Enab Baladi – Yamen Moghrabi

Syria is experiencing a severe economic and living crisis in light of the stagnation in the political file and the absence of any economic solutions in the hands of the Syrian regime to improve the living reality.

The regime’s government does not seem capable of implementing steps to ensure the rehabilitation of the remaining economic joints that Iran and Russia did not control.

The government’s policies were limited to establishing and licensing economic front companies by businessmen close to the regime, with contracts that lack transparency and clarity, and the privatization of multiple companies in vital sectors that represent Syria’s national wealth.

In light of the wartime economy or scarcity that Syria is currently experiencing, the collapse of economic institutions, the migration of businessmen, the destruction of infrastructure, and the ambiguity of the country’s political future, it seems that the future of the Syrian economy is not only blurry but also featureless.

Russia and Iran shackle the future of the Syrian economy

The Iran-Iraq war broke out in 1980, one year after Khomeini came to power in Iran, and Hafez al-Assad quickly allied with him during the war against Iraq, forming a strong alliance, the results of which Bashar al-Assad reaped later.

With the outbreak of the Syrian revolution against al-Assad in 2011, Iran stood financially and militarily alongside its ally, specifically with the spread of military operations across Syria.

But this stance was not without a price, and the same applies to al-Assad’s second ally, Russia, whose intervention in 2015 led to turning things around against the opposition and the Syrian regime forces outperforming the opposition and regaining a large area of land that it had previously lost.

The price paid was represented by long-term agreements in the electricity, phosphate, seaports, airports, and communications sectors.

According to economic researcher Murshed al-Nayef, these long-term agreements would restrict the Syrian economy in the coming years because both Russia and Iran sought to exploit Syrian wealth to compensate for their losses over the past years on the one hand and to enhance their influence in the region on the other hand.

The future of the Syrian economy is linked to these agreements and the influence of the two countries in the country, especially since they reserve an advanced position over any other party that wants to obtain a share in the Syrian market and participate in the reconstruction process in the future, al-Nayef told Enab Baladi.

Asma al-Assad and economy restructuring 

The Syrian regime seeks to restructure the Syrian economy, which has been exhausted by the ongoing military operations since 2011, the diminishing state resources, the shortage of goods and services, the increasing rates of poverty and unemployment, the high rate of inflation, and the collapse of the value of the Syrian pound.

The regime has already implemented several steps in this direction, first by treating the Syrian economy as a war economy or the wartime economy while lifting government subsidies on basic goods and increasing taxes on goods and services.

The Syrian regime also decided to sell the remaining state resources either to its allies through investment contracts for vital sectors or by establishing private companies and granting them partnership contracts for the state’s financial assets and companies.

In practice, not all of these companies belong to Syrian businessmen only but also to Asma al-Assad, the wife of the president of the Syrian regime, who owns a share of these companies.

Enab Baladi revealed in a special report on July 16 how al-Assad and his wife Asma founded a facade company called Eloma to seize Syrian aviation business with stakes that will be distributed between 51% for the Public Syrian Airlines Corporation and 49% for the partner investor.

Enab Baladi uncovered the founders of Eloma and those behind it and tried to find out the impact of the economic privatization that the regime has been pursuing for years on key vital sectors of the war-torn country.

Dr. Firas Shaabo, expert and scholar in economics, believes that the Syrian economy is witnessing a restructuring in the interest of new faces and led by Asma al-Assad, who neutralized figures who were at the head of the Syrian economy, including Rami Makhlouf, Bashar al-Assad’s cousin.

These movements began practically since the establishment of the Syria Trust For Development, through which international organizations implement some of their humanitarian projects in areas of the Syrian regime, Dr. Shaabo told Enab Baladi.

For his part, economic expert al-Nayef told Enab Baladi that the prominent feature of the Syrian economy is that it is a “customer economy,” so it is not surprising that Asma al-Assad has an acquisitive role in this economy, as Rami Makhlouf had previously.

