The Syrian economy is in freefall. At the beginning of the uprising in March 2011, $1 was equivalent to approximately 50 Syrian Pounds. Today, it is equivalent to around 3,000 Syrian Pounds, a 600-fold increase over the past nine years. A state employee in Syria was paid what was equivalent to around $200 per month in March 2011 but that is now worth approximately $15-$20 a month. This is barely enough to cover basic groceries, and the collapse of the economy has been even more severe over the past 6 months with the Syrian Pound clearly weakened to the extent that salaries have become worthless.
The collapse of the economy under Bashar Al-Assad is due to a number of reasons, not least because the regime has transformed itself into a war economy, with the killing machine massacring its own people and using money meant for humanitarian aid to do so. According to Foreign Affairs, most of the $30 billion in UN-led humanitarian aid to Syria has been used by the regime to skirt sanctions and subsidise its war effort.
The regime is infamous for its deep-rooted corruption and cronyism led by the Assad family’s money man, Rami Makhlouf, who controlled a huge slice of the Syrian economy and essentially had a veto on any proposed business enterprises. Moreover, the threat and intimidation of the notorious Mukhabarat — secret police — led to a brain drain and the flight of working age young people as well as the emigration of wealthy business people and potential investors.
More recently, the Lebanese banking crisis has had an impact on Syria, as many Syrian businesses use Lebanese banks as a safe haven for their funds, and some businesses attached to the regime use it for money laundering. The economic problems faced by Iran, the main financial supporter of the Syrian regime, have increased recently as the coronavirus crisis has exacerbated the effect of sanctions.
The Syrian regime has been guided by corruption and poor economic decision-making, and has stopped the currency exchangers from operating and threatened their workers with imprisonment. Millions of dollars in remittances from expatriates to support their families in Syria have thus been lost to the economy. Local businesses have suffered as they can no longer import materials for pharmaceuticals, textiles and other industries vital to the Syrian economy. Iran and Russia have demanded repayment of their war loans because of their own financial crises. Ordinary Syrian citizens now have to pay grossly-inflated prices for locally produced food items, which shouldn’t be affected so badly by the exchange rate of the US Dollar.
Even before the implementation of America’s Caesar Syria Civilian Protection Act which will come into force next week introducing sanctions against the regime for alleged war crimes, over $500 billion is needed to rebuild the country. Unfortunately for the Assad regime, Russia is no longer able to act as its main financial patron and rebuild the country singlehandedly.
The Caesar Act demands the regime to stop bombarding civilians and put an end to siege warfare and using starvation as a weapon. It also demands the release of all political detainees and for humanitarian aid to be distributed freely with no restrictions, while allowing all refugees to return safely to their homes with no threat of repercussions. Moreover, the Act stipulates that war criminals should be held accountable and that Iranian militias should be made to leave Syria, making clear that human rights organisations should have the unrestricted rights to visit Syrian prisons. It ultimately states that Geneva Resolution 2254, which references the transitional political process, has to be implemented.
Fundamentally, the Caesar Act — named after Caesar, a former Syrian military photographer who fled at great personal risk in 2014 with 55,000 images proving the cruelty and brutality of Assad’s prisons — is not aimed at disadvantaging civilians in Syria. Its aims are the exact opposite, as it wants to prevent any country, non-state actor or company from financing or supporting the current regime in Damascus.
As a former Soviet intelligence agent who witnessed the dramatic collapse of the USSR, Russia’s Vladimir Putin has always dreamed of restoring Russia to its so called former glory and would like to set the stage for a new Yalta, in imitation of his Soviet, American and British predecessors who planned a new world order after the Second World War. The US, however, does not consider Russia to be its equal as a superpower in the way that President Franklin D Roosevelt viewed Premier Joseph Stalin. Nevertheless, even with its current indifference, the Syrian issue cannot be resolved without the US. The fact that Washington has pushed through the Caesar Act implies that its involvement is essential.
Russia has staked a larger slice of the Syrian pie, and due to the lack of payment from the Syrian regime, Moscow has started to take control of its ports (the port of Tartus, for example, has been taken on lease for 49 years) as well as its businesses as a form of repayment. Both Syriatel and SyrianAir are rumoured to be part of this.
Even without the implementation of the Caesar Act, the Assad regime is on the brink of economic collapse. Once the act is implemented, though, it is likely that the entire system will come crashing down. Assad cannot control his own economy. In recent days, protests have been erupting in areas of Syria, such as Suweida, which in nine years of conflict have never criticised the regime.
The Syrian people yearn for their freedom from Assad’s tyranny. They may not have much longer to wait. Despite the lack of military intervention and the belated Caesar Act, it is starting to look as if the regime will finally crumble under the weight of its own deadly incompetence.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.