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Anger and confusion erupt over the Syrian government’s decision to ration bread through the smart card

In recent months, the smart card system has been expanded to include a wider range of subsidized goods, namely fuel, rice, tea, and sugar.

21 April 2020

AMMAN — The Syrian government will begin distributing and selling rationed quantities of subsidized bread through the smart card system in Damascus and Reef Dimashq.

According to Dr. Atef al-Naddaf, the Minister for Internal Trade and Consumer Protection, the sale of bread on the smart card system is being rolled out in Damascus and its suburbs, where the government has located 473 authorized sellers, 108 bakeries, and 86 grocery stores. The Ministry plans to extend this practice to all citizens in all the regime-held provinces of Syria. 

There are two types of bread in Syria, both of differing qualities. The regular subsidized bread is sold by public and private bakeries who receive support from the government in terms of flour and diesel provisions. Each bag costs 50 Syrian pounds (SYP)—or $0.04 using today’s black market exchange rate—but is considered to be of poor quality.

On the other hand, “tourist bread,” which was widespread before the uprisings of 2011, is known for its white color and is considered to be of much higher quality. However, it is known as “tourist bread” because of its high price—in some areas, a bag costs as much as SYP 700 ($0.54) unofficially. The pro-government newspaper, al-Watan, reported last week that the Ministry of Internal Trade and Consumer Protection is considering raising the official price of “tourist bread” from SYP 300 ($0.23) to SYP 350 ($0.27).  

Anger at the citizen level
In recent months, the smart card system has been expanded to include a wider range of subsidized goods, namely fuel, rice, tea, and sugar. Although the smart card system sustained widespread criticism when it began selling these goods in early February, the decision to sell bread on the very same system is unprecedented. It has resulted in intense backlash on social media, especially among government supporters. 

For example, Ain al-Janoub, a small pro-government media outlet, published a post on April 9, appealing to Bashar al-Assad himself to improve the situation for those living in poverty. “Is it reasonable that loaves of our bread will become part of the (stupid) smart card?” the post asks. 

It goes on to describe those responsible for the situation as “masters of stealing the country, looting, and taking advantage of their position.” While it is never clearly defined who exactly the anger is directed at, it is assumed that this includes traders, corrupt government officials, importers, and corrupt businessmen. “We say every day that sayyid al-watan (the master of the country, Bashar al-Assad) will hold them accountable,” the post adds, ending with the hashtag #BreadIsARedLine.

Similarly, on April 1, a pro-government Facebook page run from Latakia echoed a similar sentiment, writing that “there are invisible hands exploiting these difficult circumstances and trying to pass a decision to include bread on the stupid card.” 

The personal appeals to Assad from government supporters, especially when criticizing government policy, is by no means new. In September 2019, a song about corrupt businessmen such as Samer Foz, Rami Makhlouf, Abu Ali Khodr, and the Qaterji brothers, circulated widely among pro-government activists. Ironically sang to the tune of the Italian anti-fascist anthem, Bella Ciao, the song ends with appeals to Assad, asking where he is and calling for his help. 

As Joseph Daher, a scholar of political economy from Lausanne University, commented on the song, “this reminds us of a saying we heard a lot at the beginning of the Syrian revolution: Bashar is good, those around him are bad.”

Confusion at the highest levels
Contradictory statements from government officials are not assuaging fears about bread shortages and the smart card system either. 

In March, Takamol Holdings—the private company that runs the smart card—closed its offices due to the coronavirus pandemic, making it more difficult for citizens to register for the card and have access to subsidized goods. However, on March 19, a source told Al-Watan newspaper that this was just a “temporary measure and would not exceed a week.” 

Nonetheless, rumors circulated that the sale of bread on the smart card system would be canceled and distributed through an alternate method. These rumors prompted Rifat Suleiman, the Deputy Minister for Internal Trade and Consumer Protection, to clarify on April 11 that “news about the cancellation of the smart card system for the distribution of bread is false.” He went on to say that “it is being continued in this experimental phase whereby bakeries have been distributing material to authorized sellers through the smart card in Damascus and Reef Dimashq.”

However, two days later, al-Naddaf told journalists that “each authorized seller can sell 10% of its quantity to families or individuals that are not on the smart card system after they register their names and national ID number.” He also stated that “every citizen has the right to obtain necessary amounts of bread through the smart card system” and that the price of bread will be SYP 50 for a bag of bread and SYP 10 for delivery.” According to the pro-opposition website, Iqtisad, the bags of bread will come in two sizes—a bag of 7 loaves for SYP 50 ($0.04) and a bag of 11 loaves for SYP 100 ($0.08)—with a maximum of four bags for each family per day. 

Most importantly, al-Naddaf announced that Takamol Holdings would no longer be responsible for administering the smart card and instead would be administered by Mahroukat—the state company responsible for distributing fuel and part of the Ministry of Petroleum and Mineral Resources.

