AMMAN — On February 1, the Syrian government launched its initiative to expand the “smart card” system to include subsidized prices for rationed quantities of tea, rice, and sugar. Using the “smart card,” each family is allowed to purchase up to 1 kilogram of tea for SYP 900  ($0.87) per 200g, 3 kilograms of rice for SYP 400 ($0.39) per kg, and 4 kilograms of sugar for SYP 350 ($0.34) per kg every month. 

This initiative comes in the face of serious economic problems in the country, chief among them, the collapse in the value of the Syrian lira (SYP), deepening sanctions, and the corresponding rapid increase in the price of basic commodities. As attempts by the government to stave off inflation and stabilize the currency have yet to succeed, the expansion of the “smart card” system is an attempt to regulate and efficiently distribute basic commodities to Syrians—83% of whom live below the poverty line—while simultaneously preventing monopolies and price manipulation. 

At the same time, the expansion of the “smart card” system has been accompanied by a handful of repressive measures, such as arresting those using foreign currencies, conducting raids on small shop owners for selling goods at unregulated prices, and creating an unstable security environment in areas witnessing protests against the government—most notably in Suwayda.

What is the “smart card” system?

The “smart card” is a card eligible to Syrians through which they can purchase government-rationed, subsidized goods at authorized retailers every month. The card is used by individuals and families in order to determine how much of each product they can purchase each month. 

While basic commodities such as rice, sugar, and tea are new additions to the system, the “smart card” has been operating in some way or another for almost six years. It was first used by government agencies in 2014, then slowly expanded into certain private sector organizations in 2016, and then was partly responsible for providing heating fuel to families in 2017. 

Until last month, the purpose of the “smart card” system was mostly limited to providing fuel-related products: petrol for cars, cooking gas, and heating oil. For example, in December 2018, the “smart card” system came into effect at authorized fuel centers in Daraa province, which had come under the control of government forces that summer. Filling stations began to refuse customers who did not have the card, but those who did often had to endure long waiting times to procure fuel. Meanwhile, prices of fuel and gas cylinders dramatically rose on the black market. The price of heating oil reached 400 SYP ($0.80) per liter, while it was being sold to “smart card” users at stations for 250 SYP ($0.50). These price increases continued, exacerbated by both smuggling and price manipulation, and Iran halting oil sales to the Syrian government on its “credit line” in early 2019.

The introduction of new commodities has brought additional organizations into the fold of the rationing process. After obtaining the card, citizens can purchase specific, subsidized goods at authorized distribution halls and centers run by the Syrian Trading Establishment (STE)—a government organization that falls under the purview of the Ministry of Internal Trade and Consumer Protection. Citizens can also use their "smart cards" to purchase goods from authorized private centers and from traveling cars that sell such goods.

Unlike many other government initiatives, the “smart card” system—advertised heavily on social media and accompanied by a somewhat slick marketing campaign—employs various technological programs and applications. For example, to receive the rationed gas cylinder, citizens must confirm their phone number through one of four methods: call an automated number, communicate with a bot on the Telegram app, use the state-run Way-Inn app, or use the website designed specifically for the “smart card.” 

Public-private partnerships

While the “smart card” system has been developed to regulate prices and centrally ration the distribution of basic commodities, the system itself is a joint venture between the Ministry of Petroleum and Mineral Resources and a private company, Takamol Holdings. This type of public-private partnership (PPP) is by no means new or foreign to Syria’s political economy; in fact, it is part of the “National Partnership” approach that the Syrian government adopted in 2016. 

As Syria’s economy began to liberalize in the late 1980s—accelerating under Bashar al-Assad’s promulgation of the “Social Market Economy” approach in 2005—there has been a noticeable increase in private sector companies entering into large-scale public works programs since 2011. As Samer Abboud, a political scientist at Arcadia University in Pennsylvania, explained in a paper last year, “[The National Partnership] builds on some of the main marketising and privatising elements of pre-conflict economic policy through the centralisation of public-private partnerships as the core approach to reconstruction.”

Although the distribution of basic commodities is not a reconstruction policy, that the same approach is seeping into wider economic policy is emblematic of the important role that PPPs will play in Syria’s emerging post-conflict political economy. This will “most likely strengthen the influence and control of regime-affiliated businessmen over public goods at the expense of the interests of the state and public interests,” explained Joseph Daher, a scholar of political economy at Lausanne University.

Takamol Holdings—the company responsible for developing the “smart card”—is based in Damascus and run by Joul Elian. Apart from this, it is a relatively opaque company with little public information on its ownership structure, shareholders, and financial data. According to Syria Report, a specialist economic publication, there are rumors that the company is linked to Rami Makhlouf, Syria’s most powerful businessman and first cousin of Bashar al-Assad. 

On the other hand, an informed source told Sawt al-Asima, an opposition-leaning website, that Takamol is owned by Muhannad al-Dabbagh, the cousin of Asma al-Assad. According to the source, the company is paid SYP 330 ($0.32) for each card issued and takes a small fee for each transaction—potentially providing the company billions of pounds in windfall profits. Additionally, the company has access to the private data of millions of citizens due to the information required upon registration.

