Residents of northwestern Syria suffer repercussions of Turkish lira’s depreciation
Enab Baladi – Amal Rantisi
Despite working hard for long hours in construction, Khaled al-Khatib, a 28-year-old man living in Idlib city, struggles to secure a decent living, with a daily income of 40 Turkish liras (TL = 4 USD) at best.
Al-Khatib, who starts his work in the early morning hours and finishes late at night, told Enab Baladi with sweat running down his face after mixing over ten bags of cement in preparation for construction, “Employers and contractors are exploiting the increasing numbers of unemployed young men to manipulate and reduce wages according to their whims without any controls.”
The ongoing devaluation of the Turkish lira against the US dollar has affected the overall economic situation and daily laborers’ conditions in northwestern Syria. These workers continue to be paid fixed and low wages in the Turkish lira amid substantial price increases.
The prices of most market items and products have spiked in northwestern Syria, especially those of everyday consumer goods and fuel, while incomes remained steady and low.
Al-Khatib said that poverty and financial needs force young men to accept any wage, no matter how small or little, as it remains a better option than sitting jobless.
Al-Khatib also denounced the decision of merchants and the Syrian Salvation Government (SSG) in Idlib and its countryside to raise consumer products and fuel prices whenever the Turkish lira drops in value against the US dollar, while workers’ wages remain static.
“We are suffering already”
Twenty-five-year-old Osama al-Alloush told Enab Baladi, “We, daily laborers in Idlib, are suffering before the depreciation of the Turkish lira,” adding that the Turkish lira’s decreased value against the US dollar has reduced their wages.
Al-Alloush, who makes Saj bread (flatbread common in the countries of the Levant) in Harem city in northern Idlib, said, “Since the Syrian pound was replaced by the Turkish currency over a year ago, our wages became insufficient and are barely enough to buy food for our families.”
Al-Alloush added that he gains 30 Turkish liras a day, making him unable to buy some vegetables, whose prices witnessed a substantial increase lately.
He continued saying that the depreciation of the Turkish lira against the US dollar in recent weeks had caused prices in Idlib to double without any increase to workers’ wages, which are not in line with long working hours and high living costs.
Al-Alloush called on concerned authorities to set a salary ceiling for daily-paid workers, commensurate with the region’s living conditions and daily price hikes.
The Interim Government’s regions are not better off
Sectors that are most affected by the Turkish lira’s devaluation are usually food markets because owners of grocery shops price their goods in the US dollar and sell them in the Turkish lira, causing prices to rise immediately with every drop in the Turkish currency’s value, Enab Baladi’s correspondent in Azaz city reported.
The price spike had its toll on the transportation sector in terms of taxi and public transport fares due to the region’s increased fuel prices.
Ahmad al-Fares, a restaurant worker in Azaz city, told Enab Baladi that the depreciation of the Turkish lira had obliterated the benefits of its substitution with the Syrian pound.
Al-Fares explained that his salary of 800 TL equals 86 USD today, while a year ago, it equaled 114 USD.
He added that the US currency must be adopted for all large and small financial transactions in northwestern Syria, as the Turkish currency remains unstable and keeps falling in value, leading to significant losses, particularly for low-income people.
As for Afrin city in northern Aleppo, Fahad Yassin, a grocery owner in one of the city’s neighborhoods, said that the continued collapse of the Turkish currency against the US dollar had greatly damaged his business.
Yassin added that he is losing at least 300 TL a day due to selling on credit, for he purchases goods in the US dollar and sells them on credit in the Turkish lira.
Every 830 TL was equivalent to 100 USD a few weeks ago, but today the amount increased to 950 TL, meaning that goods sold to customers on credit would cost Yassin a loss of approximately 120 TL in every 100 USD.
Yassin noted that he is forced to sell on account because his business relies on the neighborhood’s residents, and if he refused to sell them on credit, they would turn to another shop due to most people’s dire economic conditions and low wages.
