Regime govt to lift subsidy but gradually to avoid popular anger: experts
Enab Baladi – Jana al-Issa
The process of excluding citizens residing in areas controlled by the Syrian regime from government support has been going on randomly since it began in early February.
Last June, physicians, pharmacists, and dentists who had practiced the profession for more than ten years were excluded from support after lawyers, owners of law offices and companies, and engineers who had engineering offices that had opened for more than ten years were also excluded.
The previous criteria, which affected citizens, were established on the basis of owning shares in a private university, a car with an engine capacity of more than “1500 cc” and the year of manufacture after 2008, a kindergarten or a language teaching institute, a property in an industrial zone, a gas station or a quarry license or a tourist facility, or a real estate registry, or a registry of importers and exporters, or if the person is a goldsmith or senior taxpayer, or if the head of the family is outside the country.
Any of the categories that are excluded from government subsidy are entitled to submit objection requests if there is any change to the data under which they were excluded, the regime government said.
“Wide” categories deprived of subsidy, but in batches
The researcher in political economy, Yahya Al-Sayed Omar, believes that the government of the regime seeks to lift subsidization from large segments of the citizens, but it does so in batches, with the aim of absorbing the resentment and anger of society.
The Syrian regime is trying not to repeat what happened last February when the subsidization was lifted from about 600,000 people in one day, which sparked a wide social and media uproar accompanied by criticism.
Al-Sayed Omar considered that excluding people in installments reduces this “stir” to its minimum limits.
The analyst expected the continuation of the regime’s government policy in this matter by removing new categories from the “subsidy umbrella” to reach its ultimate goal, which is to keep less than 50 percent of the residents in its areas of control within the support program, noting that many unions are threatened with deprivation of support in the future.
Since the beginning of last February, the regime’s Communications Ministry began implementing the removal of government subsidization for a group of “smart card” holders, as the number of removed cards reached about 598,000, according to the ministry’s statement to Ninar FM radio on 7 February.
To reduce pressure on budget
The regime government does not resort to continuing the policy of exclusion from subsidies to increase the revenues of the public treasury, as much as it seeks to reduce pressure on the public budget, according to al-Sayed Omar.
In his interview with Enab Baladi, the researcher added that the cost of subsidies burdens the budget, and in light of the scarcity of revenues and the high rate of inflation, the subsidy bill becomes burdensome for the government, considering that this is the actual justification for this policy.
On 10 February, the regime’s prime minister, Hussein Arnous, admitted his government’s inability to continue subsidizing basic commodities to Syrians according to the prevailing pattern.
Arnous explained that the goal of restructuring the subsidy is to “reduce the budget deficit, allocate a financial mass to support the poorest families, support production, as well as work to improve the purchasing power of citizens, and support the stability of the exchange rate of the Syrian pound.”
And he indicated that the mass of subsidization in the 2022 budget amounts to about 6000 billion pounds (without calculating the electricity subsidy) out of the total budget of about 13,500 billion pounds, and this amount increases the budget deficit.
The process of restructuring the subsidy could lead to a reduction of 1000 billion SYP out of 6000 billion, to reduce the budget deficit by a portion of this amount, redistribute the remaining part of it, and pump it into production towards the neediest families, and to support some groups and professions that need support more than others.
The average monthly income of some professions that have been excluded from support, such as doctors, engineers, and lawyers, is higher than that of other categories of workers, such as employees, ordinary workers, and daily workers, but in any case, it does not amount to being high enough to guarantee them a “decent and honorable” life, says al-Sayed Omar.
The researcher believes that excluding them from the support would stimulate the emigration of competencies such as doctors, lawyers, and engineers, which poses a direct threat to Syrian society and the future Syrian state, and to any future reconstruction plans.
The number of Syrians in need of humanitarian assistance has increased to about 14,600,000 people, according to the UN report released on 23 February, after it reached 13,400,000 in 2021.
On 12 January, the UN Secretary-General, Antonio Guterres, presented a report confirming that 90 percent of Syrians are below the poverty line, while 60 percent of them suffer from food insecurity.
In March 2021, a report issued by the Norwegian Refugee Council warned that the Syrian crisis might witness the displacement of at least six million Syrians over the next ten years if the political conflict, insecurity, and economic deterioration in Syria continue.
The report attributed the increase in the number of people leaving Syria due to reasons such as the search for safety and the creation of new opportunities to rebuild their lives due to what is imposed by the low living reality and the high rates of poverty, in addition to the continuation of military operations that threaten their security.
When did govt subsidies start in Syria?
A study published by the Arab Center for Research and Policy Studies last March showed that Syria has adopted a socialist approach in managing its political and economic affairs since 1936, a regime based on state ownership of the means of production, management, and economic cooperation.
With the arrival of Hafez al-Assad to power in 1970, the restrictions imposed on individual projects and the private sector were eased, but this did not help much in revitalizing the economic cycle in the country due to corruption and the persistence of some structural restrictions that discourage investment.
In the 1980s, Syria found itself politically isolated and in the midst of a stifling economic crisis, as its real GDP per capita fell by 22 percent between 1982 and 1989, and the extensive nationalizations of factories, plants, and lands resulted in the flight of a large part of the national capital to abroad, while a governmental capitalist class emerged that took advantage of corruption and the absence of economic freedoms to create great wealth, the study says.
These factors have led to the deterioration of the living situation and the rise in poverty and unemployment rates, especially among the youth, and the decline of the industrial and agricultural sectors and their contribution to the GDP to unprecedented levels.
With the end of the Cold War and the cessation of foreign aid, the Syrian government, starting in 1990, implemented a series of economic reforms, under which the Syrian economy witnessed strong growth throughout the nineties, and this was reflected in the per capita GDP during the period between 2000 and 2010, as the average per capita income for the Syrian citizen doubled from about 1,200 US dollars in 2000 to about 2,800 US dollars in 2010.
The mismanagement of the crisis that erupted after the start of the Syrian revolution in 2011 caused great losses to the Syrian economy, the United Nations Commission for Economic and Social Affairs for Western Asia (ESCWA) estimated it at 442 billion US dollars at the end of 2020.
The study found that the main causes of the economic crisis that the regime-controlled areas are currently experiencing, which was exacerbated by the outbreak of the COVID-19 pandemic, are summarized as follows:
- Harnessing all the capabilities of the state in the service of the military machine.
- The widespread and systematic destruction of infrastructure and population.
- Loss of control over many commercial crossings that contribute to the state budget.
- Disruption of the movement of industry and trade and the suspension of production.
- Low level of import and export.
- The flight of the owners of efficiency, labor, and capital.
- International sanctions imposed on the Syrian economy.
- Decreased oil production as the Syrian Democratic Forces (SDF) took control of the most important wells.
- Draining the hard currency reserves and increasing the public debt.
- The complete collapse of the tourism sector due to the seriousness of the security situation.
- The global economic downturn due to the COVID-19 pandemic.
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