The Associated Press: Why the economic crisis in Syria has reached such a dangerous level?

The Associated Press published a report on the Syrian economy and the deterioration in it, especially in the last year in particular.

The Syrian economy has reached its lowest level in 11 years, with rising inflation, a declining currency, and an acute shortage of fuel in both government- and opposition-controlled areas.

The Associated Press indicated that life in Damascus has reached a dead end.

The streets are nearly empty of cars, homes receive a few hours of electricity per day at best, and the cost of food and other necessities has skyrocketed.

The Syrian pound (Lira) recorded an all-time low of 7,000 pounds to the dollar on the black market last week, before rebounding to below 6,000 pounds.

However, that’s still quite a drop, given that the rate was around 3,600 one year ago.

The Syrian central bank raised the official exchange rate from 3,015 to 4,522 on Monday, apparently in an attempt to lure people in by using the official rate rather than trading on the black market.

Amid fuel shortages, the government raised the prices of petrol and diesel.

At the official price, 20 liters of petrol now costs nearly a full month’s salary for an average government employee, which is about 150,000 Syrian pounds, or $25 at the black market rate.

Some employees stopped showing up to work because they couldn’t afford transportation.

Since wages don’t come close to covering the cost of living, most people “live on remittances, live on two or three jobs and on humanitarian aid,” says Joseph Daher, a Swiss researcher and professor at the European University Institute.

The UN Special Envoy for Syria, Geir Pedersen, told the UN Security Council on December 21 that “the needs of the Syrian people have reached the worst levels since the start of the conflict”.

According to the Associated Press agency, apart from years of war, sanctions and rampant corruption, the Syrian economy has witnessed a series of shocks since 2019, starting with the collapse of the Lebanese financial system that year.

“Given the open borders between Syria and Lebanon and both being increasingly cash-dependent economies,” said Nasser Saidi, a former Lebanese economy minister, “their markets are inextricably linked to the high prices in Syria.

Syria has also been hit by the global economic downturn caused by the Covid-19 pandemic and Russia’s war in Ukraine, which has pushed up global fuel prices and drawn the attention and resources of Damascus’ ally, Moscow.

But the most important factor, analysts said, is the recent slowdown in oil shipments from Iran, which has been the main source of fuel for Damascus since the early years of the prewar conflict.

Syria was an oil exporter, and now the US-backed Syria Democratic Forces (SDF) control its largest oil fields in the east of the country, so the Syrian government must import the oil.

Jihad Yaziji, an economist, pointed out that “Damascus buys oil from Iran on credit, but” when they sell oil in the markets… they sell it for cash. So facing the oil supply also reduces the money supply of the government”.

Syrian Oil Minister Bassam Tohme, speaking to state television in November, blamed the fuel shortage on Western sanctions and long delays in oil supplies, without explaining the reasons for the delay.