Syria's economy is continuing on its downward spiral in the absence of a political solution to the crisis, writes Bassel Oudat Syria is facing serious economic meltdown as a result of European, US and Arab sanctions against the country, with most aspects of investment, trade and services being affected and showing the effectiveness of the economic sanctions put in place against the country by the international community. After 14 months of the uprising against the regime led by Syrian President Bashar Al-Assad that has so far led to the deaths of some 15,000 people, according to Syrian human rights monitors, the country's economy continues to deteriorate. Hundreds of workshops have closed because of difficulties in exporting and importing raw materials, while dozens of factories and companies have shut their doors and state-owned firms have frozen investment projects. Growth in Syria over the past year has dropped to -3.4 per cent, while inflation has risen to 6.6 per cent. Exports have dropped in value from $14 billion one year ago to less than $6 billion today and falling. The Syrian currency depreciated by half over the course of the year, adding to the country's woes. Meanwhile, bank deposits went down by 30 per cent, and the stock index in Damascus fell by 75 per cent of its value. Credit card services such as Visa and MasterCard have stopped operating in the country, and European banks have closed the accounts of Syrian clients. Bank transfers from and to Syria are also frozen, and banks have stopped funding import transactions. It is no longer possible to pay the cost of imports through international banks, and the government has thus far spent billions of dollars from the country's reserves to shore up its currency. Tourism has dropped by more than 98 per cent, a heavy blow since it used to generate nearly $6 billion in revenue annually. The recession in this sector has affected the two million Syrians who work directly or indirectly in tourism, which accounts for about 12 per cent of national revenues. At the same time, domestic and overseas transportation has been harmed, and the transit trade with neighbouring countries, especially Lebanon and Turkey, has ground to a halt. Most private transportation companies have suspended travel routes between Syrian cities because of security threats on roads connecting the Syrian governorates. According to sources in Syria, some 200,000 people have lost their jobs, unemployment has risen to 25-30 per cent of the labour force, and a large number of Syrian businessmen have relocated their businesses outside the country. Syrians are suffering from shortages of basic goods, such as fuel, flour, pharmaceuticals and spare parts. Even the electricity grid has taken a hit, with blackouts occurring daily in Damascus and other areas. Agriculture has also suffered, as farmers grapple with the lack of fertilisers and high costs, the security forces fearing that fertilisers could be used to make explosives. Poultry and animal husbandry have been hit because of the high cost of fodder. International oil companies, such as Total, Shell and others, have stopped operations in Syria, and the country's petroleum minister admitted some days ago that Syria had incurred huge losses because of EU and US sanctions on the oil sector, estimated at more than $3 billion. The minister said that Syria's oil exports had dropped from 380,000 barrels a day to 150,000 barrels, and that Syria had slowed down production and closed some oil wells altogether. Meanwhile, fuel and gas imports have also dropped, with Syrian ports not receiving any gas or diesel deliveries over the past four weeks. Former French foreign minister Alain Juppé said recently that western sanctions against Syria had depleted the country's foreign reserves by half, from nearly $17 billion to $8.5 billion. The government has reportedly started to sell the country's gold reserves in Arab and Asian markets to secure funds for the suppression of the protestors. According to estimates from the World Gold Council, Syria has some 25 tons of gold on reserve worth $1.36 billion. Meanwhile, the Syrian opposition has accused the regime of trying to bypass western and Arab sanctions on the country by securing its financial needs from Iran, Russia and Venezuela and through middlemen at high prices. The EU imposed new sanctions on the regime this week, with the aim of blocking funds for its military crackdown against its opponents who are demanding its ouster. The new EU sanctions target more than 150 officials, including the president and several members of his family, and more than 30 institutions connected to the regime. The US, Canada, Switzerland and Australia have done the same, while the Arab states and Turkey have reduced dealings with Syria to a minimum. Even international organisations have stopped assistance to the government, accelerating the deterioration of the economy. Western sanctions include a ban on exporting arms to Syria, as well as freezing the buying, importing and transporting of Syrian oil and oil products, and the freezing of financial guarantees. The EU has halted the production of Syrian currency and all investment, development and training aid going to the country. Sanctions have also affected cell phone companies, holding companies owned by the president's family, and media and television channels owned by people close to his brother. Public oil companies, the government-owned trade bank, and companies and institutions connected to the army have also been targeted. The sanctions have had a crippling effect on the country's economy, but the opposition has supported them, saying that oil revenues in particular have been looted for decades by the country's rulers. One tycoon from the president's family controls about 65 per cent of the Syrian economy, and the opposition says that under these circumstances the hope is that the sanctions will allow the Syrian people to take back their property. According to the opposition, the present economic meltdown is another reason for the ejection of the regime, which has shown itself to be unable to provide stability, growth and a prosperous economy. Meanwhile, the regime itself has been trying to imply that the sanctions have been ineffectual, and it is true that even today parts of the economy are partially holding up perhaps because of domestic production. However, continued pressure from abroad will further damage the government's ability to manage the economy, and the shrinking level of economic activity in the country, when accompanied by ever- growing spending on the army and security, has led to a serious drop in living standards, triggering further social tensions. In the absence of a political solution to the crisis, it is clear that the Syrian economy will worsen, and it is likely that the continuing economic meltdown will compound the crisis in the country, turning it from a political into a social and economic revolution against the regime.
