ISTANBUL — The story goes like this. Presidents Ronald Reagan, Mikhail Gorbachev and Hafez al-Assad, father of the current Syrian leader Bashar al-Assad, meet at a summit. To break the ice, they start discussing their salaries. “I make $400,000 a year,” Reagan says. Gorbachev puffs out his chest. “Ha! Well, I earn $500,000.” Al-Assad, seemingly uninterested, responds, “Well, I make only 20,000 Syrian pounds per year,” or several hundred dollars. Puzzled, Reagan and Gorbachev ask, “How do you live on such a measly salary?” With a smirk, al-Assad replies, “Oh, my children send me something every month.”
There’s some truth behind every joke: Remittances have always been important to Syrians. In 2010, the year before the Arab Spring protests began, $1.6 billion flowed into Syria from abroad in the form of personal transfers, according to the World Bank. When the onset of conflict the following year led to the widescale destruction of infrastructure and basic services, money sent from outside became essential to a country bankrupted by war.
Today, more than 90 percent of Syrians live below the poverty line, according to the United Nations. Over this past year, the prices of wheat and fuel have soared internationally, helping put all but the most basic goods beyond reach inside Syria. Blackouts take place daily and basic medicines, like aspirin, are difficult to find.
The country is also experiencing its worst drought in 25 years, which has contributed to lower productivity and even higher prices. And the value of the Turkish lira, adopted as the primary currency by the dominant authority Hay’at Tahrir al-Sham (HTS) in opposition-held northwestern Syria, hit a record low in December. Such price shocks, atop such instability, have made remittances a crucial lifeline for Syrians inside the country.
The majority of support occurs through a major unregistered global remittances system, known as hawala, on the black market. The Syrian channel, used by everyone from the US State Department to businesses to diaspora families trying to deliver aid to their home country, is known for its affordability and convenience. Most important, it is built on trust and connections, which remain notably intact within communities even after a decade of war.
The mechanism is valued differently by the authorities and citizens, with different needs and motivations, including the desire to steal, squeeze or share money. As the economic pie in Syria and neighboring countries shrinks, life is becoming increasingly harder on both ends of the arrangement. The story of hawalas reflects how the Syrian conflict has become a battle for control of resources coming into Syria. Ordinary Syrians, hard-up for cash, must deal with the consequences of both poor fiscal policy and extortion. But the adaptability of lenders to new pressures also reflects Syrian communities still trying to help one another, no matter the distance, risk or cost.
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On a sloping street in the neglected Tarbalasi neighborhood of Istanbul, a sole Syrian grocery store stands sandwiched between a shop selling rows of fabrics and a Chinese restaurant plastered with cartoon paintings including dumplings, sushi rolls and jars of kimchi.
Abu Abdo sat in front. Wearing a brown cable knit sweater, pants rolled up to his ankles, he rattled off the cost of transferring money across the Syria border at the pace of an auctioneer: “Fifteen percent to hand-deliver US dollars to those in government areas. I can check the rate to send it in [Syrian] pounds. Five dollars for every 100 dollars to Qamishli [inside the Kurdish-run Autonomous Administration in Syria’s northeast].”
Interrupted by a customer asking for makdous, or pickled stuffed eggplants, Abu Abdo stiffened, tilted his head back and responded, “I swear to God, I have no idea,” before returning to outlining my pricing options: “Fifteen Turkish lira to move between 100 and 500 Turkish lira through shops in Idlib [controlled by HTS].” And so on.
“You overpaid!” a friend named Tarek later told me, even though I had explained I only asked Abu Abdo about his rates. “I send money back to my family in Damascus for a 2 percent fee at the black-market rate.”
The Syrian pound has lost 85 percent of its value since the start of the war. Currently, there is a difference of close to 1,000 pounds between the artificial and actual exchange rates. The Central Bank’s inflated official exchange rate is fixed at 2,512 Syrian pounds to the dollar, but the fluctuating black market rate is around 3,500 pounds to the dollar. The gap was previously even larger. The distorted official exchange rate means capital sent through all formal avenues of remittances and humanitarian relief becomes diluted—an egregious example of aid diversion. In 2020, the government pocketed close to half of every dollar spent on assistance, at least $100 million, entering the country.
Hawalas enable a wholly different kind of exchange: Skirting the artificial rate, the movement of money through unofficial routes maximizes the benefit for ordinary Syrians.
“Trust is our capital,” Abu Abdo told me. “Syrians trust Syrians.” But such trust can be selective, hawala rates varying based on perceived risk with each individual client, centering on business histories, personal connections and other criteria. To Abu Abdo, I was unknown, with no social capital. No wonder I would have faced a hefty rate.
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Hawala—Arabic for “transfer”—is not a new phenomenon. The system began in India in the eighth century, and the conduit has since spread across South Asia, the Middle East and Africa. The majority of Syrians have never had bank accounts, so many have always relied on hawala agents—with their own bank accounts and connections in Syria and abroad—to move money in and out of the country. Arrangements within Syria were often conducted without official licenses until 2006, when the government enacted legislation prompting most companies to become licensed.
