Civil war leaves Syrian economy, cities in ruins

By Zeina Karam

Associated Press

Published: Tuesday, Oct. 9 2012 1:00 p.m. MDT

On Sept. 29, a fire caused by the fighting swept through Aleppo's covered market, a UNESCO World Heritage site in the Old City, burning more than 500 shops in the narrow, vaulted passageways.

Some of the country's most significant historical sites have been turned into bases for soldiers and rebels, including historic citadels and Turkish bath houses known as hamams.

"It's a dirty war. Nobody is stopping for a minute to consider the damage that they are causing," said Haytham Manna, a prominent exiled Syrian opposition figure, likening the fighters on both sides to Taliban extremists who in 2001 smashed the 1,500-year-old Buddha statues in Bamiyan, Afghanistan.

"Who will pay these bills later on? Nobody," he said.

The civil war also has brought economic suffering — both from the destruction and from crippling sanctions imposed by the West against Assad's crackdown.

Vital sources of revenue, such as tourism, have dried up, and much of the economic squeeze has hit low-level merchants and businesses.

The country's currency has weakened — it now takes 68 Syrian pounds to buy a U.S. dollar, instead of 47 at the start of the conflict. The Syrian central bank says inflation reached 36 percent in June. The price of basic foodstuffs and fuel has increased by much more, straining household budgets and leaving many parts of the country facing severe shortages.

U.S. and European Union bans on oil imports, which went into effect this year, are estimated to be costing Syria about $400 million a month.

Before the uprising, the oil sector was a pillar of Syria's economy, with exports — mostly to Europe — bringing in $7 million to $8 million per day.

This income was a key to maintaining the $17 billion in foreign currency reserves that the government had accumulated from a brief oil boom in the 1990s and maintained until last year. The government has not said what currency reserves it has left, but the London-based Economic Intelligence Unit estimates it to be a little more than $4.5 billion.

Robert Powell, Middle East analyst for the EIU, said the economy alone probably won't bring down the Assad government in the near future.

"It may be another year or so before the economy falls off the precipice," he said.

Experts say the loss of Syria's currency reserves is the single most worrying aspect for the country's recovery prospects.

"That's like mortgaging Syria's future," said Jihad Yazigi, editor in chief of The Syria Report, an online economic and business digest. "By burning through the foreign reserves that took really a decade to accumulate, you are putting future Syrian governments, and future generations, without any reserves."

Added Yazigi: "When the war ends, where will the government get the money to finance the reconstruction? They will have to borrow huge amounts and in the end, the people who are going to repay the debt are the Syrian people."

Abdelbaset Sieda, head of the Syrian National Council opposition group, told a meeting of Syrian opposition representatives and diplomats in Berlin last month that the country would need a program similar to the post-World War II European reconstruction effort known as the Marshall Plan. The gathering, chaired by Germany and the United Arab Emirates, was designed to address how to prevent the collapse of basic services and infrastructure, and how to revive the economy in the post-Assad era.

Unlike neighboring Iraq, Syria lacks vast oil reserves that could help finance the reconstruction. Assad's regime has devastated the public finances and institutions to such an extent that Syria won't be able to rely immediately on oil revenues and taxes to rebuild, Sieda said.

German Foreign Minister Guido Westerwelle urged the international community to be ready to provide economic support, and another meeting is set for next month to bring together Syrian businessmen and foreign donors.

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