Syria Economics Project

Internal Strengths - Politics

There is a vast void of internal political strength within Syria; however, there are some

political strengths in regards to both the Baath government led by Assad and the National Coali-

tion for Syrian Revolutionary and Opposition Forces led by mainly by the Syrian National Coun-

cil. The Baath government led by Bashar al-Assad has strong control over its own military and

security forces which is actively using to repress rebellions by the Syrian people and keep the

state under control by the current government. Assad also has strong political ties with Hezbollah

due to decisions to financially support them in their confrontations with Israel. This political de-

cision led to Hezbollah launching a counter offensive last year against the Syrian rebels. The As-

sad government is dominated by Alawite Shia members which are a minority and therefore en-

courages cooperation and trust in the upper echelon of the government. There are strong political

ties to Russia and Iran. Russia has been an increasingly important ally in that it has supplied As-

sad with highly advanced weaponry to be used against the Syrian people. Another strength is As-

sad’s refusal to give up power and instead continue with his authoritarian rule, because it estab-

lishes a sense of stability for the supporters of the Assad government.

The Syrian National Council that was established in 2011 and is recognized by the United

States, Britain, France, and various other countries. The council displays political strength in that

it strongly backed by the majority of people in Syria. It also includes various opposition groups

which increases the military support for the government. The government coalition is recognized

by major countries around the world which has led to foreign aid, mostly humanitarian. The Free

Syrian Army supports the Syrian National Council and is the main military force of the govern-

ing body.

Internal Strengths - Economy

The economy of Syria is also suffering, but has some redeeming qualities. The Syrian

economy used to import foodstuffs; however, it turned that around and now has the capability to

export agricultural goods. The agricultural sector of the economy is fairly diversified and makes

use of mixed farming. This is the integration of both cash crops, such as cotton, and sustenance

farming, such as wheat, barley, and sugar beets. Another strength of the agricultural section is

the fact that Syria implemented a huge irrigation system in northern Syria which has greatly in-

creased farming output. Phosphates make up the main mineral exported from Syria and the rest

of the mining industry is not a large portion of its exports. The most lucrative export Syria pos-

sess is oil and there are a large amount of multi national corporations that are waiting to cash in

on the opportunity to import their oil. Their are some MNCs that are currently working with

Syria, most notably the Al-Furat Petroleum Company. Land is also a valuable asset to offer to

countries or investors abroad because it isn’t controlled by the state and prices aren’t regulated so

the returns are relatively safe and feasible. Syria has gradually opened itself up to financial insti-

tutes that are willing to loan money to Syrian people which is important for investment and eco-

nomic development, however this is more of a pending opportunity in the face of the civil war.

The potential for a strong Syrian economy is more than possible as can be seen in Gross National

Income graph below. The data obviously suggests a steep upward trend in the GNI which is in-

dicative of stronger business activity and economic growth.

There is also a significant interest in Syria in regards to foreign direct investment.

There are many MNCs that hope to take part in FDI due to Syria’s resource endowment, mostly

oil.

Another positive economic feature of Syria is that they have taken great strides recently to re-

structure their debt and therefore decrease their debt obligations while in the midst of this civil

war. Overall Syria is wrought with economic opportunity that could easily be utilized if the

country ceased its civil war and adopted a free market attitude.

Internal Strengths - Social

The internal strengths regarding Syria are largely based on potential or past progress as

social characteristics of Syria are overtly negative due to the civil war. As you can see below, the

fertility rate was significantly declining up through 2010. This is an important social aspect be-

cause a high fertility rate is a leading cause of high unemployment rate and rampant poverty. It is

well known that the high fertility rate and high poverty rate correlate. This is because excess

children cost more to take care of and once they’re older there area lack of jobs due to the im-

mense population. A declining fertility rate is a step in the right direction fixing poverty.

Another important social factor is the literacy rate. There is a literacy rate of about 96% for

males but below is a trend of the literacy rate for women which is similar to males. It shows the

upward trend of literacy rate for women which is good because this is the first step in gender

equality. It is also a step to empower women which lends itself to decreasing the birth rate as

well because more women are focused on their careers and do not have children, wait longer to

have children, or have a reduced amount of children.

The overall effect of the previously successful primary schooling for boys and girls and the de-

creasing fertility rate results in a decreased birth rate as shown below which is a very important

statistic in determining growth. Birth rate affects the GDP per capita, GNI per capita, unemploy-

ment rate, and overall development in a country.

It is important for Syria to continue to decrease its birth rate as shown above especially during

these times of civil war; however, another strength that Syria possessed previous to the war was

a decreasing death rate. A decreased death rate is indicative of improving health standards and

greater security. This social development could return once the civil war is over.

