Weak Economic Structure in Northern Syria (Reality and Solutions)

Introduction:
In recent years, Syria has witnessed a series of intertwined crises in the energy and food sectors. Then, the Ukraine war shed light on economic disparities. While oil-rich Gulf states reap profits from rising energy prices, Syria and other food and energy-importing countries suffer from these increases. This is exacerbated by weak or non-existent budgets, particularly in Northern Syria, where the general consumer price index (according to the Ba’ath 2021 index) has increased sixfold, and food prices have increased 6.7 times during the period (2019 – the first half of 2022). The general price index recorded annual inflation (Y-O-Y) of 113.5% and 110.9% for 2020 and 2021 respectively, and semi-annual inflation of 55.71% for the first half of 2022.

Price disparities and inflation levels are clearly evident among areas controlled by different conflict forces (the Syrian regime, the autonomous administration, the interim government, and the Salvation Government). The regime-controlled areas experienced the highest level of general and food inflation, followed by autonomous administration areas, and then interim and salvation areas, leading to social pressures and burdens on Syrians.

This coincides with a food crisis not only affecting Syria but also non-oil-producing countries, causing basic food commodity prices to soar. For instance, the standard food basket price for September 2023 increased by 100 percent since January 2023 and tripled compared to the previous year, reaching 938,000 Syrian pounds (equivalent to 81 US dollars), contributing to food shortages and exacerbating social tensions and economic instability, along with political instability in Syria.

On a positive note, Northern Syria is not on the list of indebted countries like Lebanon and Egypt or the Syrian regime-controlled area, where funds allocated for the public debt fund in Syrian budgets have significantly increased, exceeding a 2300% increase. The allocations for the public debt fund in the 2024 budget project remain unknown. Authorities in Northern Syria have relied on detrimental programs based on economic randomness, focusing on maintaining their presence as long as possible, deferring long-term solutions to the future, substituting them with short-term solutions, and excusing themselves due to the war and its circumstances.

These crises and other financial issues in Northern Syria put the de facto authorities in a dilemma of choosing appropriate economic policies. These authorities are negligent in implementing possible economic reforms due to the social and political costs that may cause them to lose their support base. At the same time, refraining from implementing structural reforms will only exacerbate the difficult financial conditions in the region. The de facto authorities tend to prefer maintaining the status quo over what is!

Discussing these crises from a geopolitical perspective reveals a rearrangement of economic and geopolitical conditions that strengthens the ally state, Turkey, while further marginalizing Northern Syria in terms of energy resources. The reliance of de facto authorities in Northern Syria on Turkey for assistance has undermined their independence in all internal and external fields, due to their need to comply with their financiers or meet their demands.

Structural Weaknesses in Northern Syria:
The food and energy crises facing the region cannot be attributed solely to the consequences of conflicts in Ukraine or Palestine, or even in the eastern region between Turkey and the SDF. Unless these shortcomings are addressed, the region will not be able to overcome its difficulties. These difficult choices imposed on the de facto authorities have led to a kind of stagnation, which will only exacerbate financial and economic conditions in the upcoming period.

The first problem the region faces is the lack of food security, meaning insufficient essential food materials. This problem has grown after the World Food Programme halved its food aid, affecting over two million Syrians in the region. In addition, the inflation of food prices, combined with the collapse of the Turkish and Syrian currencies, widespread unemployment, and scarcity of job opportunities, has reduced Syrians’ purchasing power, especially for camp residents living in the worst economic conditions. As stated by the Response Coordinators working in northwest Syria in their report: “Since the beginning of 2023, humanitarian response rates in Syria have been continuously decreasing, with deficit rates exceeding 70%. Therefore, the next year will witness very high deficit rates, opening the door for high levels of poverty and hunger in the region, coinciding with an increasing rise in unemployment rates, due to the lack of real job opportunities for civilians.

The second phase of problems faced by Northern Syria includes heavy reliance on imports and a decline in food production, with 79 percent of families depending on humanitarian aid for basic needs, while the rest have only one person working at minimum wages. This has impacted the local economy, especially agriculture, which suffers due to imported materials and the consequences of war.

