The Report in English Political Economy Report English F
- The three studied cities are located in different areas of control: Tartous is under the existing Syrian authority, Azaz is within the “Euphrates Shield” areas controlled by Turkey and the armed “opposition” factions loyal to it, and most of Qamishli is under the authority of the “Syrian Democratic Forces” and the “Self-Administration” emanating from it. Each of these regions has its own characteristics in terms of the « political war economy ».
- After ten years of conflict, the political economy in Syria today differs significantly from its pre-conflict conditions due to specific mechanisms that resulted from the war, the actual division of the country, and unilateral measures (sanctions).
- An economic and financial crisis had hit all regions of Syria in 2020, in line with the Lebanese crisis. This led to a significant collapse in the exchange rate of the Syrian pound and a significant increase in inflation. This crisis destabilized the networks of production and marketing of goods and services, within each area of control and between these areas, and then the crisis of the Covid-19 pandemic exacerbated this deterioration.
- This crisis affected the living conditions of the population. The monthly minimum survival expenditure basket (SMEB) defined by aid agencies for an individual amounted to 45 working days of salaries for an unskilled worker in Azaz, 37 days in Tartous and 22 days in Qamishli. As a result, most families in the country fell below the poverty line. Also, many young people have been forced to join armed militias that fight for pay or benefit inside and outside Syria, and in illegal activities. This increases the risks of the continuation of the division of the country by the de facto situation, the further breakdown of security, distancing from the hope of restoring stability and recovery.
- This crisis has exacerbated the problems of the supply chains for securing goods and services that have already witnessed the repercussions of the war, the unilateral measures (sanctions) and the division of the country into different spheres of influence, between which exchanges are controlled by warlords and armed militias, so are the imports.
- The prices of goods and services have inflated dramatically in all parts of the country, coinciding with the collapse of the exchange rate. It is noteworthy however, that the exchange rates remained very close between the regions, despite the great discrepancies and differences in the prices of goods and services available in each of them.
- The production mechanisms in the three areas of influence collapsed further with the recent crisis, and the country lost its food, medicine and energy security. It became vulnerable to a hunger crisis if it witnessed a drought year without rain, as a consequence of the collapse of irrigated agriculture.
- Many of the basic goods that were produced locally have been replaced by those imported, especially from Turkey and Iran, with the development of different import mechanisms, formal and informal, for each of the spheres of influence and other mechanisms for the transit of commodities between one zone of influence and another. These mechanisms undermined the economic integration of production that existed between regions. Economic processes have also become more concentrated around large monopolies through which some actors linked to the de-facto powers dominate over production inputs (fuels, feeds, medicines, etc.), the production itself and/or the large distribution networks. Monopolies have also aggravated with respect to imported goods, as only few actors dominate foreign trade and the means of financing it, as they are linked with the foreign countries influencing the conflict areas and they are capable of circumventing the economic sanctions.
- Otherwise, the continuation of distribution of in-kind aid for many years through the United Nations and the relief organizations has led to the emergence of mechanisms to recycle this aid in the market at cheap prices. This undermined local production, increased further unemployment further, and thus affected negatively the livelihood and sustainability of the population.
- Drinking water, electricity, and telecommunications are used as means of conflict between the conflicting parties, as well as means of domination within each area of influence, instead of being public services.
- Real estate prices have risen significantly during the last period, so that real estate investments remained a main refuge in the context of the collapse of the exchange rate and rapid rise of inflation. This has exacerbated the real estate to constitute rent-seeking opportunities, encouraging « warlords » to seize private and public properties. Especially since monopolies dominate building materials. This takes place within a redistribution of the population between the cities neighborhoods and with the countryside, producing social shells at the local level.
- Smuggling and illegal activities play an important role in the political economy of all three cities. They are originally border cities, famous even before the conflict years for their networks capable of « smuggling » across the borders and evading public policies. This situation has exacerbated during the years of conflict with the weakness of the central government and the dominance of the fighting forces over the central and local administrations alike.
- Most of the « warlords » in the three cities have only local influence that does not extend beyond the city and its surroundings. Meanwhile, the largest rent-seeking comes from the direct domination of fuel trade, electricity and telecommunications services, which are linked to the top of the pyramid of the armed authority in the three regions, constituting bases of negotiations between them.
- It is not possible to continue distributing in-kind aid to the needy for such a long time. Such aid must be quickly replaced with direct cash transfers or developmental aid that encourages the local economic cycle and employment. Likewise, it is not possible to continue for long with the mechanisms of subsidizing the prices of some goods, as is the case especially in the areas of the government and the Autonomous Administration, because they deplete resources and create a large scope for corruption and smuggling.
- Aid organizations and existing administrations need to take into account the political economy generated by the aid and support mechanisms, so as not to encourage monopolies, « warlords » and the continuation of conflict. The same applies to those in charge of the policies of the unilateral sanctions.
- It is necessary to revitalize the local economy and to find ways for citizens to work and earn their living. One of the priorities in this regard is for the United Nations to work to secure the free transit of goods and people between the three regions, in agreement with the controlling authorities of these regions and with the external forces that dominate them, under conditions that prevent monopolies by such authorities and the use of free movement as a weapon or a means of negotiation.
- Dealing with economic actors, especially the strong ones, requires a lot of rationality, away from the media war waged by the « warlords » against each other in the three regions. It is preferable to have always present the question of who will really benefit from the step or the action to be taken?
- Small and medium economic activities must be encouraged, while they will remain surrounded by the economics of war, smuggling and rent-seeking. It is necessary to link the projects of these SMEs with means of marketing and distribution, and to push for the establishment of sectoral cooperatives that can be collectively assisted. All means of assistance and support must adopt the goal of reactivating the economic wheel, the movement of goods and people between the regions, encouraging developmental economy to get out of the existing vicious circle.