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Since Russia declared war on Ukraine in late February, Syria was featured repeatedly in Arab and foreign media. The focus was on the similarities between the wars in both countries, comparing the two based on the destruction and targeting of hospitals and civilians.
The premise is that wars create tragedies and remind us of the shared link: Russia.
Despite the geographical distance, the effects of the Ukrainian war quickly crept on the Syrian economy. As a result, economists highlighted how Syria is already “economically exhausted.” Damascus’ economy primarily depends on imports for most of its basic needs.
The Worst is Yet to Come
During an interview with the local radio station “Melody FM,” economist Amer Shahda warned of the impact of the Ukrainian war on Syria, especially concerning remittance. He pointed out that remittance happens in tandem with the Russian banks. Additionally, this war will affect oil derivatives and imports of fodder and wheat, and disrupting imports will eventually hike prices.
Shahda expects the poultry sector to stop functioning because corn is imported from Ukraine. He stressed that imposing economic sanctions on Russia would negatively affect Syria. Given the high oil derivatives and transportation fees, the effect will ripple across all goods imported from other countries.
According to Shahda, the next phase will affect the production sector, which depends on imports from Ukraine and Russia. He explains: “If the war continues, our situation will worsen. Even if the war stops within a week, we would need six months to return to how we were before the war.”
New Price Hikes
A few hours after Moscow announced its march on Ukraine, the price of goods in Syria gradually increased. The unprecedented rise in food prices caused essential commodities to disappear, especially vegetable oils. Moreover, the price of one pack of eggs exceeded SYP14,000. As for 1 kilogram of raw chicken, it stands at around SYP12,000 and SYP22,000 for the roasted one.
Meat prices were also affected. One kilogram of lamb hit SYP42,000 ($10.7), up from SYP14,000 only last year. A litre of corn oil in Damascus exceeded SYP18,000 ($11.5). Moreover, a kilogram of rice is sold for SYP9,000 ($2), while it was SYP3,500 at the same time last year. Finally, the price of subsidised bread reached SYP1,300 ($0.3).
The areas controlled by the Syrian Democratic Forces (SDF) also saw an increase in the prices of essential goods. The price of a litre of corn oil is more than SYP10,000 ($2.5), while it was sold for SYP5,000 last year. One kilogram of rice is SYP4,600 ($1), while last year it sold for SYP3200. One bag of flour weighing 50 kilograms was SYP50,000, but now it has reached SYP125,000 ($32).
Additionally, the exchange conversion rate of the Syrian pound is at its lowest. According to Syrian Pound Today, a website specialising in currency exchange rates, one U.S. dollar is almost equal to 4,000 Syrian pounds.
Today, the Syrian economy stands out as the country most affected by the Russian war on Ukraine in the Arab world. Its reliance on the Russian and Ukrainian economies is one significant reason.
The government depends on aid from Russia and essential goods from Ukraine. Journalist and economic analyst Fouad Abdulaziz told Fanack that the decline of the Syrian pound and the rise in commodity prices due to the war were not surprising. Since global oil prices jumped from $85 to more than $120 per barrel, it is no surprise that the budget allocated to oil import will see a 50 per cent increase at the very least.
Abdulaziz noted that 50 per cent of Syrian imports come exclusively from Russia and Ukraine. Both countries provide most of the government’s demand for wheat, sugar, oil, fodder and other essential industrial goods.
According to Abdulaziz, it is natural for the consequences on the Syrian economy to be this extensive. The fears of not finding alternative markets are fuelled by the sanctions, the blockade, and the scarcity of hard currency.
Abdulaziz stresses that Syria is on the cusp of a disaster concerning the economy’s future. The government has openly announced that the food supply imported from Russia, primarily wheat, sugar and oil, may only suffice for the coming two months. In other words, the continuation of the war will lead to more significant problems if alternatives are not found quickly.
Alexander Efimov announced on Feb. 10, 2022, that the trade volume between Russia and Syria saw a 300 per cent increase in 2021 compared to 2020. Efimov pointed out that his country continues to help the Syrians restore the economy and ensure its stability and efficiency.
The volume of the Syrian trade with Russia for the first nine months of 2021 amounted to about 185 million euros. In 2020, that number was 63 million euros, according to Deputy Minister of Economic Development Rania Ahmed. Ahmed noted that the focus with Russia is on the exports of citrus fruits, apples, and pomegranates. The exports will be to Russia via Crimea or Crimea itself. The discussions will include the issue of grain supply as well.
As for Ukraine, the Statistical Abstract for 2020 revealed that the value of Ukrainian imports to Syria was SYP81.6 billion ($186.9 million) as per the official exchange rate. On the other hand, Syrian exports barely exceeded SYP1 billion ($2.5 million), according to the same source.
In 2018 the Ukrainian imports of manufactured goods were about SYP35.245 billion, making them the most valuable. The second is raw materials with SYP18.979 billion. Thirdly, food and livestock with SYP14.114 billion. Finally, animal oils and fats were valued at SYP2.558 billion.
Impossible Living Costs, Diminishing Minimum Wage
Nearly two months after the start of the war in Ukraine, specifically with the beginning of Ramadan, the average cost of living for a Syrian family of five exceeded SYP2.8 million, an unprecedented spike during a record period. This catastrophic gap between the cost of living and the minimum wage is widening. The SYP92,970 minimum wage is half the cost of food for a single worker.
According to the Kassioun website, the average living costs for a family in March 2022 witnessed an unprecedented SYP833,405 increase since the beginning of this year. The cost of living increased from SYP2,026,976 in January to SYP2,860,381 in March. However, wages remained unchanged, and by March, they represent only 3.2 per cent of the average cost of living.
The increases affected the entire food supply chain, especially vegetables, which increased in price from SYP430 per person per day to SYP955, more than 122 per cent.
The same happened to fruits, which rose from SYP260 to SYP767, more than 195 per cent.
Collapsing Economy and Record Levels of Poverty
The Syrian economy has been collapsing for more than a decade. The regime has been harnessing all resources in the service of the war, effectively suspending industrial production. Moreover, the drought that hit the region affected agricultural production.
COVID-19 made things worse by contributing to the economic crisis. Inflation rates reached record levels when the average wages in areas controlled by the regime did not exceed $32. However, studies estimate that the monthly minimum standard of living is no less than $250 per family.
According to a report published by the United Nations in September 2020, the economic losses during the first eight years of the war reached $442 billion.
Experts unanimously agree that the Syrian economy is going from bad to worse, attributing this to Russia and Iran controlling the bulk of Syria’s sovereign investments, such as gas, phosphate, and electricity. Additionally, the United States and the European Union will carry on with the sanctions policy on the Syrian regime as long as it continues to be stubborn.
According to figures published by the World Health Organisation’s Food Program in September 2021, about 90 per cent of Syrians live below the poverty line, while 9.3 million people lack proper food. This comes when the number of people without food has risen to 1.4 million during the first six months of 2021.