Overall, Syria has many redeeming improvements in the quality of social statistics in its past. It

must quell the unrest and return to this progress track. These statistics are internal strengths only

because it is proof of the possibility for progress, despite a recent departure from that track.

Internal Weaknesses - Politics

The weaknesses of the political system of Syria is obvious. There are two recognized

governments of the people of Syria which are at war with each other. The official Baath govern-

ment of Syria run by Bashar al-Assad and the Alawite minority is an authoritarian regime. Assad

held a plebiscite on the issue of keeping himself in office and he was the only candidate on the

ballot; an example of his authoritarian schemes. Assad is not held accountable for his actions due

to military control and this in turn leads to social and economic crises which upset the people.

The government’s decision to use military force on the upset civilians has led to even great politi-

cal issues with countries around the world and organizations supporting peace and trade. There is

an obvious lack of political stability which causes an economic recession; however, even in good

times the government is lacking in its ability to change. The country requires radical economic

and social changes aren't able to happen in a corrupt, greedy, self centered ruling government

body.

The National Coalition for Syrian Revolutionary and Opposition Forces could be benefi-

cial to the people and economy; however, unless the coalition ousts Assad they remain as the key

reason for the political branch of Syria to continue ordering attacks. This government has strong

allies but is not able to receive substantial military aid or make an alliance. The government also

consists of many different groups brought together by one cause, so that is possibly another areas

of unrest or disagreement within the political system.

In order to fix the internal political weaknesses the civil war needs to come to an end and

a democratically elected president needs to be voted into office. The first step is eliminating the

greed and selfish culture about the Alawite minority that keeps them as the sole ruling class. The

president would then need to replace any advisors or cabinet members of the old regime that

were stuck in the past ways. The government would have to be willing to ignore their own cul-

tural identity and support people of other cultures that are vital to Syria’s economy. They would

also have to abandon their anti-western attitude and form agreements with nations like Europe

and America that offer strong alliances and beneficial trading partners. The next step is to have

the government open up to free market trading and allow financial institutes to flourish within

Syria instead of the present laws against various financial transactions. Overall Syria needs polit-

ical stability brought about by a popular elected leader that can be held accountable for actions

taken in office.

Internal Weaknesses - Economy

There is an abundance of weaknesses in the Syrian economy ever since the civil war be-

gan. To start off, there has been a barrage of sanctions placed on Syria which has all but stopped

trade in and out of the country. The only solution to this problem is to end the civil war and com-

ply with the demands of the countries and organizations that placed the sanctions.

The agricultural sector of the economy is fairly efficient; however, large portions of the

irrigated lands are government owned and force the product to be sold above the world price in

domestic markets which hurts consumers. This fact suggests that the conditions of production are

more costly and inefficient than others and is the result of a lack of advanced technology, which

is in true in that there are serious water shortages and storage facility shortages. This advanced

technology that could increase production and quality of foodstuffs and allow farmers to com-

pete in the world market and support themselves without government intervention would either

be the result of foreign direct investment which is directly productive or development aid from a

country or agency.

Syria also is endowed with oil as a natural resource. The issue with this oil is that Syria’s

government has almost complete control over all the oil production in the state and the exporting

of it. Production has decreased as demand increases which is once again due to technological

fallbacks. There is a need for the privatization of the oil industry in Syria. However, Syria has

made it illegal for Western companies to work in Syria which eliminates the possibility of at-

tracting the most lucrative and successful Multi National Corporations to contribute FDI for

Syria and its residents. Syria must allow FDI by Western MNCs so that they provide new tech-

nology to search for and produce oil. The state may lose complete control over all oil resources,

but it will increase the amount of oil it produces and help raise GDP and GNI as well as offer

jobs and most likely education, due to the fact that an educated person is needed to work at an oil

refinery. The graph below represents the FDI in Syria which is completely negative and has con-

tinued to become even more negative over time. It is logical to assume the FDI has worsened

much a larger margin due to the civil war and a lack of confidence in the country.

The industrial sector is another important aspect of the Syrian economy that suffers due

to too much state control or a lack of help. The Syrian government must recognize the great ben-

efits of supporting small businesses. There are large restrictions on financial institutions and the

types of loans or amounts they can provide. Syria needs to change this and support the financial

industry so that small businesses can acquire loans and grow their own business that would em-

ploy more of the impoverished people that have flocked to city for jobs while helping the finan-

cial institutes as well. However, in order for this to be effective the government must facilitate

the sale of the products and not force its own control over the sector.

