Empty promises and unrelenting economic crisis: Syrians leave 2022 behind, expecting worse
As 2022 draws to a close, Syrians across the country’s four areas of control are grappling with worsening economic conditions and shortages of essential goods and services—with no end in sight.
28 December 2022
PARIS — Syrians are greeting the new year, 2023, while in the grips of an economic crisis worse than ever before. Across the country’s four areas of influence—held by the Syrian regime, Hayat Tahrir al-Sham (HTS) and the Syrian National Army (SNA) in the northwest and the Syrian Democratic Forces (SDF) in the northeast—Syrians face the worsening crisis and its repercussions: the rising cost and scarcity of goods and services, and the devaluation of the national currency.
If past years weighed heavily on Syrians, then in 2022 “the economic crisis and the approach that aggravates it got out of control,” said Manaf Quman, an economics researcher at the Omran Center for Strategic Studies. The regime and de facto authorities in Syria “haven’t taken measures that help alleviate the severity of the cost of living crises for residents—from controlling prices to securing essential items and healthcare.”
Damascus offers empty promises and wholesale disappointments
At the start of 2022, the Syrian regime’s Minister of Internal Trade and Consumer Protection, Amr Salem, promised Syrians that the ministry would start “the new year with a modern action plan and new staff, guided by serving citizens in word and deed.”
At the time, the exchange rate of the Syrian pound in the parallel market was around SYP 3,000 to the United States (US) dollar. Today, it is around SYP 6,000.
Salem’s promises came four months after he pledged, in September 2021, to adopt a new mechanism for selling subsidized goods through Damascus’ electronic “smart card” system in place since 2019. Salem proposed to sell sugar, tea and vegetable oil through the smart card without subsidies, at prices competitive with the black market, in exchange for increasing the amount of bread allocated to families of three or more members. But all the promises were not fulfilled.
As empty promises come and go, the average monthly cost of living for a family of five in Syria stands at more than SYP 3.5 million ($500 according to the current parallel market exchange rate of SYP 7,000 to the dollar), with the minimum cost of living at SYP 2.23 million ($318). In September 2021, the average was SYP 1.85 million for a family of the same size, with a lower limit of SYP 1.15 million, according to the Kassioun newspaper affiliated with the People’s Will Party.
In contrast, the average salary of a public sector employee in Syria is around SYP 100,000 ($14.25) per month. Some 40 percent of Syrian families rely on remittances sent by relatives who are refugees or expatriates abroad, according to the Damascus government’s former Minister of Economy, Lamia Assi.
While Syrians try to make a living, relying on subsidized goods or foreign remittances, Damascus excluded an estimated 600,000 families from subsidies through the government support package this past February. Prime Minister Hussein Arnous justified the move at the time, saying “the state can no longer sustain the same type of support that has existed for the past decades.” Support for some of the excluded families was later returned.
In response to the weak economy, the head of the Syrian regime’s Commission of Financial Markets and Securities, Abed Fadleih, told pro-Damascus Sham FM radio in July that he hoped to introduce an SYP 10,000 bill. Fadleih denied that introducing large banknotes would spark further inflation.
This year, as one of the results of Syria’s economic upheaval, regime areas saw a more severe electricity crisis than ever before. Rationing in some provinces reached six-to-seven hours of power cuts, punctuated by 15 minutes of electricity. Meanwhile, in June, Syrian President Bashar al-Assad promised to improve electricity in 2022, citing “its importance and role in improving production.”
Assad’s promises paved the way for Law No. 41 of 2022, which he issued in October. The law amended some of the provisions of Syria’s Electricity Law No. 32 of 2010 and opened the electricity sector to private investments. Under the new law, the Syrian Minister of Electricity may grant licenses for investors to implement conventional electricity generation projects.
Investors will not be obligated to purchase electricity, provided the Public Establishment for Transmission and Distribution of Electricity—Syria’s state power utility—or the electric company in the province of the project will transfer and distribute electricity to major subscribers, medium-voltage subscribers or for export, within the network’s capacity, in exchange for usage allowances paid by these companies.
The new law has come under fire, with accusations that it opens the door to corruption—for businessmen close to the regime to invest in and profit from this sector at Syrians’ expense. Concerns have also been raised that Law No. 41 legalizes the work of private generators, known locally as “amperes.” Many Syrians rely on large-capacity, fuel-powered generators for electricity, subscribing to informal networks and paying each month according to how many amperes of electricity they consume.
Minister of Electricity Ghassan al-Zamel denied the law would formalize the amperes system, explaining that his government “turns a blind eye” to it given the poor electricity conditions in the country, but opposes the system.
In addition to power cuts and a soaring cost of living, Syria is experiencing an acute fuel crisis, the “most severe since 2019,” according to Karam Shaar, the director of the Syria Program at the Observatory of Economic and Political Networks. In regime-controlled areas of Syria’s southern Daraa province, the price of a liter of gasoline has reached SYP 18,000 ($2.57), while a liter of mazot sells for SYP 11,000 ($1.57), local sources told Syria Direct. Prices vary from one area to another.
Shaar suggested the Syrian regime will move to completely lift fuel subsidies, “and move towards bringing in the private sector in order to supply fuel.” He cited “the regime starting to rely on a registered company owned by the Qaterji family.” The Qaterji company is one of the most prominent regime-aligned companies working in the oil sector in Syria.
‘Bullying’ as an economic solution
In October, Prime Minister Arnous laid the foundation stone for a tourist complex in Latakia: a 45-year investment by the Russian Sinara Group valued at SYP 150 billion. The project is one of the sovereign investments the Syrian regime has gifted to its allies, Moscow and Tehran.
The project is part of a broader economic openness by the Syrian regime towards friendly countries, or those that have recently normalized relations with it. To this end, the Damascus government, in August, issued a decision to form a committee to supervise and oversee the activities of joint business councils between Syria and foreign countries. The committee, headed by the Minister of Economy and Foreign Trade, is tasked with supervising the councils, evaluating their performance, making proposals to develop their work, proposing new councils and dissolving existing ones.
The same month the committee was formed, the regime Minister of Economy, Mohammad Samer al-Khalil, issued a decision to form a Syrian-Iraqi Business Council. In July, al-Khalil formed a Syrian-Algerian Business Council, the same month Algeria’s foreign minister visited Damascus.
Despite all attempts by Damascus, whether directly or through its allies, to improve the country’s economy, Syria’s general budget deficit for 2023 has increased. In October, the regime approved a general budget for 2023 in the amount of SYP 16.55 trillion, compared to SYP 13.325 trillion in 2022. The deficit for 2023 is around SYP 4.86 trillion, compared to around SYP 4.118 trillion in the previous year’s budget.
Economics researcher Quman called the Syrian regime’s economic behavior in 2022 “contradictory.” The regime adopted “a more inflationary budget than the previous one, an indicator of new price increases and [impacts on] citizens’ purchasing power and the exchange rate of the pound against the dollar.”
Shaar accused the Syrian regime of continuing to work with a “bullying mentality,” by “extorting businessmen” to support its economy. “The regime believes that it can continue to invade the private sector,” but this behavior has “created aversion in the private sector,” which can no longer “play a real economic role.”
The SDF: An exception without tangible improvement
SDF areas of influence in northeastern Syria saw several strikes and protests in 2022 against the backdrop of low wages in some sectors—such as education—and reduced allocations of subsidized fuel for citizens in the region. This unrest underscores how the region, which is also fearing a potential Turkish cross-border military operation, is not immune to the country’s broader economic crisis.
In May, the Autonomous Administration of North and East Syria (AANES), which administers SDF-held territories, reduced the amount of diesel heating fuel allocated to families from 440 liters to 300 liters, distributed once a year. Sadeq Muhammad Amin, the director of the AANES’ General Fuel Administration, attributed the decision to the “shortage of fuel available to the Autonomous Administration.”
The AANES subsequently reduced subsidized fuel allocations provided to taxis to 10 liters per day in August, prompting a number of impacted taxi drivers to organize a strike in front of the Fuel Administration’s headquarters in protest of the decision.
The Qamishli Fuel Administration also raised the price of a liter of subsidized gasoline at its stations from SYP 710 to SYP.
Separately, teachers in the SDF-controlled eastern Deir e-Zor countryside went on strike twice in 2022: first in March, and again at the start of the current school year in September. The strikes were due to the deteriorating economic situation in the area, and a decrease in their monthly salaries. Teachers called on the SDF to uphold its responsibility for the education sector.
Another indicator of the economic crisis in SDF areas, despite being exempted from the US Caesar Act sanctions impacting regime areas, is the AANES’ inability to buy yellow corn—a strategic crop in northeastern Syria—from farmers, driving it to allow corn to be exported to outside its areas.
In May, the US Treasury Department announced it would allow some foreign investment in areas outside regime control: those controlled by the AANES and SNA, with the exception of Afrin and Idlib. These areas were exempted from the US Caesar Act sanctions law, in a move aimed at achieving economic stability as part of the strategy to defeat the Islamic State (IS).
Following the US policy change, the Co-Chair of the AANES Economy and Agriculture Board, Salman Barudo, announced the administration intended to issue a new investment law. The law has yet to materialize.
Contrary to what was hoped for from Washington’s exemption, SDF-controlled areas have seen no clear economic improvement, for a number of reasons related to the AANES’ economic behavior and the crisis throughout all of Syria. Months of continuous threats by Ankara to launch a new cross-border operation against SDF areas in Syria have also played a role, alongside Turkish air and artillery strikes targeting energy infrastructure and services.
In August, the AANES’ Crisis Cell announced that the budgets of specific investment projects—such as those in the cultural sector, local administration, municipalities and the environment—would be redirected in the interest of the “state of emergency.”
The Co-Chair of the AANES Executive Council, Hevin Ismail, said the transfer was in order to “protect civilians” by providing medicine, first aid and support for the health, economic and food sectors, as well as securing housing in the event of any displacement related to Turkey’s expected operation.
Despite the deteriorating economic situation in northeastern Syria, and the emergence of a fuel crisis, the AANES has not changed its approach of “transferring oil to regime areas, despite knowing in advance the negative impacts on the economy and prices in its areas of influence,” researcher Quman said.
“The living situation in northeastern Syria is the worst of the [country’s] four regions, because of the recent Turkish attack,” Shaar said, referring to “Operation Claw Sword,” a series of airstrikes and bombardments carried out by Turkey across northern Syria and Iraq in response to a November bombing in Istanbul. Ankara accused the SDF of responsibility for the attack. And, in his view, “the AANES cannot control things and work in an impartial and institutional way.”
Northwestern Syria: Between al-Jolani’s state and opposition failure
Syrians in areas controlled by HTS and the Turkish-backed opposition SNA are, like Syria’s other regions, in an economic crisis. But in northwestern Syria, it reaches its height in the displacement camps.
Idlib province, which is administered by the HTS-affiliated Syrian Salvation Government (SSG) is experiencing crises in the availability of certain goods. In February, the area underwent an acute crisis in the availability of sugar due to “the expiration of sugar contracts signed with Turkey” at the time, as well as weather factors that impacted ground transportation from Turkey to Idlib.
And for weeks, Idlib has been hit by a fuel crisis—which only recently began to lessen—leading to scarcity and high prices that, in turn, drove up the cost of some basic necessities. One of the reasons for the crisis was the October announcement by Watad Petroleum that the company would stop working and dissolve itself. Before the announcement, Watad had a monopoly on the fuel sector in SSG areas. The SSG also canceled import licenses for fuel coming from SNA areas the same month.
After that, the SSG granted licenses to five private companies in late October, allowing them to import oil derivatives. While these companies have since started working, the area has yet to recover, especially since the fuel crisis coincided with the start of the winter season, when the consumption of oil products increases.
Increased prices of fruits and vegetables led civilians and activists in HTS areas to launch a social media campaign entitled “Let it Rot.” They called for a boycott because of what they described as “traders’ greed and high prices,” coinciding with the start of Ramadan.
As part of its official economic policy, HTS relies on trade with Turkey and other areas of influence–including the regime—to support its economy. To this end, 2022 saw HTS prepare to open a new crossing with regime territory in the eastern Idlib village of Mujayzir. HTS attacked a military point held by the National Front for Liberation faction along the Idlib-Saraqeb road in late September to secure the area of the planned crossing, which has not started operating until now.
Although HTS areas were not immune to the economic crisis striking the country, they “saw the greatest improvement at the level of governance,” Shaar said. HTS “has come some way in administrative organization and governance, despite its corruption.”
“There is a framework of governance that is taking shape in the Idlib areas,” Shaar said. He called what HTS commander Abu Muhammad al-Jolani is doing in the area a state-building project, while “SNA areas are still suffering from the absence of law,” and therefore “economic activity is still virtually paralyzed.”
Administratively, the Syrian Interim Government (SIG), affiliated with the National Coalition of Revolutionary and Opposition Forces, oversees SNA areas in the Aleppo countryside and Afrin. But it does not have any clear economic role in the area, while Turkey maintains its military and administrative institutions there.
Opposition areas in northwestern Syria are “still fragmented between the actors in economic decision making, and suffer from excessive dependence,” economics researcher Quman said.
Most northwestern Syrian cities under SNA control saw, in early 2022, mass protests as a result of an electricity price hike by the Turkish AK Energy company, which supplies electricity to the area. The company justified the increase due to high electricity prices in Turkey.
The protests were repeated in June, after the company doubled down on its decision. During these protests, several buildings and service institutions were set on fire. Such events highlight how the region is connected to variables in Turkey, and is impacted by the economic crisis that is striking that country, too, affecting the exchange rate of its national currency.
What does 2023 hold for Syrians?
“Every year, we expect the next year to be worse, given the objective conditions we perceive in the four regions, and I don’t see anything that changes our forecast for this year,” Quman said. He expects “a worse year than the last one, especially in the provision of essentials.”
Quman projected that 2023 will see “continuous price increase, leading to more hunger and poverty, alongside a continuous fall in the value of the pound, increased migration due to poor living conditions and the spread of corruption, drugs and disease.”
And although northeastern Syria is the most resource-rich of the four areas, “the AANES has not been able to achieve a better standard of living for those residing under its control, and I don’t believe their situation will improve much in the coming period,” Shaar said.
“Chaos rules the scene” in SNA areas, Shaar added, while he projected HTS areas “will see a greater turn towards governance and things getting better.”
And finally, Shaar expected “Bashar al-Assad’s mentality in running the country” to continue “as it is,” namely in “Assad forcing private sector businessmen to deal with him directly, especially those that benefit from him being in power.”
“Assad believes that the businessmen are evading their obligations towards him, so he prefers to adopt a policy that everyone should be his partners, and work with him directly or with his wife Asma al-Assad,” Shaar added. “Assad is heading towards privatizing the fuel sector and lifting subsidies from it, then opening it to Qaterji and Yasar Ibrahim.”
This report was originally published in Arabic and translated into English by Mateo Nelson.