Enab Baladi – Amir Huquq

The official discourse about transitioning to a free market economy in Syria is on the rise. However, despite the public talk about this direction, the necessary legal and economic steps have not yet been completed, while attention turns towards breaking previous market monopolies and protecting competition.

Basil Abdul Aziz Abdul Hanan, the Minister of Economy in the interim government of Damascus, told Al Jazeera Net that the restructuring of the economy will transform it from its socialist roots that later turned into a dictatorial system, into a free and open market economy.

In an interview with Reuters, Basel al-Hamawi, the head of the Damascus Chamber of Commerce, explained that the new Syrian government has informed business owners that it will adopt a model of a free market economy.

He revealed that the goal is to integrate the country into the global economy, marking a significant shift from state control of the economy that has lasted for decades, describing it as a free trading system built on competitiveness.

A free market economy is defined as a system based on individuals’ freedom in any economic activity, founded on private ownership of the means of production.

Its core principles are supply and demand, which control prices and generate free competition without any influence from the state. The role of the state in this economic system is to organize the economic direction and keep it functioning.

Economic circles in Syria welcomed the government’s decision to adopt an open free market economy, considering it an emergency step to revive the economic situation in Syria, whereby the identity of the economy, which has been absent for years, can be defined.

In an interview with Enab Baladi, Dr. Abdul Rahman Muhammad, Deputy Dean of the Faculty of Economics at Hama University, explained that an open free market economy means an economy based on the interaction of supply and demand, which grants individuals the right to engage in any economic activity they desire and is built on the private ownership of the means of production and individual initiative.

Free competition within a free market economy plays an important role in controlling prices, liberating them from any state-imposed constraints.

Not measured by statements

On his part, economic researcher Mohammad al-Salloum contends that any real economic transformation is not measured by political statements or incremental steps, but requires a legislative structure, financial stability, and institutions capable of implementing sound economic policies.

Al-Salloum told Enab Baladi that discussing the adoption of a free market economy is a theoretically positive step. However, without clear laws ensuring fair competition and investor protection, there is a risk of merely redistributing centers of economic influence with no meaningful change.

Talking about a free market economy in Syria is not just an option; it is a necessity imposed by the nature of political and economic transformations. On one hand, the country needs to stimulate production, attract investments, and create job opportunities, according to al-Salloum. On the other hand, economic openness must be managed cautiously to avoid falling into the trap of economic chaos or the dominance of monopolistic capital.

An emergency economy

Dr. Abdul Rahman Muhammad describes a free market economy as an emergency solution for the national economy, which has nearly collapsed due to corruption that plagued all areas of the national economy during the previous regime. The potential impacts of its implementation include enhancing market competition with minimal central government control or participation.

This economic system relies heavily on supply and demand principles, and the structure and authority in a free market are decentralized, where individuals make all their economic choices voluntarily. However, it is crucial to ensure that its policies do not become absolute, which would be guaranteed by those economic policies and their operational controls, ensuring competition and encouraging both local and foreign investments to enter and operate in the Syrian markets.

Researcher Mohammad al-Salloum clarified that a free market economy would limit monopolistic practices by large traders and suppliers of some essential and strategic commodities, which now threaten Syrian food security, a vital component of Syrian national security.

A comprehensive environment to protect competition

The transition to a free market economy requires not only lifting government restrictions but also establishing a comprehensive environment to protect competition. If old monopolies are not dismantled and markets are not opened to all investors, control may simply shift from one influential group to another without achieving true economic liberation.

Al-Salloum advocated for regulatory measures to prevent the repetition of past experiences where a few businesspersons monopolized most resources.

He clarified that moving toward market liberalization and eliminating trade restrictions could increase competitiveness, improve the business environment, and attract both local and foreign investors.

Conversely, it should be borne in mind that transitioning to a free market does not entail abandoning the role of the state; rather, it requires institutional reforms that enhance the investment climate, protect consumers, and ensure fair competition.

What about foreign products?

Foreign goods and products, such as those from Turkey and Iran, have flooded Syrian markets, including food products, clothing, and electrical and glassware items. Economists suggest this is a routine procedure within the framework of a free market economy.

Meanwhile, traders and industrialists have raised concerns about the need to regulate their entry, as they pose fierce competition to Syrian products, potentially undermining Syrian production processes.

In this context, Dr. Abdul Rahman Muhammad regards the entry of these products within the free-market framework as a situation where there is complete freedom in purchasing and selling.

The implications of these goods on the Syrian economy are numerous. It can be positive when importing materials that contribute to production processes or procuring machinery and equipment. However, negative aspects arise when a surplus of consumer goods floods the market, competing with national products.

Absence of a tax plan

Researcher Mohammad al-Salloum believes that tax exemptions for local production could help invigorate markets, but without a clear plan, they may turn into financial burdens on the state. Absent alternative sources to compensate for revenue, the government might resort to increasing indirect taxes.

He explained that this may lead to price hikes, weakening citizens’ purchasing power. Furthermore, reducing customs duties might encourage market flooding with imported goods at the expense of local production.

In this context, opinions among academics, experts, and economic researchers about implementing a free market economy have diverged. One school of thought opposes full implementation, predicting it could lead to economic disaster for Syria’s production cycle.

On the other hand, another school believes that full adoption of a free market economy will stimulate free competition, thus playing a critical role in controlling prices.

A directed economy approach

Given the current situation in Syria, which has emerged from a war that devastated much of the country, it is advisable initially to apply a directed economy, even minimally, by the government, according to Dr. Abdul Rahman Muhammad, especially in light of the current low income levels.

He anticipates that, at the outset, facilities will be provided for production through tax exemptions to aid the return of investments that previously exited Syria, and initial benefits will also derive from international organizations’ support.

He believes that raising customs duties on foreign goods will impact the free market economy, necessitating careful calibration of import duties to guarantee competitive quality and pricing between national products and foreign imports.

Therefore, customs duties should be at levels that keep the cost of imports equal to that of alternative national products, thereby encouraging the latter to enhance quality without harming domestic industry.

Should customs duties remain low, the inevitable outcome would be that industrial investments would stagnate, production would decline, industries and agriculture would collapse, unemployment rates would soar, and traders’ profits would increase at the expense of diminishing factories.

In conclusion, researcher Mohammad al-Salloum believes that the Syrian economy currently stands at a critical crossroads. There must either be genuine reforms based on economic equity and transparency, or changes may merely recycle crises under new banners. The economy requires:

• Protecting local investments and ensuring market stability.
• Combating monopolies and opening avenues for all investors.
• Reforming the legislative structure to attract foreign capital.
• Restructuring the financial system to halt the decline of the local currency.

Economic experts and academics in Syria have frequently called for determining the identity of the Syrian economy during the previous regime era to understand which economic policies should be implemented.

They have advocated for implementing an open free market economy for years to remedy the economic reality that Syria suffered from and to eliminate the monopolistic policies that significantly affected the foundations of the economy.