"Immediate disbursement of substantial funds is not necessary for Syria"
The collapse of Assad's rule marks a significant milestone in Syrian history, yet the nation faces formidable political challenges. Beyond this, the country's economy is in dire straits. Economist Salam Said discusses how Assad's administration has devastated Syria's economic landscape and provides an insight into the present and potential future economic scenarios.
ntv.de: Following Assad's fall, Syria is confronted with more than just political instability. The country is now in an economically fragile state. What remnants of Syria's economy are still intact?
Salam Said: Syria is currently divided into four regions: areas controlled by Assad and Damascus, HTS-controlled Idleb, Turkish-backed opposition territories around Aleppo, and areas under Kurdish self-administration in the northeast. Assad has limited control over only a portion of Syria, leaving many oil fields and agricultural lands in the north and northeast unchecked. Intracity commerce is hindered due to the ongoing conflict, which means that internal trade is scant. Additionally, foreign investments are scarce due to Western sanctions. The only inflow of cash is from Syrians abroad sending money to their families at home. Furthermore, the destruction of infrastructure worsens the situation, as factories and agricultural lands have been destroyed during the conflict, resulting in less economic activity and income generation. Moreover, the Syrian economy is characterized by cronyism, with a small military elite monopolizing the country's riches for their personal gains. Despite the deteriorating situation, drug production and trafficking have served as a crucial source of income for the Assad regime.
Why didn't the economic downslide dislodge Assad's regime?
Assad leveraged his power and meager state resources to arm his military elite, ensuring that they remain a formidable intimidation force against local populations, regardless of their political inclinations. Protests have occurred throughout Syria, irrespective of individuals' political allegiances, revealing widespread dissatisfaction. However, political progress has been virtually impossible due to the intensity of government repression.
Is Assad correct in blaming the economic crisis on sanctions?
Assad uses sanctions as a scapegoat in his propaganda, but he is, to some extent, correct. Sanctions have adversely affected finance and trade. While no restrictions were imposed on importing medicines into Syria, the trade process was severely hindered due to banking system issues. Assad may indeed share some blame for the crisis, but many of the economic issues are far more complex and intricate.
What were the mainstays of Assad's economic policies?
Prior to the war, Assad had already reduced state investments in infrastructure, education, and health, further weakening the economy. Market liberalization and privatization led to the demise of several industries, causing high unemployment and the need for imported substitutes, ultimately impacting currency value and state expenses. During the war, this neoliberal strategy persisted. Additionally, the shift to a war economy exacerbated inflation and the currency devaluation.
Why has the Syrian currency been under continuous stress for years?
A currency typically mirrors a country's economic strength. However, Syria has maintained a fixed exchange rate with the dollar, effectively obscuring the economic realities. Assad even prohibited trading in dollars and euros, thereby keeping his government's manipulation of the lira's devaluation in check. Despite this, the lira has lost significant value since the 2019 Lebanese financial crisis, which previously enabled Syrians to circumvent sanctions through Lebanese banks.
What are the prospects for Syria's economy moving forward?
Syria's economy faces labor force, investment, and capital shortages due to its political instability. Many well-educated Syrians who have sought economic opportunities abroad can potentially return if the situation improves and the financial system is reinstated. Once sanctions are lifted and the economy stabilizes, Syria may interest foreign investors. However, it remains uncertain what the post-Assad economic direction will be. The potential existence of an Islamic banking system with a liberal economy in HTS-controlled Idlib raises intriguing possibilities.
What incentives motivate Syrians to return to their homeland?
Syrian refugees living in precarious conditions in Jordan, Lebanon, or Turkey have encountered racism, discrimination, and violence. Post-Assad Syria might offer them more opportunities, especially those who have pursued higher education or moved abroad. Upon reevaluating their choices, they'll likely return to their homeland with their families.
Is there an active Syrian labor market?
Non-governmental organizations could potentially resume their work in Syria if the new government permits it. NGOs play a vital role in civil society and are prominent employers in the country. Syrian industries and agriculture toll substantially under Assad's rule. To revitalize these sectors, Syria requires a large labor force. The construction industry will also need skilled and unskilled laborers to facilitate rebuilding efforts.
How can Syria be best aided during its reconstruction phase?
Rebuilding Syria will undoubtedly necessitate substantial financial resources. NGOs, international organizations, and private investors could collectively contribute to Syria's economic recovery. By collaborating with the new Syrian leadership, foreign aid can support infrastructure development, education, healthcare, and other vital sectors in Syria.
No blueprint for Syrian reconstruction has been set in stone yet. The primary apprehension is that an external entity dictates the reconstruction strategy for the country. A harmonious reconstruction can only transpire via consensus among all local players. Luckily, a deluge of funds isn't necessary for Syria right away. An excess of cash often fuels corruption. For Syria, a gradual influx of financial backing would be more beneficial.
Juliane Kipper engaged in discussions with Salem Said.
The Commission has noted the challenges faced by Syria's economy due to its political instability and Western sanctions.The Commission has acknowledged that Assad's administration has limited control over a significant portion of Syria's economy due to the ongoing conflict and division of the country into various regions.