Regardless of the speculations, the fact that the company is responsible for managing one of the most important state distribution programs suggests that it is deeply connected to the government. In line with the Syrian approach to privatization, the PPP approach does not transfer assets wholesale from the public to private sector, but instead, is premised on “the expansion of markets to facilitate the entry of private capital into the economy,” Abboud wrote. 

As such, the “smart card” system embodies government attempts to centralize the distribution and regulation of commodities, while also providing a new frontier for market expansion and capital accumulation for certain business interests in areas that were previously sealed-off from the private sector.

Complaints and criticisms

Soon after the “smart card” system came into effect at the beginning of the month, it sustained widespread criticism, not only from opposition figures and publications, but from almost all sectors of society.

Al-Watan newspaper, one of the most widely-circulated pro-government publications, published a cartoon that criticized the “smart card” for benefiting wealthy traders at the expense of ordinary Syrians. The cartoon depicts a wealthy food trader standing at the front of the line to collect his subsidized goods from the STE hall, while poor, hungry Syrians wait behind him. 

Additionally, many criticized the “smart card” for limiting the quantities of subsidized goods to a maximum of what a three-person family would need, even though estimates suggest that the average family size is 4.5 in Damascus, 6.2 in Hasakah, and 7.5 in Raqqa. This means that a family of three is entitled to the same quantity of subsidized goods as a family of seven. 

Syrians also complained that the STE distribution halls were overcrowded and did not carry sufficient quantities of the subsidized goods. “We waited for more than an hour and then they told us that they ran out [of goods],” one resident from Aleppo commented on a Facebook video.

On Takamol’s Facebook page, Syrians voiced their criticisms of prices, insufficient quantities, and defects with the “smart card” itself. Others took to social media to make fun of the “smart card” system, saying that “refugees were rushing back to Syria to take advantage of its benefits,” and that sugar shortages were indicative of the “government’s desire to reduce diabetes.” 

Ali, a supporter of the government who runs the Twitter account @CoolHuh_, originally noted that the new system was “actually a very good idea, [a] nice step by the government,” but then harshly criticized it a few days after it went into effect in a now-deleted tweet.  

Another government supporter posted a photo of a skeleton and a phone, with the caption, “waiting for a message from Takamol to bring the gas cylinder.”

The blame game

The sheer number of actors involved in the “smart card” system, however, has made it increasingly difficult for Syrians to locate responsibility for the system’s failures, leaving many confused as to who exactly is to blame. Some of the main actors include the government, Takamol Holdings, the Ministry of Petroleum and Mineral Resources, al-Mahrukat, the Ministry of Internal Trade and Consumer Protection, and the STE.

In this regard, the PPP model not only facilitates the entrance of private actors into public programs, but it also emerges as a way to redirect potential backlash from the system’s shortcomings toward other actors involved. 

For example, a major criticism directed at the “smart card” is that family members who do not have an ID card are unable to procure their allocated shares of basic goods at STE halls and centers. Not only does this exclude Syrians not holding ID cards (due to problems related to the war, fear of persecution and conscription, poverty, and required documents), it also excludes children under the age of 15 who are not eligible for ID cards. 

Two days after the system went into effect, Al-Watan published an article titled, “First dance with the smart card...Errors and problems...Mistakes with ‘Takamol’ prevent family members without ID cards from obtaining their shares of rice, sugar, and tea.”

However, through the Telegram app, Syria Direct obtained the registration requirements specified by Takamol. According to Takamol, families can register all their members with proof of a family registration book, the national numbers for the wife and unmarried sons and daughters, the presence of the head of the household with his identity card, and proof of residence for those living outside their registered province.

As such, it appears that there are major defects with the system, given that different actors continue to stipulate different, and sometimes contradictory, requirements. 

Yousef Oqla, the director of the Damascus branch of the STE, indicated that the source of the defect lies with Takamol since supervisors at STE centers are at the behest of Takamol’s technology and are unable to interfere with matters related to ID cards.   

Oqla also blamed the long queues and waiting times on the lack of card-readers as well as the time it takes for the devices to read the cards, connect to the network, and determine the quantities allocated for each individual. 

An official from al-Mahroukat—the state company responsible for distributing fuel—blamed traders for allegedly stealing state-provided gas cylinders and selling them on the black market for an inflated price. 

However, an owner of a gas distribution center in Suwayda expressed frustration with the amount of criticism directed at them. “Whenever there is a problem or defect, the people blame the distributors...The government is laughing at us and the people still believe them,” he told Syria Direct previously.

As the government centralizes power—not only territorially but also among certain business networks—traders, government institutions and private-sector businesses continue to accuse one another of corruption and misconduct. 

But regardless of where responsibility for the system’s deficiencies lies, the fact that different actors are rushing to blame each other is indicative of Syria’s deep economic woes. 

For ordinary citizens, however, the results are often inadequate services and an inability to properly locate culpability and pursue accountability—often to the advantage of the government.

This article reflects minor changes made on 17/2/2020 at 1:32 pm.