'A Slow Death' How the War Is Destroying Syria's Economy

Food is scarce in Syria, the currency is collapsing and entire industries have come to a standstill. But not even economic suffering brought on by the civil war will likely help end it.


By in Beirut

It's a sector that ought to be booming. Businessman Wissam* works in hospital supplies. He sells bandages, needles and disinfectants -- all products for which there is a great need in the increasingly bloody Syrian civil war. But unfortunately, Wissam has little opportunity to sell his wares.

"More than 50 percent of the Syrian healthcare system's infrastructure has been destroyed," says the man in his mid 40s. Of the 75 state-run hospitals, just 30 remain in operation. In the embattled city of Homs, just one of 20 hospitals remains open. The Al-Kindi Hospital in Aleppo, once the largest and most modern medical facility in the country, is now a pile of ash.

Wissam is matter-of-fact about the situation. The destruction of the hospitals is widespread, he says, and those who are injured or sick receive hardly any medical care. The business is "dying a slow death," he adds.

While the world debates what its reaction should be to what was likely a chemical weapons attack in Syria last week, and the United States positions its destroyers off the country's coast, much of the focus has been on the humanitarian crisis caused by two-and-a-half years of war. But the fighting has also crippled Syria's economy, which could potentially be a factor in ending the turmoil.

For this reason, facts and figures about the economic impact of the war are state secrets. There are, however, indications of how precarious the situation may be, and these reflect what Wissam says about the collapse of the health sector.

Desperation and Suffering

Experts estimate that some 75 percent of the production facilities in Aleppo, Syria's commercial capital, are no longer operating. Some of the factories were bombed, while others burned down or have been taken over as rebel strongholds. Others can't even be reached due to the precarious security situation in the surrounding area.

Transport difficulties have hit the agricultural sector too. Farmers have been unable to till their fields or sell their crops. Food is becoming scarce and increasingly expensive. The Syrian people are suffering, and their rage and desperation are growing. In response, President Bashar Assad's regime in Damascus is importing grain, rice and sugar.

The economic sanctions imposed by the European Union and others have also hit Syria hard. The country used to sell some 95 percent of the oil it produced to Europe. That demand has now collapsed. Only a handful of countries now buy Syria's oil, and at significantly reduced prices.

Countries including Iran, China and Russia are supporting the currency, according to Deputy Economy Minister Kadri Jamil, but that hasn't stopped the Syrian pound from depreciating by around a third.

All this is hurting the economy, although no one knows the extent of the damage. Estimates differ on the extent of the contraction of Syria's GDP last year. Some say two percent, others 10 percent.

Regime Saving Money

According to Reuters, the regime has been trying to access funds held in accounts abroad that were frozen as a result of sanctions. That could be a sign of desperation.

Before the civil war, Syria's foreign currency reserves had been estimated at some €13.5 billion ($18.1 billion). But it's unclear if that money is running out. Rumors suggest the regime has access to secret reserves amounting to billions. According to Jamil, Tehran has granted Damascus unlimited credit for food and oil products.

The regime also appears to be saving on expenditures. Assad's government has one to two million public employees whose salaries have become cheaper to pay. That's because oil is traditionally paid for in dollars, and the depreciation of the Syrian pound means the government can sell less oil to obtain the same pound-denominated revenues.

The government is also saving part of its usual subsidy outlays. Before the war, Damascus spent some €6 billion per year on subsidizing goods like cooking gas, fuel and electricity to make them cheaper to buy. That sum is likely to have dropped sharply because hardly any of those products are being supplied to areas that are controlled or made inaccessible by the rebels.

Syrian businesspeople don't think the sanctions will speed up the end of the war. "In Iraq, sanctions destroyed economic life for 13 years," says Wissam. "But Saddam Hussein managed to stay in power. We're not even halfway through this war."

Criminals are the profiteers of this economic erosion. A black market economy has grown in territories controlled by the opposition. "Regime officers take bribes for protecting certain city districts or villages," said Wissam. Networks of smugglers are getting rich from selling groceries, fuel and food, he added.

*Name changed at the source's request.


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thomas 08/27/2013
1. You can no more win a war than you can win an earthquake.
The world seems to never learn...
fairleft 08/27/2013
2. The West knows what it is doing
It knows, for example, that sanctions destroy economies but don't generate regime change. Maybe the intention, then, is to destroy the Syrian economy.
peskyvera 08/27/2013
3. optional
We are hearing the same pack of lies we heard before Iraq was attacked. The Western 'Christian' culture in it's relentless march. Never mind all the rubble, the misery, the displaced people, the children...We are a despicable lot. Who sold the chemical weapons? The CIA? Just as it provided chemical weapons to Iraq in it's war against Iran? World War III in the making?
greanknight 08/27/2013
4. If the Arab League asks us in, and if we agree, then go in
1. If the Arab League asks us to go in, we should go in. No question about that. If the UN General Assembly asks us to go in we should go in too. Again, no question about that. This would not be us following their orders, this would be us deciding that, given 22 diverse leaders in the region asking for miltary aid for humanitarian purposes we will render it. 2. The USA, UK, France, Russia and other colonial powers and former colonial powers have zero moral authority on their own to order military intervention for humanitarian reasons -- they're/we're all major war mongering states and they'd/we'd all reject outside intervention when they/we cause hardship to civilians. (The USA and UK would be very unhappy if NATO intervened to stop the Attack on Iraq, just to give a recent example.) Therefore the UN General Security Council, whose veto wielding members include those current and former colonial powers, lacks the moral authority to order military intervention for humanitarian reasons. Same with NATO lacking the moral authority to request or order military intervention for humanitarian purposes, for the same reasons. 3. We should stop taking orders from despots, including the Tony Blair and George W Bush home-grown warmongering colonial power kind. But if invited in by despots who are not war mongers, and if our war mongering despots agree the military aid for humanitarian purposes is justified, then, we can decide on our own to go in at their invitation. Them inviting and us accepting is sort of an extra external opinion that going in is worth the casualties of our soldiers, their soldiers and our civilians. It is not just their despotic leaders and not just our war mongering leaders, but both agreeing military intervention for humanitairan purposes is justified. If it is just us, or just them, wanting military intervention, then no, don't go in.
greanknight 08/27/2013
5. About the Arab League
4. If we do intervene it would be really nice if we were intervening on the side of democracy, letting Syrians elect whomever they want to form their government. A democracy is a country whose government is elected by that country's people to satisfy the needs and desires of that other country. A country whose leadership is selected to satisfy the needs of US voters is only a democracy if the people born in that country are US citizens. 5. About the Arab League. It seems to me to arguably be as good an international body as we can expect these days. Its rules are, one state, one vote, regardless of physical size or population. So it is not dominated by a single powerful country. And it includes both Shia and Sunni Muslim states. Members are: Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanonn, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, UAE, Yemen
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