Impacts of deteriorating economic situation on Syrian issue

The deterioration of the economic situation and the living standard of citizens topped the current stage of the Syrian issue, which has begun to accelerate since mid-2019 against the backdrop of the rapid devaluation of the Syrian currency after the Central Bank of Syria stopped direct and indirect intervention in support of the stability of its exchange rate, and put all its efforts to revive it in the exchange market, and following the policy of multiple exchange rates to seize the large exchange differences between them in order to rebuild the central bank’s foreign exchange reserves to use it in supporting the power and the centralization of economic and political decision.

This old and new policy was practiced in the mid-1980s after the Central Bank was devoid of any foreign currency reserves, which also led to the gradual deterioration of the exchange rate of the Syrian pound from about four SYP per one dollar until it reached 50 SYP per one US dollar.

Syria’s beleaguered currency has been plunging to all-time lows against the US dollar, which equals now 2,500 SYP per $1 in the Central Bank, while it has no fixed exchange rate in the market, which affects negatively on the Syrian economy and its productive capabilities, and on the Syrian market in terms of the scarcity of goods and the insanely high prices whose equations exceed the market exchange rate.

Freezing the Syrian funds in Lebanese banks, Caesar Act, then COVID-19 pandemic, the suspension of the Iranian credit line, the escalation of the military operations in northwestern Syria, and the suspicious silence of the world regarding the Syrian issue, all contributed to exacerbate the deterioration of the economic situation in the country as it became on the verge of going bankrupt.

The government or the central bank supposed to response positively and effectively to explain the deteriorated situation and had to take emergency measures to curb it, reassure the market and spread hope among the citizens who lost their faith in the ability of this authority, which originally was created by it, regardless of its justifications and arguments, that are mostly flimsy and ridiculous.

But the government has resorted to coercive (monetary and financial) economic policies that collect money for it, but it destroys the economy and eliminates its chances of recovery.  

There is no doubt that the government, any government, is the first and last responsible for the economic situation in its country, and the Syrian government has not dealt with the country’s economy from a scientific standpoint for decades, which has equilibrium, perspectives and general societal goals, but rather it deals with it [country’s economy] as a current situation from a utilitarian standpoint that serves the regime and its political and social environment.

Therefore, the government has not yet taken any measures to stop the devaluation of the Syrian pound, the erosion of the national economy and the deterioration of the standard of living. On the contrary, everything it does is based on looting the citizens, more than 90% of whom are below the poverty line, and they have been living from hand to mouth.

This is a logical and natural result of a moral political crisis that has been in the country for decades, which leads to the continued depletion of the national economy, the wealth and income, the wasting of national capabilities and energies, the weakening of effective internal demand, and the filling of the local market with imported luxury goods.

Any government, out of its legal, political and moral responsibilities, is required to adopt economic, financial and monetary policies to save the economy of its country from deterioration, whether in a state of war or in a state of peace, and if it was incapable or unwilling for some reasons, it should leave, because its existence, then, is a useless national cost.

Among the emergency measures that can be taken: raising the interest rate on deposits for Syrian pounds, accepting foreign currencies;’ deposits at acceptable interest rates, granting credit of all kinds to productive projects and consumer spending, supporting basic consumer goods and delivering them to those who deserve them in order to strengthen the effective demand of the majority of the Syrian people, and securing the requirements of industrial and agricultural production, and start thinking about alternative energy resources.

It is necessary to combat administrative and financial corruption, especially the corruption of politics, corruption of the rulers and the influential, grand corruption and confiscation of corruption funds, and combating tax evasion and various Shadow Economy practices such as smuggling, prohibited trade in goods, drug trade and encroachment on public and private property.

Also, taxes on people with limited income must be reduced and increased on those with unlimited income, and they must stop compromising the capabilities of the national economy wither human, natural and capital resources.

Getting out of this catastrophic state of the national economy is linked to moving the wheel of production, which in turn is organically linked to the reconstruction and the return of refugees and IDPs to their homes, to contribute to the reconstruction of the paramount importance of Syrian human resources, which are characterized by a high operational capacity useful for the recovery process of the Syrian economy.

All this is linked at the same time to the political solution in accordance with UN Resolution 2254 and its inclusions, because reconstruction requires huge funds that the allies of the Syrian government, Russia and Iran, cannot afford, because their economy and state budgets are connected to oil revenues or natural rentier resources, which in turn are linked to the global market and its accompanying tremors and effects on the level of prices or production quantities. 

In recent years, the economies of the two countries have been subjected to severe US and European economic sanctions and to the deterioration of oil prices due to the lack of production from inside and outside OPEC, and thus their economic capabilities have declined.

The effects of the rentier economy of these two countries do not extend to the fragility of the economic structures only, but also affect societal and political structures and affect the formation of power relations within the state apparatus, drawing the shape and essence of the relationship between the regime and society, which makes the situation in the two countries very similar to the Syrian in terms of the nature and size of the problems, including economic problems, in addition to the fact that they are racing to obtain economic gains by rushing to buying national goods from the Syrian market and investing and buying national institutions and Syrian real-estate in a way that enhances the state of the escalating economic collapse.

If the rich countries link their contribution to the reconstruction in Syria to the extent of the Syrian government’s response to the UN resolution and political solutions, and the inability of its two allies to provide it with a helping hand and economic assistance, they make any bet on Russian or Iranian cash or commodity flows to save the economic situation from deteriorating a losing and absurd bet that prolongs the life of the Syrian issue, and makes reconstruction mere a dream.

At the same time, if the economic situation continues to collapse, it may lead to complete chaos that will push the international community to abandon Syria, leaving the government’s allies to bear its consequences and drown in its swamp.