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Saturday, 15 August 2020

Covid-19 and Syria’s economy

The spread of the coronavirus could have a potentially devastating impact on Syria’s already fragile economy, writes Bassel Oudat in Damascus

Bassel Oudat , Tuesday 14 Apr 2020
Covid-19 and Syria’s economy
Volunteers from the Violet organisation teach a child how to wash his hands properly at a camp for displaced Syrians, in the village of Kafr Yahmul, north of the northwestern Syrian city of Idlib (photo: AFP)
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Countries the world over are suffering from the Covid-19 coronavirus pandemic, which has impacted their social, political and economic activities, putting a serious strain on governments and financial resources.

This is also true for Syria, where the pandemic is expected to increase public debt and the country’s budget deficit and significantly raise inflation and unemployment rates. It will also directly impact every citizen due to shortages of basic goods, including bread.

Madad, a Syrian research centre, expects the coronavirus crisis to increase the country’s budget deficit due to a drop in government revenues, the suspension of an already weak public sector, the closure of domestic and foreign markets and a decrease in customs duties and tax revenues.

It said the government would be forced to slash taxes on the business sector, and there would be an increase in public spending even with limited available resources.

Many Syrians have begun stockpiling goods such as medical supplies, fuel and food. But their already limited financial situation due to the economic sanctions on the country has mostly only allowed them to store supplies for a few days, even without knowing if the state will be able to replenish goods supplied by countries that still export to Syria.

There are also concerns that there will be an increase in goods smuggling from neighbouring countries, especially Lebanon.

The pandemic is also impacting unemployment in Syria, which, according to Madad, is close to 50 per cent. After the partial or complete closures of the country’s markets, the economy has fallen into a deep recession, which in turn has raised unemployment to unprecedented rates.

The global Covid-19 pandemic thus severely threatens Syria’s already vulnerable economy, which is quickly deteriorating. The pro-regime press has been warning against major hikes in prices for food, and it is common to see crowds outside bakeries queueing for bread.

Crowds of people can also be seen waiting to receive basic food supplies distributed by relief agencies, with this going against the need for social distancing to halt the pandemic. According to the Conflict Research Programme at the London School of Economics in a report issued last month, social distancing will be difficult in Syria and 83 per cent of the population live below the poverty line.

Rising food prices have been covered extensively in the country’s media, with the newspaper Tishrin reporting a 25 per cent increase in prices in the south. According to the Arab Reform Initiative, an international NGO, in the report, “the immediate future is very bleak for the Syrian society and economy. Like in all other countries, it is likely that the economic and social impact of the Covid-19 pandemic will be tragic.”

This does not only apply to areas under regime control, but also to a worse degree in areas under opposition control in northwest Syria and those under Kurdish control in the northeast. These areas do not have substantive economies that are likely to survive the pandemic, and as the crisis escalates different parts of the country will come under severe pressure to avoid a humanitarian disaster caused by shortages of basic resources.

 Some businessmen partnered with the regime are trying to alleviate the economic problems, though many commentators say they are mostly advancing their own interests. Mohamed Hamshu, a businessman and MP, is distributing food even though he is under international sanctions as a partner of the regime.

According to the Syria Response Coordinators, a local opposition NGO, more than four million residents of northwest Syria have only 1,689 beds in hospitals, 243 ICU beds, 107 respirators and 32 quarantine units to serve them. In areas under Kurdish self-rule, there are only 150 respirators and 25 ICU beds for a population of nearly two million.

Syrian Finance Minister Maamoun Hamdan has announced that 100 billion Syrian lira ($77 million) has been earmarked to fund government measures in confronting the pandemic. The economic efforts are focused on supporting the import of basic goods and the health sector, but not those who have lost their jobs due to commercial shut-downs and the quarantine measures.

The Syrian opposition has countered that this money is nothing more than words to give the impression that the government has a plan to protect the people. It expects the government to borrow from countries such as Russia in order to survive.

Salem Ahmed, a Syrian economic expert, told Al-Ahram Weekly that “if the quarantine measures continue for three months, the Syrian economy will shrink by 50 per cent due to the coronavirus outbreak.”

He added that symptoms of economic recession in Syria have already started to emerge, and the impact of the coronavirus crisis on the government level will be deeper in the light of closures of its production capacities.

The Syrian regime is trying to take advantage of the crisis to rally domestic and international support to lift the sanctions on the country, even though these do not target the health sector.

The regime and pro-regime businesses have been subject to US and EU economic sanctions since 2011, and these have contributed to the ongoing recession. The regime wants the sanctions removed in order for the economy to recover, a goal Russia and other regime allies have been striving for over the last nine years but without success.

The Syrian people are faced with a fragile public healthcare system and an economic crisis that is pushing down their living standards, together with a regime that is trying to take advantage of the pandemic in order to see the sanctions lifted.

*A version of this article appears in print in the  16 April, 2020 edition of Al-Ahram Weekly

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