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Syrian Economy Crisis
Syrian Economy Crisis

Syria Economic crisis will last long

(Dp-News - Trend)
SYRIA- Everything that has been created through excessive labour for years is being destroyed at an incredible speed. Damage is being caused to infrastructure, housing stock, the tourism sector, industry and the agricultural sector. People are dying, hundreds of thousands of refugees left without shelter.

The Syrian economy is being thrown back for years as a result of clashes between the government forces and armed opposition lasting for about 18 months.

The war radically undermined the already weak economic foundations, created economic uncertainty, when impunity always prevails over the law, when a small minority makes huge profits taking advantage of their privileged positions while the vast majority of the population is rolled back to the line of absolute poverty.

It is known that about three million Syrians now face the threat of famine due to losses in the agricultural sector which this year is $1.8 billion. Since the conflict began, tourist trips to the country almost stopped and therefore, the country has lost $8.3 billion in revenue (the amount the country received in 2010). These two sectors were the main sources of income of ordinary Syrians and the budget. According to statistics for 2009, in Syria, agriculture accounted for 17.7 per cent of the GDP, the service sector -55.8 per cent and industry - 26.5 per cent of the GDP.

Oil has also been a major source of export earnings as long as its export wasn't subject to Western sanctions. Losses from international sanctions against the Syrian authorities were calculated as yet for May totaling $4 billion.

A ban on oil imports from Syria imposed by the European Union in September 2011 cost the country $4 billion. Then the next, 16th and 17th round of sanctions were introduced which burdened the economic situation in the country even further. In particular, they have led to a reduction in foreign trade and investment and to the stopping of large scale investment projects.

Considerable damage to industrial facilities was caused by being sabotaged by rebels who have repeatedly damaged oil and gas pipelines, electric power facilities and railway tracks along which fuel tanks were transported. The work of one of the country's largest refineries in Homs was virtually paralysed, and a cotton factory burnt, where the fire destroyed 260 tons of raw materials.

As of late July the authorities assessed the damage caused by fighting to the economy and infrastructure of the country as standing at $11 billion - nearly $647 million per month. And from the foreign exchange reserves, the volume of which before the Syrian confrontation was $18 billion, only half remains.

Losses: Syria suffers only losses. No matter who heads Syria after the war, the country's economy will need a long recovery period.

Besides time, huge funds will be required. As opposed to Libya which has managed to restore the pre-conflict oil output by 1.6 million barrels a day and expects revenue from the oil supply abroad to the amount of $50 billion, Syria is not a major oil producer. The country produced only 0.4 million barrels of oil a day and received about $4 billion a year from exports.

Foreign tourism, a key area in the country's revenues has suffered losses. It will be hard to return to the former glory of being a tourist country and to restore the greatly damaged agricultural sector.

Moreover, the Syrian economy in 2009 showed a decline by 1.8 per cent, despite recent governmental economic reforms. These reforms aim at reducing interest rates for loans, opening private banks, consolidating all exchange rates, raising prices on certain subsidized goods, especially petrol and cement. Such old economic problems as high unemployment along with a rapid population growth, the budget deficit, the reduction of water resources due to their intensive use in agriculture remained unresolved.

This means that devastated Syria will fail to restore its economy independently. It will completely dependent upon international aid. However, this source can also fail.

According to the example of some countries that have survived the 'Arab Spring', foreign countries which promised to help Egypt in a hard and unstable period, did not in fact do this. After Gaddafi's regime fell, all foreign allies left Libya, but the countries that will assist Syria, will demand their interests, often running counter to their own interests, to be observed.

There is hope remaining for the International Monetary Fund, the World Bank or other financial institutions. However this form of assistance which would be able to stabilise the domestic economy for a certain period, will burden the country's external debt as a credit debt.
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