How can a Syrian citizen afford to buy a used car? He can’t. Even with a decent job, paying $65-$70 a month, he’d need 500 months to get his hands on a 2009 Kia that'll cost him $16,000. If he wants a new car, he'll need to save about 1,000 monthly salaries.
Car dealers in Damascus say the market is all but dead. Before the war, around 1,000 used cars were traded every day in the Syrian capital; today that number is down to barely 200. Car lots that once held dozens of vehicles now hold a handful, priced never to sell. The thousands of cars that were destroyed during the eight years of fighting created high demand, but the government has clamped down on new vehicle imports and has completely prohibited that of used cars, as part of the policy to preserve the country’s foreign currency reserves by not importing anything that can be made domestically.
The Syrian government awarded eight companies licenses to build cars in the country, and determined that only those eight can benefit from dollar allocations for the purchase of parts. Of those, only three companies are active, however, and they have found a convenient detour around these constraints. They import used cars that are missing tires or basic parts, put them back together in small workshops, and thereby “comply” with the criteria for receiving the foreign currency allocations.
Syrian car dealers now rely mainly on vehicle smuggling from Lebanon or so-called liberated areas, such as the Kurdish regions in the north, where cars cost around half what they do in government-controlled areas. License plates are switched, the engine and chassis numbers are erased and new ones are punched on top of them, the seats are wrapped in plastic film, paint is applied and any dents are knocked out, and the car can be sold as nearly new, if there are any buyers.
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The Kurdish autonomous regions supply Syrians with more than just cars. According to a recent report by the Syrian Observatory for Human Rights, the government in Damascus also buys petroleum and natural gas from oil fields under Kurdish control. The Syrian Kurds, who control 11 of the 20 or so oil fields, produce around 14,000 barrels of oil per day, which they sell to the government for about $30 a barrel (around half the market price). The estimated monthly revenue of the Kurdish regions in Syria from oil alone is around $12 million. In effect, they are selling Syria the oil that belongs to it, just as the Islamic State used to sell the very same oil to the Syrian government when it was in control of these regions.
For now, Washington ignores this violation of the U.S. trade sanctions on Syria. This is the same smuggling route for dozens of items whose import into the country is prohibited. In August, Damascus chopped the list of 41 permitted staples for import by about a quarter, and it seems set to make further cuts soon, following reports suggesting that the Central Bank of Syria doesn’t have enough dollars to cover necessary imports.
Shortages of basic commodities have created an active black market dependent on smuggling, which deprives the state of tens of millions of dollars in income tax and customs duties. As a result of the government’s strict supervision of food merchants and its efforts to enforce low, fixed prices, farmers prefer to sell their produce to neighboring states such as Iraq and Jordan, where they can receive much more than in the local market. The supervisory and enforcement authorities crack down, at least according to the government’s reports, against profiteers. They raid warehouses and grain elevators, go into stores to check prices and stocks, and take legal action against lawbreakers. But it’s a Sisyphean task that cannot end the smuggling or the laughable prices that sellers are setting.
The result is that ordinary Syrians are paying much more than their counterparts in Jordan and Lebanon for the same goods. As with cars, those living in areas outside the regime's direct control enjoy a higher quality of life on account of the stronger buying power of the Syrian lira in these areas. This is driving economic internal migration in Syria to the liberated regions, alongside the development of mass immigration sparked by the fighting and security situation.
On the face of it, this is a temporary situation that should change once the war ends and the Syrian government reclaims control of the entire country, but this years-long interim has no end in sight. Not only are the battles still raging, but the Russian-led efforts to reach a political settlement have not resulted in an negotiated plan of action.
Moscow’s first goal is an agreement over the composition of the committee tasked with drafting Syria’s new constitution, which will serve as the basis for elections and forming a stable government. A consensus has been reached on the committee’s 150 members, but there’s still a long road ahead to establishing a unanimous government. The most optimistic estimates are that it will be months before Syria returns to function properly; more realistic assessments say it will take at least two years before they can begin talking about rehabilitating of the state. Until that happens, smuggling will presumably continue to be the only stable foundation of the Syrian economy.