Enab Baladi – Muhammed Fansa
The year 2023 witnessed a 60% increase in Syrian exports, according to regime government data, yet this has not significantly reflected on the country’s economic growth. According to analysts, this has rather had a negative impact, causing an increase in the prices of local goods, which has harmed the purchasing power of the population.
Despite this increase, the volume of exports in Syria remains small in comparison to the volume of imports, according to figures and statistics, causing a significant trade deficit.
According to data from the Ministry of Economy and Foreign Trade in the regime government, published on January 10, the year 2023 ended with a 27% decrease in the total value of public and private sector imports compared to 2022, with a total value exceeding 3.2 billion euros.
The Deputy Minister of Economy for Foreign Trade Affairs, Shadi Jawahra, stated that the ministry’s policy regarding imports is to provide industrial and agricultural production necessities and to increase employment opportunities in order to reduce the trade deficit and decrease the demand for foreign currency.
On the other hand, the percentage of exports during 2023 increased by 60% compared to the previous year, with a total value of public and private sector exports exceeding 900 million euros, resulting in a trade deficit of about 2.3 billion euros for 2023.
The ministry reported that the increase in exports resulted from the rise in the quantities exported and the export value of phosphate, apparel, shoes, medicines, aromatic products such as cumin, and some agricultural products like almonds, with a decline in quantities of some exports compared to 2022, such as vegetables, anise, stones, sand, and gravel.
Exports affect people’s access to food
The former Director of the Central Bureau of Statistics and Professor at the Faculty of Economics at the University of Damascus, Shafiq Arbash, denied the Ministry of Economy’s data regarding the increase in exports, saying in his interview with the government newspaper Al-Baath on January 8, that it contradicts what the business sector states, pointing out that reality is “completely different regarding exports which have decreased.”
Arbash explained that the Central Bureau of Statistics deviated from its legislative decree which assigned it the role of preparing the country’s statistics independently, and “became subordinate” to the economic committee, making it unable to publish any statistical figure “without its approval”. He indicated the ease of accounting for import and export operations since all import licenses are granted by the government and the export process is also subject to governmental procedures.
Despite the ease of their accounting, the government has been preventing the publication of export and import data since around 2013, according to the former director of the Central Bureau of Statistics.
Arbash believes that the government presents numbers that are not related to reality and that if the statistics were available, they would be prevented from being published, and if not available, data would be “invented” by the government. However, reality has “exposed and stripped bare” all measures, and the cause of this contradiction seen in government institutions is due to “improvisation and lack of competence,” according to Arbash.
Doctor of Economics, Imad al-Din al-Musabeh, told Enab Baladi that the size of imports relative to exports remains very large, meaning that the trade deficit continues, and thus, the pressure on the Syrian pound exchange rate also continues.
Al-Musabeh clarified that in the case of developing countries, exports are for locally produced goods that exceed the consumption of the people, and what is surplus to the national economy’s needs. However, in Syria, currently, the approach is to “export whatever can be exported,” even if the exported materials are needed by the residents, especially food commodities.
The decision to allow the export of basic food materials in Syria, including olive oil, sparked popular criticisms for the potential impact it could have on the availability of these materials in the market or on increasing their prices, amid the deteriorating living income of the population.
Professor at the Faculty of Economics at the University of Hama, Ibrahim Qushji, told the government newspaper Tishreen last month that exporting will affect the prices of local commodities, contributing to their increase. For example, if a tin of oil is currently sold at 1.2 million Syrian pounds, with the start of the export, its price could reach 1.5 million pounds or more.
Al-Musabeh attributed one of the reasons for the continuous increase in food and basic commodities prices in the local market, despite them being local products, to the increase in exports of these materials, noting that some of them reach other countries at prices lower than the products of the importing country, such as the prices of exported vegetables to Iraq.
Enab Baladi monitored during 2023 the sale of Syrian products exported to Lebanon at prices equivalent to or cheaper than their counterparts in Syria.
The Vice President of the Consumer Protection Association in Damascus and its countryside, Maher al-Azat, stated, in November 2022, that the prices of materials in Syrian markets are higher than in neighboring countries. He added that the Ministry of Internal Trade did not have a significant and important role in securing all materials, especially basic ones such as sugar and oil, confirming the continued presence of “black markets and monopolies”.
Moreover, the increase in exports of basic and locally produced food commodities, which are not in surplus, leads to inflation due to the accompanying price increase, according to Dr. Imad al-Din al-Musabeh.
