Over the past month, the Syrian pound has plummeted against foreign currencies to unprecedented levels. There are now 9,000 to 12,500 pounds per dollar, marking a 25 per cent loss in value within a single month.

The rapid erosion of the value of the pound has plunged Syrians already living in impoverished conditions into a deep abyss and made them unable to withstand any further deterioration in their circumstances.

The Syrian economy is now in its worst condition since the onset of the uprising against the regime led by Syrian President Bashar Al-Assad 12 years ago.

The Syrian pound has plummeted, inflation has surged, and public services have eroded or are non-existent. Industrial production has drastically declined, and oil production has plummeted.

Even in the capital Damascus, electricity is available for just a few hours a day, while prices have skyrocketed. These conditions pervade all of Syria, whether in areas under state or opposition control.

Wages and salaries in Syria are at their lowest levels in history and fail to cover even a fraction of the cost of living. Many Syrians are forced to work multiple jobs just to make ends meet, and a large proportion of the population now relies on humanitarian aid or remittances from relatives living abroad.

Since the onset of the uprising, the Syrian economy has been beset by a series of shocks, including the destruction of infrastructure as a result of the conflict in the country.

The displacement and flight of millions of Syrians, the spread of corruption and the emergence of warlords, the depletion of the country’s financial reserves to finance the war, and the imposition of US and European sanctions on the Syrian regime have led to successive economic difficulties.

The global economic downturn resulting from the Covid-19 pandemic, the catastrophic earthquake that struck northwestern Syria and Turkey in February this year, and the effects of the Russian war in Ukraine have all compounded the economic crisis.

All these factors have contributed to the spread of corruption at all levels and the proliferation of exploitation to an unprecedented degree.

There has been a near stop in oil shipments to Syria from Iran, which has been the primary source of fuel for Syria during the years of war. Kurdish forces supported by the US have taken control of the largest oil reserves in northeastern Syria, exacerbating the fuel crisis that has severely impacted electricity production and other essential services.

The Syrian regime has attributed the fuel shortage to Western sanctions and long delays in oil supplies.

UN Envoy to Syria Geir Pedersen has emphasised that the needs of the Syrian people have now reached their worst levels since the beginning of the conflict. He has called on the international community to urgently address the needs of the Syrian people before additional humanitarian disasters occur.

Pedersen has placed particular emphasis on opposition-controlled areas that lack resources and receive little or no support from the state.

Syrian political analyst Said Moqbel said that “the ongoing economic crisis in Syria may lead to chaos or sustained protests by the Syrian people… The economic collapse will continue, aid will diminish, and financial transfers from abroad will remain the only viable option for many people.”

“But these transfers are neither stable nor guaranteed. They are individual, not collective, solutions. There has to be a comprehensive political solution as the only way that can save Syria.”

Millions of displaced Syrians living in the northwest of the country in temporary camps and areas controlled by the regime are enduring a double catastrophe. The state is often hostile towards them, and the international community has failed to provide even a fraction of their needs.

The aid has been further diminished due to the ongoing conflict in Ukraine and Russia’s recent use of its veto at the UN Security Council to prevent aid from crossing the border from Turkey into northwestern Syria.

Humanitarian organisations have warned of the dire consequences of cutting off this aid, painting a bleak picture of the humanitarian crisis that could ensue.

In addition to the challenges posed by the conflict and the lack of international aid, the displaced Syrians also face winter storms, earthquakes, and other hazards. These have been compounded by a scarcity of job opportunities, high prices, and other economic problems, making it increasingly difficult for people to sustain their daily lives.

The earthquake-affected areas were home to three million internally displaced persons, or 50 per cent of the total number of internally displaced people in Syria.

Syrian commentator Radwan Ziada, head of the Arab Centre for Research and Policy Studies in Washington, said that “the risks to growth in Syria are significant and tend to be on the negative side. The Syrian pound is not supported by anything that can prevent it from free fall against the dollar.”

“Foreign currency reserves in the Syrian Central Bank reportedly collapsed from $17 billion to less than $70 million in 2019, although these numbers remain unofficial. The collapse of tax revenues has compounded the situation, contributing to the free fall of the pound. Unless there is a process of political transition, the situation is likely to continue to worsen.”

According to UN reports, more than 84 per cent of Syrians now live below the poverty line and Syria’s oil revenues are largely in the hands of the US, which redirects them to the Kurdish-led Syrian Democratic Forces (SDF).

As a result, the Syrian regime has become an oil-importer after exporting the equivalent of 150,000 barrels per day in 2015, meaning that all the regime’s revenues have drastically diminished.

The US and European sanctions imposed on Syria have had a significant economic impact, particularly the US Caesar Act. The Syrian regime has accused the West of waging an economic war against Syria through these sanctions, while the US maintains that they are intended to hold those responsible for war crimes accountable and to deter the Syrian regime from committing further atrocities.

The US believes that the economic crisis in Syria may force the regime to comply with UN Security Council Resolution 2254, which calls for comprehensive political reforms.

To increase the pressure on the Syrian government, Washington issued the Captagon Act at the end of last year, which holds officials of the Syrian regime accountable for any involvement in the Captagon trade and aims to deter them from profiting from it. Captagon is an amphetamine-like drug.

It is expected that the Caesar Act will be amended to give the US the right to impose restrictive measures against organisations and individuals who help the Syrian government directly or indirectly, leading to further deterioration of the economic situation in Syria.

The Syrian opposition is unable to influence the economic situation and is itself affected by the crisis without having the resources to address it. Despite differences in their positions regarding the lifting of sanctions and the blockade imposed on the Syrian government, all the country’s opposition groups agree that a political solution is essential to improving the economic situation.

The political track is the only way to inject reconstruction funds into the country, halt the catastrophic economic collapse, and restore the economy, they say.

However, they also fear that their calls will go unheeded and that the international community may not care enough about the situation in Syria and the plight of millions of Syrians to intervene.

* A version of this article appears in print in the 28 July, 2023 edition of Al-Ahram Weekly