold.”
According to the website Coin Update, the new banknotes, dated 2019, were produced by the state-owned printing facility Goznak, in Russia, upon the request of the Syrian Central Bank. The 5000 Syrian pound banknote, dated 2019 on both sides, was printed using engraved technology on secure paper with a cotton watermark, boasting high-security features difficult to forge or counterfeit, according to the Central Bank of Syria.
The new 5,000 Syrian pound banknote was introduced by the Central Bank of Syria on January 24, 2021. Five bankers, including experts overseeing banks in Syria and Arab countries, confirmed to SIRAJ that the new banknote was printed in Moscow. However, Syrian and Russian officials did not respond to the investigators’ questions to confirm.
Printing money without backing is likely to have a significant impact on an economy already suffering a severe crisis since 2011. Joseph Daher, a Syrian-Swiss university professor at the University of Lausanne, expects the budget deficit in Syria to increase from 4.86 trillion Syrian pounds (equivalent to 1.62 billion U.S. dollars at the official exchange rate during this period) to 9.5 trillion Syrian pounds (equivalent to 800 million U.S. dollars). This represents a real value decrease of approximately 51%.
In 2023, approximately 90% of Syrians were living below the poverty line, with over 15 million people in need of humanitarian assistance. Additionally, 6.5 million faced food insecurity and 13.2 million required healthcare, according to a report by the International Committee of the Red Cross.
According to the annual budget schedule, nominal values in Syrian pounds increased from 2010 to 2021, accompanied by a significant decrease in the value against the dollar. This could exacerbate inflation, leading to further deterioration in living conditions. The researcher Shaar noted, “The numbers indicate that the fiscal policy relies on printing large amounts of money, with approximately 6 billion Syrian pounds injected into the market in 2012 and 1.4 billion Syrian pounds in 2019.”
Syria’s inflation rate surpassed 16,000% between 2011 and 2023. In 2022, inflation rates were 100.7%, and in 2023 they reached 104.7%, according to data released by the Central Bureau of Statistics and estimated by the Ministry of Finance. The overall inflation rate between 2011 and 2023 is reported to be 16,137.32%.
Experts believe that the primary cause of this inflation is the continuous printing of money, as each printing operation leads to inflation and a decrease in the value of the local currency.
Shaar believes the ongoing budget deficit leads to continuous financial strain, with a deficit in the general budget estimated at around 31% of the total value from 2011 to 2023. A former official at the Commercial Bank of Syria, one of the oldest active banks in Syria, said in a phone call with SIRAJ: “The primary purpose of printing banknotes is to continue paying salaries to employees and security and military forces in the country.” This step is crucial for the survival of the regime”.
