Analysis |

Russian Flour, Kurdish Fuel, Turkish Power: Assad May Control Syria, but Not Its Economy

Goods flow from parts of the country controlled by opposition forces to regime-run areas, disrupted by occasional fighting in poverty-stricken Syria, which has largely dropped from the headlines

A photo of Dr. Zvi Bar'el.
Zvi Bar'el
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Syrian refugees walking through a camp for displaced residents near the village of Kafr Aruq, in Idlib province, Syria, in January.
Syrian refugees walking through a camp for displaced residents near the village of Kafr Aruq, in Idlib province, Syria, in January.Credit: Ghaith Alsayed,AP
A photo of Dr. Zvi Bar'el.
Zvi Bar'el

Photographs and video clips from Syria show long lines in front of bakeries and gas stations in cities under regime control. Hundreds of people move slowly to the distribution sites, where they pull out their smart cards and get sealed packages, each containing seven large pitas, depending on household size.

A family of two gets two packages, a family of six gets three packages. The flour is imported mainly from Russia or northern areas under Kurdish or opposition control, and it’s divided up by a strict formula used by all the government bakeries.

Every district has a registry of numbers of people eligible for the rations. Each package costs 100 to 150 liras (the black market charges 4,000 Syrian liras to the dollar compared to the official rate of 1,250 to one). Whoever doesn’t suffice with the government ration can buy pitas privately for 1,500 liras for much better bread, rather than the pitas, "where you can taste the almost unbaked dough with a terrible smell,” as one customer described it.

Customers wait a long time on the long lines, sometimes seven to 12 hours before they get to see the vendor and then discover that they’ve run out of pita. Last month, some of the Russian suppliers stopped selling flour to the regime because of late payment. They only resumed supplies this month after a new contract was signed with Russian exporters.

Even the flour supply from northern Syria stops at times due to fighting between government and Kurdish opposition forces, which sit on the country’s wheat supply. But even when the flour arrives, the bakeries have trouble baking bread and pita because of fuel shortages. The state buys some fuel from Kurdish forces and the interim government that controls most of the oil fields, but when there’s a conflict between them and the Syrian army, the oil pump gets shut and the lines at the gas stations get so long they block all the streets.

Iyed Bilal, the director of the treasury department of the Syrian Central Bank, shows the new banknote of 5,000 Syrian pounds - the currency's largest - in Damascus, Syria, in January.Credit: ,AP

Syria has been pushed out of the headlines during the past year despite the fact that the violent conflict and local battles haven’t stopped. The coronavirus, which has also struck the Assad household, the U.S. elections and the diplomatic impasse in Syria have rendered the country uninteresting to the international community despite periodic reports issued by the UN and aid groups full of disturbing data about the level of poverty and the loss of an entire generation.

A new report by World Vision estimates that the decade-old war has cost about $1.2 trillion, and even were it to end now it could be expected to cost through 2035 another $17 trillion, a sum which reflects anticipated reconstruction costs and lost productivity from all the professionals, students and refugees who will not be able to contribute to the Syrian economy.

The Syrian government will not be able to raise such sums on its own, requiring huge donations from willing countries and corporations. Investors will wait until political circumstances arise that would ensure a more stable security situation. Meanwhile, the regime is trying to squeeze local sources as much as it can. For example, the head of the Syrian army’s recruitment branch said he would seek legislation that the regime could confiscate the private property of anyone over 42 who hasn’t served in the military or paid $8,000 for averting such service, as well as their relatives’ property as much as needed to cover the imposed fee. It’s doubtful there are any ordinary citizens around who can afford to foot the bill for such an expense in a country where the average wage is about $45 a month.

Confiscating property is nothing new in Syria. Hundreds of thousands of people have lost their homes and fields to the state based on an anti-terrorism law allowing it to confiscate the property of anyone deemed to be a terrorist, a definition which encompasses all militias and those who aide them, over the past decade. Another law, from 2018, permits the confiscation of real esate properties from whoever cannot prove their ownership of it.

This is a particularly cruel maneuver, since most Syrian citizens, particularly in rural areas, avoided registering their assets even before the law to save on the high registration costs and requisite briberies for the officials in charge. Transfer of ownership is done via private agreements without a government stamp. Millions of citizens left their homes during the war and moved to regions under opposition control or even abroad. Their property remained behind. Some of it was seized by regime troops and some was “legally” confiscated.

Internally displaced Syrian children walk at a camp in northern Aleppo near the Syrian-Turkish border, Syria, in February.Credit: MAHMOUD HASSANO/ REUTERS

Many citizens hastened to sell their assets at any price to avoid being left with nothing but agents and contractors seized control of many such assets due a dearth of buyers. An apartment in Da’ariya cost $800 per square meter before the Syrian army took it over and now it’s sold to realtors for $160 a meter. A Syrian woman who inherited $5,000 before the war and bought gold said she had managed this month to purchase an apartment. “I never dreamed I could buy an apartment with my inheritance money and now I’ve fulfilled a dream,” she said in an interview with the Anav Baladi website.

Prices have quintupled near the Turkish border. Internal migrations have created a huge demand for housing, so it’s not unusual to find an apartment selling for $70-80,000 or $200,000 for a larger one. The original local population suffers as a result and can’t afford to buy an entire flat or pay rent for an apartment, the price of which jump every six months.

The other reason is that the level of public services such as water, electricity, and health is generally good and more accessible in regions under opposition control than in areas run by the regime. The opposition areas benefit from healthy trade with Turkey. Goods move from the north to the rest of the country. Turkey, which has no diplomatic or economic relations with the regime, provides merchant licenses to businesspeople in northern Syria for $2,000 a year and handles the money transfer via Turkish postal services that have opened in several cities in the north. Some cities like Tell Abyad and Ras al-Ayn also get electricity from Turkey and cheaper Syrian farm goods.

The regime controls most of Syria, but it is not economically homogeneous. Turkey, Russia, Iran divide up the markets and natural resources, based on local forces. The close economic ties between the foreign countries and militias and local forces create a situation in which economic interests can be expected to interfere with and even obstruct political reconciliation efforts.

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