Another economic weakness due to the civil war is Syria’s inability to enact effective fis-

cal policies. Taxes can hardly be collected or enforced due to the large percentage of the popula-

tion rebelling against the government in armed conflict. In addition to the lack of taxes there is

rampant inflation as shown below. This inflation is due to instability in the country as a result of

civil war, supply shocks, and a continuing demand for products that are declining in production.

The civil war must be ended so that monetary policy in conduction with support for financial in-

stitutes could decrease the inflation rate through spending that would restore and increase aggre-

gate supply of goods.

The graph below represents the effect of an increasing inflation rate which is increasing prices

for consumers that still manage to buy products. Due to the civil war it is likely there is a large

amount of theft and or destruction of property which hurts supply and further increases prices.

Internal Weaknesses - Social

There is an abundance of social issues within Syria due to the civil war. There are various

blatant human rights violations and a decreasing standard of living for most all citizens. The

armies on both sides have been accused of human rights violations. Assad’s forces have kid-

napped and tortured rebels and even used chemical weapons against civilians. The opposition

forces are not without fault though and have practiced indiscriminate killing of civilians that sup-

port Assad. There has been mutual destruction of each other and overall anguish for the country

of Syria. The only suggestion to fix this is to end the war as soon as possible and have those re-

sponsible for the atrocities brought up on war crime charges. The civil war has majorly impacted

health standards, not just due to fighting, but shortages of medical supplies. Many pharmaceuti-

cal producers have been destroyed in the war and now patients are suffering and resort to black

markets to buy drugs at inflated prices. In order to facilitate the production of these drugs or the

deliverance of the drugs Syria must ask for humanitarian aid or request that specific sanctions be

lifted in order to produce drugs to save lives of civilians. Education is lacking as is obvious by

the poverty trap that Syria faced and still does, though less of an issue in the face of war. Chil-

dren need to be educated for the work force so that there is less unemployment and greater out-

put. Also Syria needs to continue to encourage a lower birth rate. This may be done through em-

powering women or providing easy access to birth contraceptives. It is possible that Syria could

receive project aid from an agency to help pay for either project which in the long run would

help lower unemployment and increase the standard of living.

External Opportunities

Syria is in line for serious aid considering the condition of their country recently. The

most important aid that either government in Syria could attempt to receive at the moment is hu-

manitarian aid. This aid would most likely come from a multi national agency, such as the

United Nations, or a non governmental organization. Humanitarian aid in the form of medicine,

food, and emergency relief would help the citizens that are currently suffering due to the condi-

tions of war. Once the war is over though the remaining government would look for multilateral

aid most likely in the form of development aid from entities such as the International Monetary

Fund or the World Bank. This form of aid would be necessary to fund economic and social de-

velopment. For instance, it could fund the building of schools, hospitals, pharmacies, waste facil-

ities, and other standard of living necessities. However, it could also fund capital purchases to

help increase the productivity of the agriculture or industry sector of the economy.

A more effective technique to strengthen the economy is too look to Multi National Cor-

porations to invest directly in the country after the civil war. MNCs bring advanced technology

into the country that could increase production and grow GDP. The MNCs would require work-

ers which would decrease the unemployment rate and it would also provide tax revenue to the

state. It is likely that the MNCs would also want healthy, educated, and motivated workers so

they would provide health services, send them to school, and ofer them decent pay that would

help fuel economic growth. As long as the amount of MNCs does not overwhelm the rising do-

mestic producers then the opportunities are vast.

Tariffs at the moment are ineffective due to the vast amount of sanctions. However, once

sanctions are removed the country will be weak and it would be unwise to place tariffs on goods

that citizens need. Instead the government could begin to collect tax revenue by placing tariffs on

luxury goods, thought that won’t products much tax revenue most likely.

Summation -

Syria should continue to ask for humanitarian aid during the civil war. After the war

Syria should request development aid in order to rebuild infrastructure, schools, hospitals, phar-

macies, and irrigation systems. The standard of living will rebound some and people will be able

to survive more easily. Syria should soon after allow Western MNCs to invest directly in Syria in

order to bolster production of food, oil, and industry goods. This will decrease unemployment,

increase standard of living, and increase GDP. The financial sector should be supported by the

Syrian government as well and restrictions placed on the existing companies should be eradi-

cated so that small businesses can take full advantage of loans and investments in order to pro-

duce more and make more money for the financial companies. GDP will continue to increase as

the government spends its tax revenue along with citizens that now have money and the in-

creased exports due to FDI. More importantly the supply shocks will have reversed therefore

quelling the inflation rate. The government will then continue to focus on decreasing birth rate

through empowerment of women and access to birth contraceptive, which will decrease the

poverty in Syria and help lower unemployment later on.