According to al-Nayef, the “customer economy” means the spread of corruption that pushes Syrians to believe the narrative of Asma al-Assad’s control over it, especially with the granting of broad powers to companies affiliated with figures close to them.

Through these companies, it can be said that Asma controls many sectors, including the oil sector, through the Qaterji family, for example, as al-Nayef said.

No economic vision

In light of all these economic crises, the Syrian regime’s movements in this sector, and the investment contracts of Russia and Iran, the question about the current and future status of the Syrian economy seems legitimate, especially since governments’ determination of the shape of the economy comes according to specific goals that are primarily linked to the state’s available resources and the possibility of developing and benefiting from them.

In light of the collapse of the Syrian economy, the destruction of the infrastructure, and the agreements restricting it with Russia and Iran, it is difficult to determine the shape of the economy in Syria during the next stage, whether in the short, medium, or long term, according to economists interviewed by Enab Baladi.

Economist Shaabo says that the Syrian economy is currently a “war economy,” and the Syrian regime does not have a clear vision of its future image.

If the Syrian regime continues to rule, Syria’s economy will remain under the control of Russia, Iran, al-Assad, and figures close to him, and thus, it will remain an economy of individuals, not institutions, and there will be no major change in it.

Therefore, according to Shaabo, it will be an unknown economy, and this can be seen from the current indicators, from the decline in the value of the Syrian currency against the US dollar and the deteriorating economic capacity of the Syrian regime, so it is an economy without features, and it is not possible to know its future shape and where it will reach.

In the event of a political change in the country, the economy will transform into what is known as the “infrastructure economy,” which supports development plans, construction, and reconstruction, according to Shaabo, who linked this type of economy to the party that will form it from the opposition and the countries supporting it.

Economic scholar al-Nayef believes that the Syrian economy is, in any case, linked to long-term agreements with Russia and Iran in vital sectors.

Therefore, it will remain far from the rules of stimulation, innovation, and growth in various sectors and will remain unable to bring about a recovery that would instill hope in the country’s present and future.

Therefore, the expected form clearly reflects and expresses the actors on the ground in Syria and their political will, and therefore, it will not be “without features.”

But they will be dark features and will remain so due to the destruction of infrastructure, economic institutions, and state resources, the exhaustion of Syrian citizens, and the decline in their standard of living, according to al-Nayef.

Last May 1, the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) issued a report detailing the humanitarian crisis in Syria for the year 2023. The number of Syrians in need of humanitarian aid reached 15.3 million people, an increase of 5% over the year 2022, according to the report.

Three stages of the Syrian economy

Since 1958, which witnessed the unification between Syria and Egypt, the Syrian economy has gone through several transformations between different forms of the economy, ranging from socialism to the “wartime economy.”

Before 1958, Syria witnessed a free economy, a private sector, and huge companies, including (Al-Khumasiyah) the five-member company that was established by five Syrian businessmen at the time.

Unity led to the nationalization of dozens of industrial facilities and the entry into a socialist system that aroused widespread dissatisfaction at the time, and with the military coup carried out by Colonel Abdul-Karim al-Nahlawi in 1961, the Syrian economy did not return to its former state, according to what the Syrian historian Sami M. Moubayed mentioned in his book “Abdel Nasser and Nationalization,” published in 2019.

The arrival of the Baath Party to power in Syria through a military coup in 1963 established the socialist economic system, and Hafez al-Assad implemented it when he came to power in 1971.

In the late era of Hafez al-Assad, he began a slow process of economic opening, and after his death and Bashar al-Assad assuming power, he followed what he called the “social market system.”

According to Shaabo, this economic system falls between the socialist and capitalist systems. This is the second stage of the Syrian economy.

As for the third stage it began with the Syrian regime adopting the security solution in the face of the demonstrations that demanded its departure in 2011 and then waging battles against armed military factions opposing it.

All led to the depletion of state resources, the transformation of the Syrian economy into a war economy, and new ways to deal with the shortage of resources and goods.