Syrian Arab Republic: How Bashar Al-Assad Ruined A State

Executive Summary

In examining the political economy of Syria, my first recommendation to ensure economic stability is to end the civil war. At this point, no political factions in Syria are making any changes to establish an end to the civil unrest. Most likely, another country will have to intervene in ending this war. This will clear the political field and allow new economic models to be employed. Clearly, a capitalist model would bring the most economic stability and growth to the country. Syria is not currently tapping into its wealth of crude oil, which could stabilize the country’s political and economic standing. First, the government would need to subsidize the existing oil and agriculture production to stimulate economic growth. Trade agreements need to be formed and new markets in electronics and automobiles need to be created to decrease the number of products being imported. Creating and expanding new markets in Syria will create new jobs and bring down the unemployment rate. In addition, every sector needs to be privatized so the government doesn’t have control over Syria’s industries. As these economic reforms are implemented, Syria’s GDP should rise, wage disparities should decrease, inflation rates should normalize, and Syria could become a global economic power.

International Political Economy of the Syrian Arab Republic

Syria, officially known as the Syrian Arab Republic, is a Middle Eastern country mired in a history of political and economic upheaval. In 1963, Syria embraced Socialism along with the Arab Socialist Ba’ath Party, wanting an economy based on Marxism and a society based on a unified Arab world. In 1970, Ba’athist General Hafez al-Assad seized control over Syria in a military coup, where Syria has maintained an al-Assad autocracy ever since. Bashar al-Assad was elected president after his father’s death in 2000. There is controversy over the legitimacy of the Syrian presidential elections and western states consider Syria to be an autocracy, not a democracy. Bashar al-Assad’s contribution to Syria’s economic platform was to accelerate his father’s neoliberal reforms which contributed to the country’s increase in unemployment, poverty, and income disparity. Despite the Ba’athist party’s socialist leanings and Assad’s neoliberal economic reforms, the country’s civil war has devastated the country’s infrastructure and economic stability.

Al-Assad’s economic reforms are believed to be attributed to the outbreak of the Syrian Civil War in 2011. Assad opponents want political and economic reforms. However, neither Syria’s president or opposing political factions are doing anything to stabilize the economy in the region. The economics, like the politics of the region have broken down and an unusual war driven political-economic system has evolved. Nazih Richani postulates that the Syrian civil war is creating a political and economic war system that will trap the country indefinitely in war. To further complicate Syria’s economic problems, before 2011, there was a four-year drought that Richani reports affected 60% of agricultural fields and killed 85% of the livestock, affecting almost half of the entire population of Syria. According to Syria’s Minister of Economy from 2005-2011, Abdulla al Dardari, the Ba’ath Party was responsible for blocking any aid from reaching the rural Syrians. Dardari’s cabinet was responsible for eliminating government subsidies to agricultural production. The drought, lack of government aid, and useless economic reforms after the four-year drought is believed to be the instigation of the uprising of radical Islamic insurgents inciting war. Syria does not currently have unified state economic goals. The country is being torn apart by individuals who are getting rich on the spoils of war, contributing to further decline in the country’s economy. Richani’s theory that Syria will remain a war-torn state indefinitely is believable, because neither side has economic motivations to end the war and unite the country.

According to The Century Foundation, Syria’s civil war has created a new class of elites, who are getting rich on the spoils of the Syrian Civil War (2017). In 1963, the emergence of the Ba’ath Party, led to the disbursement of monopolies and large aggregates of wealth and land. From the 1980’s, the Ba’ath Party was responsible for an economic stratification that persisted until Bashar al-Assad purposed a “social market economy”. The Century Foundation 2017 claims that the political goal of these economic proposals was to assure Assad’s Authoritarian rule and increase personal wealth (2017). Instead of Assad stimulating Syria’s economy with his Marketization economic approach, unemployment increased, wages stalled, and living standards diminished. The Syrian Center for Political Research (SCPR) reports a rapid economic decline across every sector of Syria. They report on depletions of household assets, hyperinflation, and an increased need on armed, militia groups for sources of jobs and basic goods which are necessary for survival. The SCPR also reports on the level of poverty spreading throughout the country and that Syria has dropped from 113th in the world to 173rd out of 187 countries. International sanctions imposed on Syria since 2011, are considered the most comprehensive sanctions imposed outside of the United Nations and include a complete arms embargo, restrictions on all imports of Syrian crude oil products, bans on all forms of financial support, telecommunication equipment, and any goods that could be used for social/political repression. Sanctions have not been successful in curtailing the civil war or the humanitarian atrocities.

Syria is the only country in the Eastern Mediterranean that can produce crude oil, making the country rich in natural resources, however the government has lost control of the territories containing the rich resource. Militant Islamic State Groups within Syria control the production and sales of the region’s crude oil.

Before the civil war, it is believed that Syria could produce over 170 barrels of crude oil a day, but by 2019 its estimated that Syria only produced 16 barrels a day. Syria has also exported sheep, goats, tomatoes, sugar, corn, rice, wheat, and tobacco. Syria is a country that has currently and historically imported more than they export.

