DAMASCUS // For years Abu Mohammed struggled to make ends meet, working as a painter, fruit seller or water carrier to put food on the family table. But soaring prices have made his daily battle for survival ever harder. "A year ago I could pay for all the basics with 7,000 Syrian pounds [Dh440] a month," he said. "Today I need double that. Today I need 14,000 pounds just to get by."
Although the cost of food, fuel and housing has risen dramatically in Damascus, household incomes for the majority of Syrians has not. Official government figures for 2007 recorded an inflation rate of less than six per cent, a number rejected by independent economists here who estimate that real living costs rose by up to 30 per cent. Whatever the actual numbers, inflation is beginning to bite hard and the poorest members of society, such as Mr Mohammed, 47, are bearing the brunt.
He said that in 2006 he could feed, house and clothe his wife and seven children without outside help. Now he relies on handouts from a community mosque in Blackstone, where he lives, 8km south of Damascus. "Life is getting unbearable," he said. "The cost of living is all I talk about with my neighbours; it's a constant worry, it's the only thing on my mind. It's the only thing Syrians think about."
A poor harvest has pushed down supplies of food, while an influx of Iraqi refugees has added to demand. The resulting rise in prices has forced Mr Mohammed into an increasingly desperate position. Each afternoon he goes to the local market to buy damaged fruit and vegetables that are sold cheaply. Sometimes, he said, he sifts though rubbish dumps for pieces of scrap metal that can be sold to salvage yards.
"We have one meal a day because that's all I can afford at the moment," he said. "We eat meat perhaps twice a month. I'm ashamed to tell you my daughter fainted in school, because I hadn't fed her properly. She was too embarrassed to tell her teachers it was because she was hungry. "I'm not talking about missing out on luxuries like roast chicken or kebabs; the basics are getting too expensive. Life is getting harder and harder."
In a recent survey of 1,000 Damascus residents by the Syrian Economic Centre, 70 per cent said their financial situation had "deteriorated seriously" during the past two years. Syria's economy is in transition, shifting from a Soviet-style socialist system to a more open, free-market model. The move has ended decades of stagnation and brought about an economic recovery, with Syria now showing sustained growth in national output.
But is has also led to an upsurge in inflation, and in Syria pressures have been exacerbated by the movement of hundreds of thousands of Iraqis fleeing the violence of their country. The International Monetary Fund has praised the Syrian authorities for their handling of the situation and for resisting the temptation to simply print more money. A 2007 International Monetary Foundation report said that "barring policy missteps or a deterioration in the regional environment, the near-term outlook for growth and inflation looks favourable".
But with oil reserves running dry, the government can no longer afford to bankroll huge national subsidies, something economists warn is a potential time bomb for the Syrian economy. "There is no easy way to deal with this problem; it's going to be painful," said Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment. "If we don't remove subsidies, there will be a growing deficit, and that will cause inflation. If we remove subsidies, salaries will have to be raised and there will be inflation."
Syria imports diesel for Dh1.8 per litre and sells it under government subsidy for Dh6 per litre - far cheaper than the true market cost. Supply shortages mean some fuel sellers already charge more than the government-approved price, adding Dh3.6 to Dh7.2 to the cost of 20 litres - a 30-per-cent rise. The extra cost is easily met by the minority of wealthy Syrians, but is a burden the working-class majority can ill afford.
"These subsidies and the need to remove them mean there is a build-up of inflationary pressure," Mr Sukkar said. "Inflation is dangerous for the Syrian economy, as it's dangerous for all economies; the problem is we are heading towards a threatening level. We should take steps to cope with it before it gets out of control. Difficult decisions are going to have to be made." Housing costs in Syria's urban centres have also soared dramatically during the past two years, pushed up by rising costs of imported construction materials, such as steel and cement.
Last year Mohammed Mamard, a real estate company owner and builder in Damascus, said he paid Dh180 per tonne of cement. This year the price has risen to Dh550 per tonne. "Costs went up, and there were lots of Iraqis looking to rent property so the market just exploded," he said. "We were selling houses before we'd built them. I used to make maybe 15 per cent profit, but in 2006 and 2007 I would put in perhaps a 40 per cent profit margin and the houses would still sell."
The fevered state of the property market was heightened by speculative investments, with Syrians rushing to buy land after the announcement of a series of multimillion-dollar real estate ventures, including by Emaar Properties of Dubai. "Prices of homes have effectively doubled," Mr Mamard said. "What used to sell for a million pounds [Dh71,850] now sells for 1.5 or two million. I think that has peaked now, it seems to have stabilised."
In his illegally built house in Blackstone, just south of Damascus, Mr Mamard said he feared his situation was only going to get worse. "I walk out of a shop, and the next time I go in the prices have gone up. "If they remove the subsidies I don't know how I will pay for things. My wife has diabetes, and I can't really afford the medicine as it is. I don't know how we will get by." psands@thenational.ae
