Economic squeeze tightens on Syria

The worsening economic situation in Syria is compounding the woes of the average Syrian, who is finding it increasingly difficult to find petrol. In Damascus, long queues formed outside filling statioShow more

DAMASCUS // Syria’s economic crisis is deepening with petrol shortages, a plunging currency and complaints from government employees over unpaid salaries.

Long queues have been common at filling stations in and around Damascus for months but only for those needing diesel. Drivers of petrol-engine cars had been spared, until a serious shortage last Thursday.

Many private garages have closed and the arrival of a delivery tanker at government-run refuelling points has become important local news, often prompting chaotic scenes and huge traffic jams as angry drivers – already annoyed by a recent price rise – jostle for a place at the pumps.

“I went to five fuel stations and none of them had any petrol, I was lucky to get some at the sixth just before my tank was empty,” said one taxi driver.

He complained that his 10-hour working day now had to be extended by two hours to search for petrol. “The way things are going we’ll soon be back to using horses and buggies,” he said.

Government officials insist the shortage is temporary, and due to a mixture of bad winter weather and “terrorist” attacks on pipelines in Homs.

A tired and increasingly sceptical public has heard similar pledges that diesel shortages would not endure – they have – and that long electricity cuts would soon be shortened.

Instead, in all but the wealthiest parts of Damascus, blackouts have held steady or lengthened. Middle-class areas on the outskirts of the city not directly involved in protests now have only 12 hours of power a day.

Syria’s currency, the stability of which was once trumpeted by the authorities as a barometer of the nation’s economic health, is losing value so quickly that businesses have started to price goods and services in US dollars.

“We fix our prices in dollars but people are allowed to pay in Syrian pounds at the day’s [street] exchange rate,” said a technician at a large electrical services company operating in and around the capital.

“Soon we may start asking for payment in dollars because that will be the only way to stop losing money.”

Despite the government’s spending billions in hard currency to try to keep the exchange rate close to the pre-crisis value of 47 Syrian pounds to the dollar, the black-market rate hit 90 pounds to the dollar on Tuesday night after starting the day at 84.

An economist in Damascus said security forces recently arrested several well-connected black market currency traders, in what he said may be part of a despairing effort to more tightly control hard currency supplies. “It will not succeed,” he said.

“The only way to stop the currency sliding even further is to find a real political solution to the uprising. Either that or we have to hope that Russia or Iran is prepared to put a gift US$15 billion (Dh55.1bn) in our hands. I don’t see either of those scenarios happening.”

Syrians who failed to convert their cash either to gold or hard currency before stringent exchange controls were introduced last year have had the value of their life savings almost halved.

At the same time, prices of basic goods, from fuel to staple foods – except bread – have continued rising, eroding the purchasing power of those on fixed state salaries.

The government is the largest employer in the country, with legions of ordinary workers earning about 15,000 pounds a month – $6 a day, scarcely enough to support a family.

Sugar, green peppers and rice, which all cost about 30 pounds a kilogram before the crisis began, now sell for between 75 pounds and 140 pounds.

The prices of eggs and chicken have doubled.

“We used to buy whatever food we needed, now we have cut back,” said Um Osama, 50, a mother-of-two in the capital’s Yarmouk neighbourhood.

Her husband is a government employee and one of her sons works in a privately owned sweet factory. His salary was recently cut by 75 per cent.

“When we eat meat now, we buy half as much, and we don’t have it twice a week like before,” Um Osama said. “It’s hard to keep track of the prices because every day things have a new price.”

Government officials blame economic sanctions imposed by the United States, the European Union and the Arab League. Yet while acknowledging the country is facing economic difficulties they maintain Syria’s economy has a proven resilience to blockade and that key allies, including Russia, China and Iran, will continue to do business with Damascus.

Yesterday’s announcement by Beijing that Chinese workers, including engineering teams, are to be pulled out of the country for security reasons has added to doubts that the Syrian economy will be able to weather the growing storm.

Economists and analysts say it is the widening non-payment of public-sector salaries that stands as the clearest signal of an economy heading for collapse.

“None of us has been paid for two months. If we are not paid at the end of this month then we will go on strike,” said a municipal employee in Syria’s eastern Jazeera region.

A supporter ofpresident Bashar Al Assad, he said his faith in the government’s ability to administer the country had been undermined.

In other parts of the country, including the restive province of Idleb, those on government payrolls have also not been receiving salaries.

“Public-sector workers are being told their money is held up in Damascus and cannot be given to them unless they travel to pick it up in person,” said a government economic adviser.

“It’s unclear how widespread it is, but if it continues it means the government is running out of money.”

He predicted the economy would not survive until the end of the year.

“It is now a matter of months until we see economic collapse in Syria, unless there is some miracle,” he said.

However, Nabil Sukkar, a former World Bank economist who heads a development consultancy in Damascus, said a breakdown was not imminent.

“We are suffering, there is hardship and there will be more hardship but I don’t see the economy collapsing soon,” he said.

“I think we can survive as things are for another 12 months or so. What really worries me is what sort of economy will be left at the end of it all?”