Syrian economy in tatters after 5 years of war

Posted on November 13, 2016

In his tiny office, tucked behind stacks of olive oil soap and bags of pistachios stored in an arcaded courtyard in the main market of Damascus, Abu Abdallah laments the difficulties of doing business in war-torn Syria.

The food wholesaler, who sells ghee that he sources from sheep-farming eastern areas of the country that are controlled by Isis, says he faces “pressures from every direction”.

“From the state, from armed groups, from Isis and from criminals,” he says. “It used to take six hours to bring goods from Deir Ezzor in the east, now it takes two weeks and the cost of transport has multiplied two hundred fold — not to mention all the tolls that have to be paid to armed men along the way.”

After more than five years of a civil war that has caused the deaths of some 250,000 people, sent 5m into exile and forced another 7m from their homes, the economy is in tatters.

President Bashar al-Assad’s regime, reviled in the west for its brutal tactics against civilians, has lost control over almost half of the country to various armed groups, including Isis.

Factories in regime-held areas that have not been destroyed or looted are plagued by daily power cuts and insecurity on the roads. Armed groups and regime forces extort bribes at checkpoints from truckers across the nation. Oil exports, once a mainstay of the economy, were lost to the regime after Isis swept into the eastern region in 2014.

International sanctions have also taken a toll and the lira has tumbled from 50 to the dollar before the war to 500, pushing up prices and plunging vast numbers of people into poverty.

“There is a huge problem with everything, getting fuel, raw materials, transport and inflation,” says Iyad Betinjaneh, a Damascus businessman who heads a family conglomerate that exports and imports food products. “People have cut down consumption because purchasing power is decreasing. We are not able to import any of our brands, partly because of the sanctions.”

His company was forced to slash its workforce from 700 to 450, he says, and it has been unable to reach food packaging plants in rural areas surrounding Damascus that were taken over by rebels.

Samer al-Debs, the pro-regime head of the Damascus Chamber of Industry, estimates that in some sectors output has shrunk 50-60 per cent. He complains that US and European sanctions have increased the cost of imports because banks refuse to transact with Syrian entities.

“There is a problem with dollars and if you can get them, you can’t use them to pay for imports because of the sanctions,” he says. “We try to use other currencies and to trade with friendly nations like Russia, Iran and countries in east Asia.”

Food and medicine are exempt from the sanctions, but businessmen and regime officials say there are still difficulties importing them because international banks are taking extra precautions to ensure they do not approve transactions linked to the government or sanctioned individuals.

“International banks have created their own compliance buffer zone,” says Humam Jazairi, a former economy minister. “Goods to be exported to Syria are denied credit facilities and even international payment transmission, so you can’t pay even if you have the money.”

He adds that importers resort to informal networks, which has increased the costs “dramatically.”

The difficulties are reflected in the scarcity of some kinds of medicine, says Ruba Mizra, a pharmacist, adding that chemists now rely on smuggled drugs and imports from Iran and India.

“Cancer medicines are short and although we get some smuggled meds, there are problems for instance with insulin because it has to be cooled during transport,” she says.

Conditions are harsher in rebel-held parts of the country. Large parts of Aleppo, once an economic hub, have been destroyed in the conflict and 250,000 people are trapped by a government siege on the eastern part of the city.

In the Damascus market, the general complaint is about prices and growing poverty.

Along a street devoted to bridal wear and wedding decorations, customers and traders alike say the lavish marriage celebrations of the past are now mostly a memory. In one shop, Basma and her daughter, Lamia, a bride-to-be, pick fabric for a wedding gown.

“The clothes, the party, the gold jewellery would have been different in the past,” Basma says. “We are doing less of everything; fewer clothes, fewer preparations and no wedding reception.”

Mr Jazairi estimates that inflation has increased 400 per cent since 2011. A study this year by the International Monetary Fund says that across the country two-thirds of all Syrians live in extreme poverty — up from about 12 per cent before the war.

Shopping in the spice section of the market, Suha Qaddour, a mother of three, says her husband earns a reasonable income from his dairy shop, but the family still barely makes ends meet.

“If I buy the needs of one son this month, I have to wait to the next month to buy for the other,” she says. “We no longer have a middle class here; it is just poor or rich.”

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