The third problem lies in the inequality in areas under the control of the Salvation Government and the Interim Government, as well as between urban and rural areas. This has led to urban bias and neglect of the agricultural sector in rural areas, resulting in reduced cultivated areas.

The fourth problem is the environmental crisis, where the unregulated use of agricultural chemicals has undermined the productivity of farmland, leading to soil salinity, health and environmental damage, loss of essential nutrients from the soil, and loss of biodiversity, increasing the likelihood of crop failure.

Conclusion:
In the coming years, Northern Syria will face a fundamental challenge in achieving comprehensive development, especially after the investment project announced by the Syrian Interim Government in the Al-Rai area. However, with the Turkish escalation against the Syrian Democratic Forces and the targeting of the Salvation Government area by Russia and the Syrian regime, dealing with this challenge won’t be easy. This process requires, inherently, restructuring existing systems, and curbing the influence of powerful interest groups of the de facto authorities. These authorities try to avoid the impacts of socio-economic pressures through populist and authoritarian strategies. However, these strategies have not succeeded in addressing the structural causes behind food and energy crises, nor have the policies of both governments, with their short-term vision and non-political programmatic approach, managed to implement any structural change.

Addressing the food crisis requires rethinking food systems and moving towards more equitable and sustainable systems. This process involves linking food security with social and economic justice, primarily reevaluating the prevailing pattern of large-scale food production in Northern Syria by encouraging and supporting citizens to farm enough for their sustenance and for small-scale agricultural production for local consumption.

This can be coupled with support for farmers and enhancing their capacities, a pressing process for diversifying food supply sources and reducing the likelihood of being affected by the cessation of aid.

To mitigate the impact of rising prices in Northern Syria, reforming support systems and accelerating the transition to renewable energy sources and adopting low-carbon solutions are necessary. This reform requires well-directed, studied, progressive, and direct tax measures, ending the state of arbitrary and excessive taxation, and lack of transparency. It’s also important to reconsider tax exemption policies, which mostly benefit wealthy individuals, organizations, and factions.

The political arrangements in Northern Syria are very weak due to prevailing feelings of despair and disappointment among Syrians. De facto authorities are weak, civil space is shrinking, and manifestations of inequality are growing and expanding, along with the widening gap between rural and urban areas. Communities are becoming more divided, while the old social contract, based on authorities providing material benefits in exchange for political loyalty from their citizens, is currently non-existent in Northern Syria due to the current state of governance. In the face of rising levels of repression and surveillance, and the social and economic suffering experienced by the region, feelings of anger are intensifying and hope is fading, with the near possibility of an impending hunger revolution on the horizon.

Therefore, these two governments, “Salvation and Interim,” must formulate new political arrangements based on new social contracts and modern governance mechanisms founded on a “quasi-state” of law and comprehensive political and economic development for the region.

Finally, we at the Syrian Future Movement (SFM) recommend, according to our vision and approach, that decisions regarding fundamental structural changes and their adoption should come directly from within the two governments, without waiting for external intervention! The neighbor is preoccupied with decoding the SDF in the northeast!

Furthermore, we in the Syrian Future Movement recommend focusing on inviting international financial institutions to play a significant role in adapting to challenges related to food security, climate change, and the energy transition. These programs should receive social acceptance and stem from comprehensive societal and economic dialogue, to ensure the governments’ ability to embrace the transformation process and achieve comprehensive development, until reaching a complete political solution for the entire Syrian map.

Ammar Al-Amouri
Researcher at the Research and Studies Department
The Economic Office.

References:

• “With the suspension of the ‘World Food Program’… Could 2024 be the year of hunger in Syria?” (aawsat.com)
• “Syrian Center for Policy Research’s Consumer Price Index for Syria for the period (October 2020-June 2022)” – Syrian Center for Policy Research SCPR (scpr-syria.org)
• “Syria: The 2024 budget reflects the depth of the economic crisis” | Majalla Magazine (majalla.com)
• “Reduction of World Food Aid.. A million displaced in northern Syria in the grip of a cold winter” | Politics | Al Jazeera Net (aljazeera.net)
• North-west Syria | Situation Reports (unocha.org)
• “Residents of northern Syria without aid and malnutrition treatment is absent” (alaraby.co.uk)