Beyond Cronyism, Beyond Violence: Reconstructing the Syrian Economy

This image from Aleppo Media Center, authenticated by the Associated Press, shows damaged buildings in Syria's former economic heartland.

This image from Aleppo Media Center, authenticated by the Associated Press, shows damaged buildings in Syria’s former economic heartland.

The stories coming out of Syria nowadays paint a picture of an economy taken over by violence, in which legitimate private-sector business activity has nearly ground to a halt. Rival groups raid a textile factory, promising protection in return for money; the factory is burned down when the two groups start fighting. The owner of a brake-lining plant does not know what happened to his machinery after it was looted—he only knows that his “entire wealth and life” have been dismantled. No longer able to rely on legal remedies, some businesspeople flee with their capital to countries such as Egypt, where they may remain even after the war has ended.

The statistics reported by the Syrian Center for Policy Research confirm this grim picture. Economic loss totals $103.1 billion. Almost half the population is unemployed, with 2.33 million job opportunities lost since the beginning of the conflict. The price of consumer goods has tripled. Energy prices continue to rise while private consumption and investment continue to fall. Sanctions have chopped oil exports in half, and the decreasing value of the Syrian pound has not led to an increase in non-oil exports. Manufacturing and mining barely contribute to GDP (just 4 percent), and textile factories—located largely in areas that have witnessed the most fighting—have closed by the hundreds, or possibly even thousands. A Byblos bank report estimates that 75 percent of production facilities in Aleppo are no longer operable.

It can be easy to lose sight of the importance of economic recovery amidst the urgent need to stop the fighting. But rebuilding the Syrian economy will be crucial to any long-term peace and reconstruction efforts, as will the manner in which it is rebuilt.

Before 2011, economic benefits mainly accrued to a small group of well-connected elites. Smaller enterprises could hardly expand, thwarted by contradictory laws, a weak financial system, corruption, and limited export capacity. Future reconstruction efforts should focus on rebuilding Syria’s economy in a way that replaces crony capitalism with a private sector in which all citizens have the opportunity to participate and thrive. Reforms that increase competition and bolster small- and medium-sized enterprises will stimulate economic growth and give more citizens a stake in the country’s economy and future.

The private sector should play an active role in reforming the Syrian economy once the conflict ends. To this end, the Syrian Economic Forum (SEF), a CIPE partner, has already begun taking steps to organize the private sector to advocate for necessary economic reforms.

In its First Annual Conference in Gaziantep, Turkey, SEF gathered Syrian businesspeople from inside the country and abroad to discuss recommendations for rehabilitating factories, amending investment laws, and improving educational opportunities for Syria’s youth. While it will certainly take a long time before the dire economic situation in Syria can even begin to improve, efforts such as SEF’s will help to ensure a future democratic Syria with an economy that offers all Syrian citizens the opportunity to achieve welfare and prosperity.

Peako Jenkins is a Public Service Initiative Fellow for the Middle East & North Africa at CIPE.

Comments are closed.