Yassin pointed out that some Afrin residents continue to use the Syrian pound in their purchases, making his loss double that of the rest of the northwestern region. He also said that merchants who import goods from outside the region do not consider these circumstances and claim the cost of goods to be paid exclusively in the US dollar.
Anwar Tubal, a resident of Afrin city who works as an artisan in a blacksmith workshop, told Enab Baladi that his daily wage is not in line with his expenditures. He earns 35 TL a day, but he needs more than 40 TL on average to afford the price of one meal.
Tubal complained that high prices of essential commodities have become intolerable, and the collapse of currencies traded in the region had significantly impacted the working class and all segments of society.
He accused merchants and importers of robbing people and being indifferent to their difficult circumstances, describing their acts as “excessive greediness,” as there are no justifications for raising the cost of foodstuffs imported at old prices or maintaining their high prices after the traded currency witnesses an improvement.
Tubal believes that the regions’ local authorities are not interested in stabilizing or controlling the overshooting of commodity prices and merchants’ greediness, calling on the Syrian Interim Government (SIG) to follow the issue and come up with appropriate and compromising solutions that would satisfy both merchants and locals.
Protests against high prices
On 15 October, Idlib city witnessed a public demonstration rejecting the SSG’s policies, demanding many services necessary to the region, and protesting high prices in general, and fuel prices in particular.
The lowering of fuel prices topped protesters’ demands, especially gas prices, which rose insanely, as demonstrators said.
Following the protests, the SSG’s Minister of Economy, Basil Abdul Aziz, said in statements that the continued price hike in northern Syria is attributed to two primary reasons. The First of which is the rise in global energy and basic commodities prices, which reached their highest levels in the past couple of years.
The current prices are higher than those recorded before the coronavirus (COVID-19) crisis.
According to Abdul Aziz, the second reason is the depreciation of the Turkish lira, which had lost over 22 percent of its value since the beginning of this year, when 1USD was equivalent to nearly 7.5 TL, while today it is about 9.20 TL.
The minister said that the region’s bakeries had significantly been affected by this price increase, particularly in recent months when the price of imported flour spiked due to droughts that had hit major wheat exporting countries, increasing demand worldwide.
He added that the recent rise in crude oil and gas prices to record levels had been negatively reflected in the entire northwestern region. The prices of oil derivatives imported from Turkey witnessed an increase after the Turkish company raised its prices amid a continued decline for the Turkish lira, which had significantly impacted the living conditions of the region’s population.
Enab Baladi contacted the SSG’s Media Office Director, Molham al-Ahmad, who said that supply and demand play a pivotal role in setting prices or lowering them.
In the case of high-priced basic commodities, the pricing department of the SSG’s Ministry of Economy and Resources’ Commerce and Supplies Directorate steps in to study the price and compare it with the commodity’s cost. If the price turns out to be unduly excessive, the merchant responsible for the violation will be held accountable for monopolization, al-Ahmad said.
Al-Ahmad added that staples such as fuel and bread are priced by the SSG’s Ministry of Economy to protect consumers against merchants’ greediness.
When asked about the low wages of daily laborers in Idlib, al-Ahmad explained that daily financial transactions in most sectors are done in the Turkish lira, especially for sums below 50 USD. As for large transactions, they are not affected by the Turkish lira’s exchange rate because they are made in the US dollar.
Al-Ahmad added that the impact of supply and demand extends to and controls workers’ wages, the per capita income, as well as high unemployment rates. Therefore, the government encourages investment, the establishment of infrastructure projects, and agriculture and industry to provide jobs, decrease unemployment rates, improve individual income, and raise the region’s minimum wages.
Meanwhile, the Minister of Economy of the SIG, Abdul Hakim al-Masri, told Enab Baladi in an email that commodity prices in Aleppo countryside areas are affected by supply and demand and that all merchants import goods from outside Turkey, which serves as a transit point. This causes goods to be affected by the US dollar exchange rate against the Turkish lira.
