In pretty bad shape - Syria’s economy 9-months into the crisis
Last November, the Arab League imposed a series of sanctions that included ending all incoming and outgoing flights from Arab capitals to Damascus International Airport. The decision, taken only weeks after Syria's membership in the Arab League was suspended, was endorsed by 19 Arab countries. It was the first of its kind-and the toughest-since the Arab League was founded in the mid-1940s.
Major Arab airline companies will now stop operating in Syria, in addition to international ones, like Air France. This means that Syrians wanting to travel abroad will now have to go through double ordeals. The first is getting a Schengen visa for the EU, or an American one-or even a "visitor" visa to visit the United Arab Emirates. By many accounts, visas are becoming increasingly difficult to obtain for ordinary Syrians, either for tourism or emigration. Once Syrians get their passports stamped with a visa, they will now have a hard time finding a travel route to the EU or Arab Gulf.
This hauntingly seems like what happened when travel was prohibited to Iraq in the 1990s, or Libya, where visitors had to go to tunisia and then travel to tripoli or Benghazi by car. Any Syrian wanting to travel to the EU, US, or Arab World will have to do so via Beirut or Amman.
The Central Bank of Syria has now also been sanctioned by the Arab League, and senior Syrian officials have been banned from traveling to the Arab world. The list of 17 officials includes the Ministers of Defense and Interior, but neither Foreign Minister Walid al-Mouallem or Prime Minister Adel Safar.
Although some countries objected to the measures, most of them-surprisingly including Lebanon-have said that they will apply them to doing business with Syria. Lebanese Economy Minister Nicolas Nahhas commented days after the sanctions were imposed, "We are committed to implementing the Arab League sanctions. The Lebanese state has no trade dealings or financial transactions, neither with the Syrian government nor the central bank." Lebanese Central Bank Governor Riad Salameh pointed out, however, that Damascus has no money deposited in the Central Bank of Lebanon. Similar measures were imposed by the turks on November 30, which prompted Foreign Minister Mouallem to remark that an "economic" war was being launched against Syria. "No less than 17,000 Syrians have lost their jobs since mid-March. The real number, of course, is probably higher.„
Foreign trade is now in danger, after all, given that in recent years, it had exceeded more than 40% of gross domestic product. Revenue from foreign trade will now hit zero, as it did with Syria's once flourishing tourism sector. Syria's reserves are also suffering, although earlier in the year, they were reported at $18 billion. Many analysts, however, predict that the real number is actually much lower, given that much of it was already spent in 2005-2009, during Syria's standoff with the international community over the alleged assassination of former Lebanese Prime Minister Rafiq al-Hariri.
Banks have stopped giving loans to their Syrian clients, and several of them have begun downsizing their operations in the Syrian market. Last November, Banque Saudi Fransi (BEMo) said it will be selling 27% of its shares in Syria, sending shockwaves throughout the private Syrian banking sector.
BEMo Chairman Saleh al-omair, said the risks in Syria do not permit the bank to continue as a partner in the Syrian banking secene. "Effective immediately, Banque Saudi Fransi is no longer represented in the board of directors of Bemo Saudi Fransi Syria. BEMo has 36 branches all over the Syrian territories and is considered one of the leadings banks in this country in terms of assets, deposits and number of branches.
Last August, the Syrian government imposed a $2,000 a year limit on foreign currency purchases. That was aimed at preserving Syria's reserves of US Dollars. Figures published by the DSE shows that Syria's main private banks saw customer withdrawals grow by hundreds of millions of dollars in the third quarter of 2011.
The International Monetary Fund (IMF) recently said that Syria's $60 billion economy might drop by 2% this year, nevertheless projecting a bounce back in 2012. The London-based Capital Economics added that Syria's GDP might shrink by 10% over the next 10 months under the weight of international boycott, given that exports will drop by over 50%. Tourism, which accounts for about 12% of the economy, will fall substantially and so will Foreign Direct Investment (FDI), which has risen 12-fold over the last decade thanks in large part to capital from the Gulf.
Although acknowledging that the country was going through the worst economic crisis in its history, Economy Minister Mohammad Nidal al-Shaar said that Syria continues to have "other options" than the EU, Arab World, and turkey. "We have a lot of options ... including Mercosur [the Latin American trade bloc] countries, Russia, Belarus, Kazakhstan, Africa and some countries from Southeast Asia," he said.
Many questions are now on the table for Syria? one is how to jumpstart the economy, how to pay wages, and how to bankroll the armored vehicles and soldiers deployed on all four corners of the country? Money used to come from taxes, oil revenue, the public sector, and investment projects-all three of which have been on hold since the crisis started in mid-March. New taxes are impossible, given that the already furious Syrian street will never accept them.
The oil sanctions imposed by the EU earlier last summer were in their own right devastating, since Syria sells no less than 95% of its crude oil to Europe. Who will now buy around 140,000 barrels of crude oil, produced by Damascus per day? Syria was using this revenue to pay for imports and this loss is largely reflected in the availability of petroleum products in the market - especially diesel for heating.
It is also reflected in the inability of the state to reimburse oil giants like Shell and total for their shares in oil and gas production. As for salaries, there are 1.3 million employees in the government sector and 587 retired workers, meaning 3 billion SP in salaries per month. this means 229 billion SP per year, made all the more difficult by the fact that according to official figures, no less than 17,000 Syrians have lost their job since mid-March. The real number, of course, is probably much higher. Meanwhile, the public sector is in shambles, and all new state-funded projects at a complete standstill.
- What's the attraction? IIF says UAE’s economic stability wooing foreign capital investment
- Public-private partnerships may be key to take Gulf's economic growth to next level
- Blame it on the women: Why KSA businesses are saying govt feminization program costing them millions
- Kazakhstan calling: Astana looking to target $5 billion in investments from UAE
- S. Sudan and Egypt discuss economic ties, trade relations