AnalysisHomeMunther Khaddam

The economics behind the Syrian crisis

Following the Russian announcementof the halt of major military operations in Idlib and the conclusion of understandings with Turkey on the same regard, contradicting Syrian regime’s will, an unprecedented economic crisis began to creep into the regime-held areas. These areas have not witnessed such a crisis even during the armed conflict between the regime and opposition groups, and it was clearly shown in the accelerating collapse of the purchasing power of the national currency, and increased prices, increasing the exchange rate of foreign currencies and negatively affecting Syrians’ lives.  Moreover, all Syrian areas, even those outside the regime areas of control, have suffered from this crisis.

As a result of the complexities of the Syrian crisis, the future economic life of Syria will likely witness continuous collapse if no political solution for the ten-year-old ongoing crisis is reached. Specialists realize that the economic crisis was not random, but is based on previous economic policies and has its own special impact on real life. To explain all of this, we will shed light on some issues in an attempt to explore possible scenarios for the future of Syrian economic life.

Economy is mainly based on two simple aspects: consumption and production. Since there is consumption, there must be production. Consumption represents different needs of people, while nature with its all resources stands for production. According to this simple equation, man faces nature as being composed of various needs, while nature stands opposite to him as a source to satisfy his needs.

Between these two elements, needs and nature, an ongoing human activity is carried out to turn the sources of nature into resources and then to production to be used to satisfy the needs.

According to this interactive, dialectical, repeated, and constant process, in comparison with the growing population and the increasing and variety needs of them, resources have become scarce.

If society does not turn its full attention to the situation and take necessary measures to return the balance between needs and resources through developing these resources, which in turn requires more investments, or reducing needs through rationalization of those needs especially, when economy is witnessing crisis, society will enter into an alarming state leading to a full-fledged disaster.

In principle, we can say that the first path encountered many difficulties in Syria as a result of the development policies followed by the Syrian authorities over four decades leading up to 2011, making it impossible to eliminate these difficulties and restore balance and dynamism to the Syrian economy. Therefore, the Syrian government resorted to the second path, rationalization of needs, which is the easier way for the Syrian regime according to its authoritarian nature.

When Bashar Assad came to power and the government tried to achieve some economic reforms in order to keep the economy far from the edge of collapse, they encountered a complex structure governed by highly coherent corruption mechanisms that prevented the process of conducting the necessary reforms.

It is quite clear that the crisis that is afflicting Syria today though people’s demands for their freedom and dignity is its prominent title, expressing the absence of a normal political life, but its origins go deep into the economic reality that Syria was going through.

The decline in growth rates, the increase in unemployment, the poor standards of life, the increase in poverty, the spread of corruption, and others are all major factors that have contributed to the objective conditions for the current uprising of the Syrian people.

The question of development in its broad sense, and all the other questions branching out from it and related to it, including the question related to investment, are all political questions which the Syrian regime itself was not able to answer.

Permanent development needs, first and foremost, a favorable political environment based on freedom, responsibility, and the rule of law within an appropriate institutional framework. This requires finding a system of interests to provide opportunities for all classes and groups of society and its events, fulfill their interests in a transparent and competitive manner according to the law, and to protect its power.

In the first five years of Bashar Assad’s rule, in light of the influence of global changes and the pressure of the escalating economic and social crises, the Syrian authorities began a series of measures aimed at rebuilding the national economy according to a reform vision, restructuring it, correcting its policies, and activating its paths. However, it failed as a result of not being serious in undertaking the necessary political reforms as a gate to other reforms. In the upcoming article we will shed light on the Syrian economic reality before the year of 2011.

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