The hawala system is simple at its heart, which may explain its durability. Exchanges in opposite directions are matched against each other through a network of personal contacts. Funds are shifted without actually crossing borders. A Syrian gives money to a member of a network of hawala dealers, for example in Istanbul, who then communicates with another member where the money is to be received, for example in Damascus. With more activity, transactions can become less linear. For example, a Syrian living on the coast of Turkey sending remittances home to family in Deir ez-Zor might in turn balance the fee by facilitating payments from a merchant in Homs importing Brazilian coffee purchased in Italy.
Inside Syria, hawala networks arose from the country’s mercantile class, especially its import/exporters. Sinan Hatahet, a researcher at Omran Dirasat, a Turkey-based Syrian research center, told me, “Go visit the al-Haria district. It’s the Dow Jones of Damascus. It’s archaic but this is where it happens.”
Established families have strong relationships with traders in other countries. And since money doesn’t always transfer directly between creditors and debtors, an unofficial credit line is typically created. Such liquidity is then used to bring into Syria remittances and other flows linked to trade.
Hawala dealers can be found everywhere, working out of grocery stores, jewelry and gold shops, travel agencies, and more. A lender with a good reputation and access to customers needs little more than a notepad and cellphone, WhatsApp, or perhaps an encrypted application to start transmitting money. Khalid al-Terkawi, the head of Jusoor for Studies, a Syrian think-tank in Istanbul, explained that the network feeds off the volume of participation. “Every year, we see more activity in the system. With more offices in more areas, settlements can be done more directly,” he said. Money can be wired and received the same day.
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Hawala is not the only way Syrians send money back, of course. In government-controlled areas, there are registered money exchange companies, such as Western Union, which use the official government exchange rate. Turkey’s state-run postal service, PTT, also offers money remittance services in Turkish lira to areas in Syria’s northwest under Turkish control. Facebook groups advertise hand-to-hand services by Syrians traveling in and out of Syria by plane or car. And there is always a dubarah—or a quick fix—to get money to someone in need, Haidera, my Arabic tutor, told me.
Still, these back-room bankers are most preferred. On a practical level, they tend to be cheaper, make it possible to transfer hard currency—primarily US dollars—and offer economies of scale. “When the amount is bigger, the hawala fees get smaller,” al-Terkawi said. “With Western Union or al-Haram [another registered money exchange inside Syria] it’s the opposite.”
In Turkey, using the formal banking system requires a minimum level of financial literacy and command of the Turkish language, even for the simplest transactions. Not to mention additional barriers: Recently, banks have placed restrictions on Syrian residents wiring money abroad, and Syrians under temporary protection status can access banks or official money exchange agencies only in the Turkish provinces in which they are registered. That provides either a major disincentive or an outright obstacle to those who move to other areas.
The choice of hawalas over other means is tied to deeper wants and needs. One is evading the detection of the Syrian government. “I don’t want the state to get any of my money,” Amer told me outside his gold shop in the Laleli neighborhood of Istanbul. Other senders said they want to make sure their families receiving the money in Syria will be safe. The fact that hawala brokers do not require any identification keeps the account anonymous to avoid detection.
But the primary reason I heard for choosing hawalas is simple: trust. Dealers are part of the communities in which they operate. Their business grows by word of mouth and recommendation, so it behooves them to hold honest dealings if they wish to build their customer bases. Of the dozens of Syrians I spoke to, I heard only one second-hand example of a customer being cheated. (It’s interesting that the reputation of human smugglers, who require a similar level of trust, is opposite to that of hawala dealers. Everyone knew a story of someone being deceived.)
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But it is becoming increasingly harder to operate as a hawala dealer in Turkey. In Aksaray, an immigrant-rich area in Istanbul where many Syrian hawala dealers have operated, I arrived at a hawala store a friend had recommended. He had used it a few times to send money to his family in Aleppo. In the back of a dimly lit office that advertised flights to North Africa, a man in yellow trackpants from Deir ez-Zor told me he couldn’t lend money but explained the location of a real estate agent who would be able to sort me out.
Next door to a Yemeni restaurant (one of many named Hadramout), a trio of realtors stood above a miniature scale model of a multistorey apartment complex. Taking one look at me, they politely redirected me to a tourism document office run by a Syrian, who upon hearing my request, handed me a card for “The King for General Trading.” Over WhatsApp voice messages, the King told me it would cost $5 to send $200 anywhere in Syria.
I wasn’t the only one experiencing problems. Another friend told me that her go-to gold hawala shop recently had liquidity issues and couldn’t take money from her. There was also a flurry of complaints on Syrian Facebook groups against hawala agents not being able to deliver on their promises to transfer remittances in US dollars, with families in Syria having to settle for deteriorating Syrian pounds.