Where does the export surplus go?
The World Bank expects the real gross domestic product (GDP) in Syria to contract by 3.2% in 2023, after decreasing by 3.5% in 2022, as a result of the earthquake disaster in February 2023. Some economic theories suggest that an increase in the export ratio comes after an increase in the GDP and economic growth, which does not align with the Syrian case.
Economic academician Imad al-Din al-Musabeh believes that the theory “exports lead to growth” is not scientifically proven, as there are cases where it succeeded, such as in Southeast Asian countries in the 1990s, and the economic growth in China is still mainly attributed to focusing on exportable industries, while there are countries where it did not succeed.
In the Syrian case, an increase in exports could help reduce the trade deficit. It may also reflect on the state’s foreign currency resources to finance imports, or to pay off Iran’s debts exceeding 50 billion dollars, according to al-Musabeh, without having an impact on economic growth.
As the surplus goes towards reducing the trade deficit according to the researcher, the regime government works on achieving savings at the expense of the population to reduce the overall state budget deficit.
The savings achieved from partially lifting the subsidy on oil product prices according to the decision issued on August 15, 2023, amounted to 5,400 billion Syrian pounds. It was redistributed according to three main areas, as stated by the Deputy Minister of Economy for Foreign Trade Affairs, Shadi Jawahra, on August 25, 2023.
The savings were distributed to the salary increases announced on the same day, to the grants and compensations issued by separate decrees, as well as a “small” part to reduce the overall state budget deficit
Smuggling never stops
Many Syrians depend on purchasing smuggled goods to alleviate living costs in light of weak purchasing power, such as buying smuggled smartphones due to the high price difference of the taxed ones. Meanwhile, residents of neighboring countries, who also suffer economic crises, benefit by smuggling consumer goods to them at cheaper prices than local products.
The head of Lebanese Pharmacists, Joe Salloum, commented in September 2023 on the phenomenon of Lebanese people buying “cheap” medicines from Syria saying, “We don’t know their nature and quality, and they might have been stored improperly, especially those that the Lebanese carry for long hours which could affect the safety of patients who will get them.”
The smuggling of local products in ways that do not generate the expected revenues for the Syrian regime’s government, and their scarcity in the local market, drive merchants to pump these consumer goods into the local market to compensate for the loss in smuggling, regardless of the sector they belong to, whether it be food, pharmaceuticals, or otherwise. Consequently, exports decrease, which counts as one of the problems of “parallel markets” that the head of the Syrian regime’s government, Hussein Arnous, had previously mentioned.
In July 2023, Arnous explained the country’s economic situation before the People’s Council, stating that economic problems in any country lead to the expansion of “the parallel market” activity, which is not limited to the currency market, but extends to include a broader market of goods and even services. The supply gap and its contraction compared to the volume of the corresponding demand lead to increasing smuggling activities “across borders and through illegitimate, unregulated and unmonitored entry points by the state and its institutions” to cover part of this supply gap.
Arnous emphasized the expansion of smuggling for several “economic, security, or social” considerations, as it now poses “a significant threat to the national currency”, especially with the spread of the phenomenon of smuggling goods allowed for import “to avoid financing procedures through the import financing platform”.
A source in the General Directorate of Customs told the local Al-Watan newspaper, on January 11, about the seizure of about 2,500 smuggling cases by customs officers during the year 2023, most of which were food items, electrical appliances, medical supplies, drugs, and energy drinks.
The active smuggling routes are currently focused on the line coming from the Damascus countryside and Quneitra – Damascus, passing through some areas in both the Damascus countryside and Daraa provinces. In addition to smuggling from Lebanon through numerous areas and illegal crossings, including areas of al-Qusayr in Homs and the coastal region. A percentage of smuggled materials also enters from the Jordanian border through the southern areas.
Most smugglers, according to the newspaper’s source, rely on smuggling methods through tourist cars, partitioning the smuggled goods, and introducing them in small and sequential quantities.
Doctor of Economics, Imad al-Din al-Musabeh, sees that one of the corrupt institutions in Syria is the customs, pointing out that since the 1990s, the issue of bribing customs checkpoints, and “buying a position in the customs institution” began, due to the large financial income that the corrupt employee can make.
As for the continuous announcement of customs controls and seizures, the researcher said that it is “throwing dust in the eyes”, and to promote the idea that the state is working on fighting corruption.