Syria used to have trade agreements with the EU concerning crude oil, and precious metals. The civil war has had a significant impact on bilateral trade with Syria. Syria currently exports the most with Jordan, Turkey, Egypt, and Spain. Syria’s top importing countries are China, South Korea, Turkey, Lebanon, and Egypt. This is a country that had to import 4.4 billion dollars’ worth of products in 2017, but only exported 622 million dollars in products. This is a huge trade deficit. This is not a country that possesses multilateral trade agreements. In fact, the US and UN has imposed multiple sanctions on Syria. The US government does not support Bashar al-Assad and as of September 2019, the US government has warned all foreign investors in all countries, not to do business with Syria.

The economic figures coming out of Syria in the last decade are clear indicators of the region’s economic instability. Between 2013 and 2016, Syria’s GDP per capita decreased from $1379 to $709, as compared to the US’s GDP in 2016 was $57,588. Syria’s unemployment rate over the past several years has varied from 8.031% to 8.449%, as opposed to the United States’ in 2017 which was about 4%. Between 2011 and 2013, the inflation rate in Syria jumped from 3.579% to 50.206%. As of May 2016, Issa states that Syria’s inflation is already at 95% and could be expected to rise another 200-300% (2016).

Recommendations

Before Syria can hope to have any sort of stable economy, a stable political and social climate has to be created. Importing, exporting, trade agreements, inflation rates, etc. cannot be established and maintained in the midst of a civil war. While it’s unlikely that Syria will be able to recover and rebuild without outside help, there are many political/economic philosophies which could help to rebuild the country. If Syria was to become a Liberal economic state, the following recommendations should be followed. First, a more free/open economy has to be allowed. Trade agreements with other countries must be established. A collaborative trade with other countries could ensure economic success and stability for all countries involved in trade with each other. If Syria were to establish a Realist Economy, a radical philosophical shift would have to occur first. The government needs to be wholly invested on helping the people of Syria, not Arabs, ISIS, or Al-Qaeda. The government would need to subsidize different sectors within Syria. The government would need to start with subsidizing farmers and herders, then the oil industry. If Syria were to attempt to establish another Marxist economy, the government needs to have complete control of all businesses. There should be no privatization, with the government controlling all means of production. If Syria was to incorporate a neo-realism economy, Multi-National Corporations (MNCs) would play a role in the economy. For example, Syria’s airline, Syria Air, would need to be subsidized and stabilized to strengthen the company until it could become a Syrian MNC. The Syrian government could benefit by working with other countries to repair the internal damage caused by the civil war, but these aiding countries should not benefit with Syria. An additional but unlikely philosophy to be adopted by Syria is feminism. A feminist Syria would have to be completely revolutionized with the equality of women in all aspects of the country. The adoption of this philosophy would also require a complete restructuring of all the region’s religious and societal norms, making the application of this philosophy unlikely in Syria.

Syria’s best economic option would be a capitalist economy. First, the government would need to subsidize in all economic sectors (oil, livestock, and agriculture). This will stimulate economic growth, and produce more products, leading to the increase of exportation and increasing GDP. Bilateral trade agreements need to be formulated. As trade increases between Syria and other countries, more products will be exported, increasing the GDP all involved countries. New markets in electronics and automobiles need to be created to decrease the number of products being imported. Creating and expanding new markets in Syria will create new jobs and bring down the unemployment rate. In addition, every sector needs to be privatized so the government doesn’t have control over production, costs, wages, and jobs. It’s believed that privatization increases financial and operating performance of companies and encourages market competition. If Syria is to ever recover in an economic sense, government officials cannot incorporate a realist economic philosophy, because it’s about Syria being able to compete economically with other countries. Syria is currently too poor to compete globally with other countries. In order for Syria to survive, and prosper it needs the economic support of economically stable countries to survive. If Syria is ever able to establish economic stability and prosperity, it can adopt a more realist viewpoint when they are financially independent. Until this time, Syria needs to be more liberal by working with other countries. Finally, when there is a stable government in Syria, hopefully officials will cease trying to adopt a Socialist economy because it’s been failing the country since the 1960’s.

References

1. The Century Foundation. The Economics of War and Peace in Syria. March 24, 2017. https://tcf.org/content/report/economics-war-peace-syria/?agreed=1.
2. Issa, Philip. 'Syrian Central Bank Exchange Rate Hits Record High.' Business Insider. Last modified May 10, 2016. https://www.businessinsider.com/ap-syrian-central-bank-exchange-rate-hits-record-high-2016-5.
3. Richani, Nazih. 'The Political Economy and Complex Interdependency of the War System in Syria.' Civil Wars 18, no. 1 (2016), 45-68. doi:10.1080/13698249.2016.1144495.
4. 'Syria GDP - Gross Domestic Product 2017.' Countryeconomy.com. Accessed September 18, 2019.https://countryeconomy.com/gdp/syria.
5. The World Bank. “Unemployment, total (% of total labor force).” Accesed September 18, 2019a.https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?end=2018&locations=SY&start=1996.
6. The World Bank. 'Inflation, Consumer Prices (annual %).' World Bank Open Data | Data. Accessed September 18, 2019b. https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG.