9 min read  | Damascus, Economy

Lifting subsidies, Damascus deals its citizens an economic blow


March 9, 2022

PARIS — As a result of “the head of the family holding a commercial registration,” the Damascus government excluded Abu Muhammad’s family from state assistance through the “smart card” in January. Losing support has deepened his suffering, he said, forcing him into “more austerity than I was already experiencing.”

The 45-year-old father, originally from Reef Dimashq, as well as his wife and four daughters, were affected by the decision to remove subsidies because of a business that stopped operating 12 years ago. In 2007, Abu Muhammad registered a sole proprietorship exporting fruits and vegetables to Iraq. Although the business stopped after three years, he did not officially close it with the state, he told Syria Direct. 

Abu Muhammad’s family is one out of nearly 600,000 families Damascus excluded from state subsidies on basic goods and services in January. 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.” A portion of the families deemed to have been excluded “in error” later had subsidies returned.

Since 2019, Damascus has implemented a state support policy through the electronic “smart card” to provide a set of basic goods and services—such as sugar, rice, and heating fuel—in specific quantities for reduced prices. With the recent lifting of subsidies, excluded families must now obtain these items at the market price. 

Despite Syrian citizens’ economic shortfall, quantities of state-subsidized goods are insufficient and not distributed on a regular monthly basis. Rather, they are dispensed according to their availability at branches of the Syrian Trade Institution, the accredited state body distributing subsidized rations in all regime-controlled areas. 

A screenshot of the smart card application provided to Syria Direct shows that one family’s turn to receive their ration of sugar is after 2,798 people receive it from the same Syrian Trade Institution branch, while their turn to receive rice comes after 2,769 people. (al-Dimashqi/Syria Direct)

Excluded wholesale

The family of journalist Amal al-Dimashqi, who lives in the Syrian capital, was excluded from government subsidies in January because “the family had a commercial registration and two cars,” she told Syria Direct last month. 

But the business, a shop her husband opened in 2006 and closed three years later without formally dissolving it, no longer exists. And the family’s second car was sold through a sales agency agreement without a title transfer “to avoid the complicated government procedures.” They currently own a single car, a 2006 model with an engine that is eligible for fuel subsidies, she said. 

On that basis, al-Dimashqi’s husband “officially” closed the business registration after the family was excluded from subsidies. She then filed an objection to the decision through the online platform to do so, but “the request was also rejected.”

A screenshot shared by al-Dimashqi showing her exclusion from government subsidies, 17/2/2022 (al-Dimashqi/Syria Direct)

Umm Qassem, 66, has also lost state subsidies. She lives in Reef Dimashq with the wife of her son, who died in a traffic accident in early 2020, and three grandchildren, the oldest of whom is 11 years old. Umm Qassem lost support because “there is more than one car in my deceased son’s name, since the subsidy card is still in his name,” she told Syria Direct

In reality, the family owns “one car, a Hyundai, that is in compliance with the conditions of the subsidy, and it is in my late son’s name,” Umm Qassem said. The family rents that car out for SYP 150,000 ($39 according to the current black market exchange rate of SYP 3,820 to the dollar) a month. 

After the subsidies were cut, Umm Qassem filed an official complaint with a Takamol center saying “the claim of us owning more than one car is false.” Takamol Holdings is the company that operates the smart card. She says employees told her to attach a government-issued statement confirming her son’s ownership of only one car and its specifications to the objection, for Takamol to “study the case and respond by accepting or rejecting the appeal.” 

Before losing the subsidies, Umm Qassem received 200 liters of subsidized gasoline each month at a price of SYP 1,100 ($0.28) per liter. She sold it on the black market for SYP 2,500-2,800 ($0.65-73), making a monthly profit of SYP 280,000-340,000 ($73-89). This sum, as well as rent from the family’s car, “met most basic needs, in terms of essentials, food, and drink.”

Arbitrary implementation?

On February 1, the Assistant Minister of Communications and Technology for Digital Transformation, Fadia Suleiman, told a pro-Damascus newspaper that 596,629 smart cards had been excluded from subsidies, accounting for around 15 percent of all families receiving support. Factors in removing subsidies included owning multiple cars, a business, or real estate properties. For families with multiple properties in the same province, the most expensive was taken into account. 

But the process of selecting which families to exclude from subsidies was marred by mistakes that led to individuals being excluded who did not meet the criteria set by Damascus. This was acknowledged by the Minister of Internal Trade and Consumer Protection, Amr Salem, who pointed out that what happened was due to “technical errors.” Accordingly, the Ministry of Communications set up a mechanism to receive objections from citizens who lost support in error. 

Additionally, it appears that Damascus was not clear about the mechanism for implementing the decision to lift subsidies, prompting it to issue a number of decisions clarifying who is excluded and who is not. For example, the Ministry of Internal Trade and Consumer Protection explained that the decision did not include everyone who has a commercial registration. 