However, less than two weeks earlier, on March 19, a source from Mahroukat told Al-Watan that “there is no alternative to Takamol,” adding that “there is no possibility of Mahroukat performing the role of Takamol in case citizens have to modify data on their smart card.”  

Uncertainty around Takamol Holdings
Takamol Holdings is a private company that is responsible for managing the smart card system. In fact, the system itself is a joint venture between the Ministry of Petroleum and Mineral Resources and Takamol Holdings. 

It is alleged that Takamol Holdings is owned by Muhannad al-Dabbagh, Asma al-Assad’s cousin. But while thirty percent of the shares are owned by al-Dabbagh, the largest stakeholders, according to Iqtisad, is Asma al-Assad’s brother—although it does not specify which brother.

Takamol is estimated to receive SYP 400 ($0.31) for each card issued, meaning that the company has received SYP 1.2 billion (almost $1 million) from the three million cards registered. The company also allegedly receives SYP 100 ($0.08) each time the card is used to fill every family’s allocation of diesel and cooking gas. In terms of bread, Takamol receives SYP 5 ($0.004) for each bundle of bread purchased (approximately 10% of each sale).

However, the statements from the Ministry for Internal Trade and Consumer Protection raise serious questions about the government’s relationship with Takamol. There appear to be three possible scenarios that emerge from this statement. 

First, Takamol might not be owned by al-Dabbagh or any individual close to the Assad regime because the government—and this ministry in particular—is unlikely to make such a confrontational move without facing serious consequences. 

Second, the statement may reflect a growing conflict within the government about how best to manage the multi-layered economic and public health crisis. That the government has not been unified in its response to the coronavirus pandemic suggests that inter-governmental disputes and fractures may be increasingly common in the future as the pandemic worsens. So far, Syria has registered only 39 confirmed cases of the virus, including three deaths and five recoveries, although real numbers are believed to be higher.

Third, the dissolution of Takamol may be part of a concerted effort to scapegoat the company for the government’s failure to distribute essential goods. With public outrage directed toward the smart card, the government may be trying to imply that Takamol has been responsible for the short supply of essential goods, rather than the Syrian state.

Underlying problems continue unabated
Regardless of the contradictory statements and continual blame-game, the underlying problem of wheat supplies continues to plague Syria’s ability to produce and sell enough bread.

In late February, the Syrian government issued a tender to import wheat but failed to complete purchases from its previous offers, suggesting that it is facing difficulties financing its imports. With Lebanese banks embroiled in a severe financial crisis, Syrian traders have been unable to access dollar accounts used to finance imports, leading to a rapid decrease in the value of the Syrian pound. As of today, the black market rate stands at SYP 1285 to the dollar, the main intermediary rate stands at SYP 704 to the dollar, and the official—but limited—rate stands at SYP 438 to the dollar. 

Although the Syrian Central Bank has made significant steps to address the deteriorating exchange rate, it has been unable to solve Syria’s underlying problem in accumulating foreign currency. With the country’s manufacturing sector having been decimated and a tourism sector that will be hard hit by the coronavirus pandemic, there is very little in the way of generating foreign currency reserves. Moreover, with the majority of the country’s oil fields remaining outside the control of the government, badly-needed dollars have been even harder to come by.

Most importantly, however, is the issue of domestic wheat supplies. In the 1990s and early 2000s, Syrian agriculture was relatively protected, with the government offering price support, agricultural extensions services, and tariffs. However, following years of neoliberal economic policy that saw the country flooded with cheap imports from neighboring countries, agricultural production of wheat steadily declined and reliance on imports increased. Between 2005 and 2008, 44% of the agricultural workforce left the agricultural sector to either work in another sector or were left unemployed.

The conflict further exacerbated this trend, forcing Syria to import more than two million tons of wheat from Russia, Eastern Europe and the Black Sea region. Although Syria produced 2.2 million tons of wheat domestically in 2019—a substantial increase from the previous year—it was still 50% less than pre-war production.

While Russia sent 25,000 tons of wheat to Syria, arriving in Latakia on April 3, this amount is clearly a temporary stop-gap measure that does little to solve the underlying issues of domestic wheat production and economic decline. 

Can the government uphold its basic duties?
The government’s decision to test the bread on the smart card system seems to have angered even its most zealous supporters. 

In the past year, the government has seen unrest in areas under its control such as Suwayda and Daraa. Even in Latakia, demonstrations broke out as residents protested the government’s decision to move the vegetable market.  

In coastal regions, thousands have sacrificed their lives defending the regime over the course of the nine-year conflict. If the government is unable to deliver on basic goods, its legitimacy will be further challenged across the country.

While the smart card may just be a footnote in Syria’s recent history, the crucial question of whether the government can deliver on citizens’ basic needs remains unanswered in the eyes of many Syrians.

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