Al-Masri attributed commodities’ rising prices to other reasons besides the devaluation of the Turkish lira. These reasons include a spike in world prices as a result of rising oil and maritime freight prices, which, according to him, have doubled by 200 percent.
Al-Masri pointed out that sectors affected the most by the increase in global prices are construction and fuel in northwestern Syria. Fuel is subject to global prices that have hiked this year, causing European fuel prices to double by 100 percent compared with last year’s prices.
The transportation sector was also affected by the global price surges, according to al-Masri.
Al-Masri also said that the SIG’s Ministry of Economy carried out a new study for the “market basket” (household living costs) this October. The basket consists of 74 commodities and measures the rate of inflation.
According to al-Masri, commodity prices in the “market basket” have hiked from 1,408 TL since the beginning of the year to their current price of 1,748 TL, with an increase rate of 25 percent.
He said that the “market basket list,” which Enab Baladi has viewed, is designed for a family of five persons and does not include the house rental cost. A family of five needs a minimum wage of 2,200 TL, noting that salaries are not below this amount and are in line with the minimum wages.
Who would benefit or be affected by the volatility of the Turkish lira?
The issue of currency fluctuations and devaluation is one of the challenges facing several economies in the world, including the Turkish economy. This certainly affects the economy of the northwestern Syrian region, which deals mainly in the Turkish lira, according to the researcher in political economy Yahya al-Sayyed Omar.
Omar added that currency devaluation has several consequences on various aspects of economic activity. On the one hand, the fixed-income segments are among the most affected in society due to the erosion of personal purchasing power, which in turn causes a decline in aggregate demand and production rate.
Currency volatility also causes the erosion of capital, especially those invested in trade, Omar said.
On the other hand, the fluctuation of the Turkish lira makes the calculation of costs and revenues extremely difficult and puts investment decisions in a wide margin of error, Omar said.
In response to a question on who might benefit or be affected by currency volatility, the researcher said the majority of people would be affected by this issue, but some money transfer and exchange offices might make extraordinary profits thanks to the Turkish lira’s fluctuation. Still, these profits are temporary and unreliable.
According to Omar, the dealing method with the depreciation and volatility of the Turkish lira is extremely difficult, especially since the economy of northwestern Syria is heavily dependent on the Turkish economy. However, the adverse effects can be mitigated by increasing the dependence on the US dollar, although this solution is impeded by several obstacles, most notably the lack of sources providing US dollars in the region.
It is worth noting that the continued devaluation of the Syrian pound, high living costs, and declined purchasing power have prompted local authorities in northwestern Syria to replace the Syrian pound with the Turkish lira in June 2020 to ensure financial stability and preserve monetary value.
Locals in Idlib city and northern Aleppo countryside areas have tried to substitute the Syrian pound with the Turkish lira but encountered several problems, most notably the volatility of the Turkish lira and its continuing fall against the US dollar.
The two de facto governments in northwestern Syria, the SIG and the SSG allowed the Turkish lira circulation in their regions besides the US dollar and the Syrian pound. The SSG limited financial transactions to the Turkish lira and banned the use of the Syrian pound, unlike the SIG that allowed the circulation of the Syrian pound besides the Turkish lira.
A report issued by the Humanitarian Needs Assessment Program (HNAP) in cooperation with the United Nations Development Program (UNDP) and the Early Recovery and Livelihood Cluster in northwestern Syria last August said that 91 percent of employed people in northwestern Syria are in households who are in extreme poverty, signaling the weak state of the local economy.
The report also mentioned that only 18 percent of men that have worked during the past three months before the issuance of the report are employed with regular incomes.
The report on livelihoods shows that even among people with work, nine out of ten live in extreme poverty.
Enab Baladi’s correspondent in Idlib Hadia Mansour and in Aleppo countryside Walid Othman and Malik al-Habal contributed to this report.
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