In this context, the Syrian Prime Ministry published an explanatory post on its official Facebook page in which it said that removing subsidies would affect those holding commercial registrations from the “excellent” to third categories. Those with fourth-category registrations are not covered by the decision, it said. 

But responses to such clarifications by commenters on social media allege that these criteria are not being followed. In response to an explanatory post by Minister of Internal Trade and Consumer Protection Amr Salem on his personal Facebook page, one commenter wrote that he has a fourth-category commercial registration that has been suspended for 10 years, with no outstanding balances, but he was excluded from subsidies. Another commenter responded, saying “I’m like you–the registration has been stopped for 15 years, and they removed the subsidy.” 

Damascus also removed subsidies for people on the grounds that they are outside Syria, though they have not left the country. Some employees of state institutions have also lost support, despite trade minister Salem saying that public sector employees would not lose the subsidies. 

Mistakes have been made in dealing with complaints about the loss of subsidies. Al-Dimashqi’s husband was unable to restore support, despite officially closing the business and providing necessary documentation, she said. 

Some complaints have been successful. Muhammad al-Qassem, 28, from the southern Syrian province of Daraa, managed to regain subsidies for his family after filing an objection proving he did not have a commercial registration.

But for Abu Muhammad to successfully appeal the decision to exclude him from subsidies, he would have to pay 12 years of accumulated fines. “Stopping the commercial registration would cost me fees ranging from SYP 750,000 to SYP 1 million [$196-251],” he said. 

What does it mean to lose subsidies?

Excluding citizens from state subsidies means they have to buy basic goods and services at the market rate, or their international price, while the average government salary in Syria is about SYP 90,000 ($23.30) per month.

That means that an excluded citizen must buy a bundle of bread for SYP 1,300 ($0.34), the unsubsidized price, rather SYP 200 ($0.052), the subsidized rate. 

For al-Dimashqi’s family, who had two smart cards, both of which were excluded, the impact of lifting the subsidies was doubled. The family made a yearly calculation to see “the impact of cutting support from the family,” she said. 

The result? Through the smart card, the family paid SYP 1.65 million ($431) a year for items such as gasoline, rice, sugar, and household gas. Now, they will buy the same amount for SYP 5.9 million ($1,544).

The family received subsidized sugar for SYP 1,000 per kilogram ($0.28), al-Dimashqi explained, while the market price is about SYP 3,000 ($0.78). A liter of subsidized vegetable oil goes for SYP 7,500 ($1.96), compared to SYP 10,000-12,000 ($2.60-3.10) for unsubsidized oil. A kilogram of tea through the smart card is about SYP 20,000 ($5.20), compared to approximately SYP 30,000 ($7.80) without subsidies. 

As for fuel, al-Dimashqi used to receive a canister of household gas every 70 to 90 days for SYP 10,500 ($2.70). On the black market, a canister costs up to SYP 31,000 ($8.10). 

For heating, each smart card is allotted an estimated 50 liters of diesel (mazut), with a subsidized liter costing SYP 500 ($0.13). A liter on the black market, on the other hand, costs about SYP 3,000 ($0.78). Al-Dimashqi bought 20 liters of diesel on the black market last week for SYP 60,000 ($15.70), she said, but it “ran out after just five days.” 

Her allocation of gasoline through the smart card was 25 liters a week, at a price of SYP 1,100 ($0.28) per liter. On the black market, it sells for SYP 2,500 ($0.65). Since losing the subsidies, she has been forced to stop using her car. 

Al-Dimashqi used to drive her two daughters to school, which “cost me about SYP 100,000 [$26.10] per month for subsidized gasoline,” she said. Without subsidies, she would have to “pay SYP 300,000 [$78.50] for the same amount.” On the other hand, she cannot subscribe to a school bus, which “would cost me SYP 150,000 [$39.20] per month for each daughter.” 

Crossing Hafez al-Assad’s red line

Against the backdrop of an economic crisis hitting Syrian citizens due to the lifting of subsidies, some regime supporters on social media have repeated a saying attributed to Hafez al-Assad: “A loaf of bread is more than a red line, and if a citizen goes out to demonstrate against the government, I will be the first to take to the street.” The intimation is that Bashar al-Assad has crossed his father’s red line. 

Abu Muhammad’s family’s allowance of subsidized bread before losing support was two bundles a day, for SYP 225 ($0.059) each, meaning each month they spent SYP 12,500 ($3.53). Now, they buy the same amount for SYP 3,000 ($0.78) a day, meaning they will pay approximately SYP 90,000 ($23.50) for bread alone. 

Given that the family’s monthly income is SYP 600,000 ($157), they will spend 15 percent of it on bread. Previously, they spent 2.25 percent of their income.

Umm Qassem’s family lost income when they were excluded from subsidies, as she was no longer able to sell her subsidized gasoline allowance, falling to the SYP 150,000 ($39) a month from renting her car. Buying two bundles of unsubsidized bread a day would mean paying 60 percent of her monthly income on bread alone. 

This report was originally published in Arabic and translated into English by Mateo Nelson. 

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