The Fight for the Syrian Economy Appears Lost

Posted in: Economy, West & Central Asia | Posted on

While on the battlefield Damascus and its allies seem to be achieving victory after victory, the fight for the Syrian economy is faltering. The enemy in this particular fight, however, is Damascus’s own policies.

Syria prior to the war was one of the key producers of agricultural goods in the region. Coastal areas such as Latakia were producing citrus while the areas around Hama and Homs focused on vegetables, with Hasakah being the main grain producer. Now all of that seems to be a distant memory, under siege from natural disasters, short term profiteering, and national-scale neglect for both farmers and their produce.

Citrus producers have not only been hit by unsanctioned logging, devastating fires and floods but they have also lost their ability to market their goods domestically.1.“تسجيل 189حريقا زراعياً وحراجياً في سورية..والهدف الحصول على الفحم!” – B2B Syria While fires are usually linked to heat waves in the summer and the reduced ability to adequately respond to them, a new reason has emerged, that being the production of “biochar”, or charcoal.2.“في طرطوس فقط..100 حريق خلال أسبوع و810 حرائق في أقل من عام!!” – B2B Syria3.Syrian MoLA official report. This is a side effect of the prolonged periods during which natural gas was severely rationed, due to the lack of access to the fields or facilities that could remove hydrogen sulfide from the ‘sour’ gas in a process known as ‘sweetening’. Initially this was offset by chopping down trees for fuel but later the production of charcoal grew and with that came daily accidental or even intentional fires.

The previously mentioned domestic market is now next to non-existent, and it strains producers who find difficulties procuring transport and customs permits to export their own production. Every year there’s talk about swaps of Syrian citrus for Russian wheat but the amounts exchanged remain small and focus on existing narrow business ties between the Syrian coast and Krasnodar Krai businessmen.4.“Из Латакии в Россию отправилось судно с первой партией цитрусовых” – TopWar5.“Майкопская компания запустит в Сирии “экспортно-импортную деревню” – РБК The situation has reached the point where Damascus is lacking other options to assure its citrus producers, and is therefore buying up some of their produce at a loss, while some plantation owners are outright replanting to more profitable stocks.6.“وزير التجارة: تخصيص 3.5 مليار ليرة لشراء الحمضيات من الفلاحين وتسويقها” – Economy2Day7.“بعد أن تحوّل الإنتاج إلى فـائض..مزارعو الحمضيات يقتلعون الأشجار ويـزرعون أصنـافاً بديلة” – Economy2Day

Tomato and potato production is not faring much better. While out of season the price of these goods increases considerably, when they are in season producers have to resort to selling them at low prices due to a lack of demand.8.“ارتفاع مستمر لأسعار السلع الغذائية في سورية خلال النصف الأول من عام 2018 .. والحكومة عاجزة عن ضبط الأسواق!!” – B2B Syria9.“الفلاح هو الخاسر الوحيد…50 ليرة سعر كيلو البندورة بأسواق الهال وتكلفته على المزارع 125 ليرة!” – B2B Syria10.“في درعا…البندورة بـ25 ليرة والبطاطا بـ60 ليرة للكيلو!” – B2B Syria Small to mid-sized shipments eventually make their way to Lebanon or Turkey, where they can earn much more as they compete with the prices on the world market.11.“أساليب مُبتكرة لتهريب المنتجات السورية..مثلاً البطاطا المهربة تغزو الأسواق اللبنانية!!” – B2B Syria However once out of season these goods again become unattainable to many Syrians.

Grain production, central to Syria’s economy, appears to be declining even as it is touted as making a revival.12.“Syria sees wheat production at 2.17 million tonnes for 2017” – Reuters By mid-July production of grain within Hasakah had decreased by 20% relative to 2017. And even though overall the state’s grain collecting authority, Syria’s General Establishment for Cereal Processing and Trade (Hoboob), has access to more farming communities unimpeded there seems to be less wheat to buy.13.“نتاج سورية من القمح يتراجع إلى نحو 251 ألف طن حتى منتصف تموز الماضي” – B2B Syria14.https://twitter.com/delfoo/status/1025659236091682816 Drought also contributed to the decline as well as the near-total nationalisation of grain deliveries.15.“إكثار البذار توزع بذار قمح فاسدة فحصدها شعيراً وشوفاناً.. والحبوب اشترتها بـ 3 ليرات!” – B2B Syria