One reason Syrian hawalas are facing such challenges inside Turkey lies with an international global terror watchdog named the Financial Action Task Force, which in October put Turkey on a so-called grey list for failing to stop money laundering and terrorist financing. (ISIS and other terrorist groups have been caught using Turkish- and Syrian-based jewelry firms and exchange offices as fronts to fund their members inside Syria, Iraq, Afghanistan and elsewhere.) The downgrade is likely to further erode foreign investment in Turkey, which is already in an economic tailspin. Less than a week after the announcement, the president issued a decree closing down several Syrian-run companies known for their informal lending services.
Mehdi Dawood, a Syrian doctor originally from Qamishli, explained how the process to send money to northeastern Syria has become more difficult. “It used to be very easy,” he said. “I could forward from several places nearby my office.” Now, however, fewer informal brokers in Turkey want to pass on money to the area, known as the Autonomous Region, from fear of catching the government’s attention or being accused of financing terrorism. That’s because the territory, which includes Qamishli, is administered by the Syrian Democratic Forces, which are dominated by members Turkey perceives as an extension of the Kurdistan Workers Party, designated a terrorist group inside Turkey. “Now the only thing we are allowed to send back across the borders are dead bodies,” Dawood said.
Still, the greatest pressures hawala agents have felt come from inside Syria. In the early years of the war, the government raided hawala offices primarily to prevent them from wiring funds to opposition forces.
The government is now going after hawalas for a different reason: They and other businesses have become rare cash reserves. President Bashar al-Assad is starved of hard foreign currency after a decade of war, and under mounting debt to foreign patrons Iran and Russia, a suite of sanctions from more than nine countries—most notably under the US Caesar Act—and affected by an ongoing Lebanese banking crisis, whose financial and import sectors Syria relies on.
Inside Syria, hawalas, known to have access to foreign currency, have a target on their backs. When the US Caesar Act went into effect in 2020, the government cracked down on informal hawala offices across the country, seizing their cash. Recently, the punishment for being caught with foreign currencies has increased to seven years of hard labor and a hefty fine.
Syrians inside the country were warned they would be arrested and prosecuted under terrorism financing laws if caught receiving remittances through hawalas—all while simultaneously issued advertisements, such as this one by Damascus Now, shamed Syrians abroad who did not send money back to support their families—and by implication the government. Violators have reportedly been taken to the government’s notorious General Intelligence Agency.
Those measures pushed furtive hawalas further underground and concentrated remittances in only a few government-permitted channels, making it more difficult and costly for ordinary Syrians. Earlier this year, the government also began to levy a reconstruction tax on each remittance received. Time and time again, ordinary people must foot the bill for destruction caused by their own government.
Although it is the most exploitative, the government is not the only authority inside Syria to cash in on unofficial hawala networks. The militant group HTS, previously Jabhat al-Nusra, turned its own hawala into a bank, Sham Bank, which is now the main source of Turkish lira in the country. Its militants also extorted fees from brokers as part of its efforts to take over the economy in northwestern Idlib province.
Last year, HTS’s monetary agency criminalized the buying and selling of Syrian pounds inside northwestern Syria and blocked transfers to government-held areas. Finally, in a bid for further control, the agency announced all unofficial hawalas would need proper licensing. With the Turkish lira’s widespread use, the currency’s sudden depreciation has produced the exact problems HTS’s original policy of adopting an alternative tender had meant to avert, including weak purchasing power and price manipulation for key commodities.
Idlib’s residents will only further struggle to cope with rising prices and have to shoulder the burden of future HTS policies trying to address Idlib’s economic disaster. Such headwinds will push inflation higher, causing residents to become even more dependent on remittances to make ends meet.
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At a Syrian-run basement shop in the Fatih neighborhood, I popped in to buy a bag of haloumi cheese. A clerk named Samir sat behind a counter piled with candy bars. I asked, “Can I transfer dollars to Aleppo?” He floridly affirmed my request: “As your eyes wish.” Samir was more open than other hawala dealers, explaining the recent tribulations he has seen. The tanking of the Turkish lira. The ever-present needs of families back in Syria. The difficulties he and other hawalas face. The fact that the Syrian government continues to weather sanctions better than ordinary Syrians.
As hawalas continue to be pressed on both sides of each transaction, their difficulties mirror the challenges all enterprising Syrians face in finding work-arounds to help one another. “Sure, I started to do hawala to make a profit, but I also got into this business to help Syrians,” Samir said, “It is becoming harder and harder to do either.”
 One study completed this year by the Operations and Policy Center, a Syrian research institute based in Turkey, found that a quarter of Damascenes depend on remittances from abroad. Such reliance is only higher in other parts of Syria.
 Several hawala dealers had mobile applications, like Haftaro, linked to specific hawala networks connected with prominent Syrian merchant families.
 These official channels have been restricted by the Syrian government to only include the companies al-Haram, al-Fadel, United Exchange, al-Daham, al-Fouad, Takahiro, Maya, Sham, Zamzam, al-Nidal, Thika and al-Diyar, Sinan explained.
 Syrians are meant to always reside in the area where their temporary protection IDs are issued.
 President al-Assad has even turned on his own family, last year plucking billions of dollars in assets from his cousin Rami Maklouf’s telecommunications and real estate empire.