Compensation of losses for producers is remarkably limited. The rate is currently at 5-10% of the estimate for damaged crops or at a flat 1,000 Syrian pounds (SYP) per dunam, essentially pricing it at 1SYP per square meter.16.“تعويض المزارعين عن خسائر محاصيلهم بـ 1000 ليرة عن كل دونم!” – B2B Syria Both methods of compensation fall far short of what is required, and ensure that without powerful backers these farming families can be brought to ruin with one season. While the state cannot be blamed for the worsening climate conditions, it has to be pointed out that its role in such events should be to support farmers to make it through the season, whereas the reality seems closer to an attempt to collect more in the short term and hope for a miracle next year. The state shows a willingness to blame every issue with the economy on the war and foreign sanctions, even in organisations focusing on a single economic sector. This logic contradicts the customs data that people working in this sector have access to. For example, Syria can export and import food products provided there’s a market for them, but transportation logistics have created a bottleneck that strangles the local economy. Nevertheless, cows were recently imported from the EU for dairy production and the EU is becoming a notable buyer of “Made in Syria” branded goods which are bought mainly by expats.17.“بعد أن تحوّل الإنتاج إلى فـائض..مزارعو الحمضيات يقتلعون الأشجار ويـزرعون أصنـافاً بديلة” – Economy2Day The bigger issue is that Syrian officials’ policies indicate an assumption that the war’s end would remedy the economic situation and thus they deny any agency to themselves, their decrees, and their short-term oriented business decisions. Based on how the EU or the US deal with domestic subsidies and how limited the foreign aid budget of both is, even if the discussion does tackle the subject of intent to provide aid, the lack of responsibility from Syrian government actors is worsening conditions in their agricultural markets.

But to make matters worse these aren’t isolated events. While the SYP has been buoyed by the sentiment that the war is nearing its conclusion and some monetary control by the Central Bank, it seems that prices for goods are yet to be affected by this.18.“في حماة.. ضبط فروج مثلج أمريكي المنشأ.. وحليب سنغافوري” – B2B Syria A reason for this may be that producers have finally decided to sell their goods abroad almost exclusively or that the entire production is now based off, not the SYP but the United States Dollar (USD). In this case, the USD’s exchange rate is used by people as a proxy for foreign currencies that have a wider reach in terms of both goods and geographic areas. In this scenario, regardless of the fluctuations of the exchange rate, the prices will move towards equilibrium with the prices for import and export in the global markets, and only when reaching parity will they start adjusting for the exchange rate fluctuations. Prior to this the SYP exchange rate had an effect on the prices of goods as only parts of the production process were priced in by the market in USD. Thus, they adjusted for that change and then continued factoring a SYP-based cost to produce. This no longer seems to be the case and it will be a devastating development for Syrians who would then become reliant on the state subsidised bread with its lower quality but highly affordable price of 50 SYP and the rest of the goods that are being replaced by imported partially processed and cheaper alternatives, with a longer shelf life.19.“في حماة.. ضبط فروج مثلج أمريكي المنشأ.. وحليب سنغافوري” – B2B Syria It seems that even domestic produce that was once in abundance not just in markets but also in people’s own gardens, is now beyond the means of a population that rarely earns more than 300 USD per month. Such an unsustainable scenario can only cause great grief for Syrian consumers in the long term, unless extreme remedial actions are taken very soon.

Stanimir Dobrev

Stanimir Dobrev is a writer for the International Review, he has a BSc in Computer Science and has attended a Masters Degree class in Innovation and Technology from Sheffield University. He has ample experience working with clinical trials and telecom operations on multiple levels and his primary work focus is business process optimisation and enterprise software solution integration. Organisational structures fascinate him, bar the dysfunctional ones which infuriate him.

References   [ + ]

1. “تسجيل 189حريقا زراعياً وحراجياً في سورية..والهدف الحصول على الفحم!” – B2B Syria
2. “في طرطوس فقط..100 حريق خلال أسبوع و810 حرائق في أقل من عام!!” – B2B Syria
3. Syrian MoLA official report.
4. “Из Латакии в Россию отправилось судно с первой партией цитрусовых” – TopWar
5. “Майкопская компания запустит в Сирии “экспортно-импортную деревню” – РБК
6. “وزير التجارة: تخصيص 3.5 مليار ليرة لشراء الحمضيات من الفلاحين وتسويقها” – Economy2Day
7, 17. “بعد أن تحوّل الإنتاج إلى فـائض..مزارعو الحمضيات يقتلعون الأشجار ويـزرعون أصنـافاً بديلة” – Economy2Day
8. “ارتفاع مستمر لأسعار السلع الغذائية في سورية خلال النصف الأول من عام 2018 .. والحكومة عاجزة عن ضبط الأسواق!!” – B2B Syria
9. “الفلاح هو الخاسر الوحيد…50 ليرة سعر كيلو البندورة بأسواق الهال وتكلفته على المزارع 125 ليرة!” – B2B Syria
10. “في درعا…البندورة بـ25 ليرة والبطاطا بـ60 ليرة للكيلو!” – B2B Syria
11. “أساليب مُبتكرة لتهريب المنتجات السورية..مثلاً البطاطا المهربة تغزو الأسواق اللبنانية!!” – B2B Syria
12. “Syria sees wheat production at 2.17 million tonnes for 2017” – Reuters
13. “نتاج سورية من القمح يتراجع إلى نحو 251 ألف طن حتى منتصف تموز الماضي” – B2B Syria
14. https://twitter.com/delfoo/status/1025659236091682816
15. “إكثار البذار توزع بذار قمح فاسدة فحصدها شعيراً وشوفاناً.. والحبوب اشترتها بـ 3 ليرات!” – B2B Syria
16. “تعويض المزارعين عن خسائر محاصيلهم بـ 1000 ليرة عن كل دونم!” – B2B Syria
18, 19. “في حماة.. ضبط فروج مثلج أمريكي المنشأ.. وحليب سنغافوري” – B2B Syria