The country is currently almost surviving on aid and financial transfers from abroad

Internal and external reasons exacerbate the Syrian economic crisis again

• Syrians line up for fuel in Idlib.

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• Food prices are rising faster with the collapse of the Syrian currency.

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The Syrian economy has reached its lowest levels since the outbreak of the civil war nearly 12 years ago, with soaring inflation, a depreciating currency, and severe fuel shortages, in both government- and opposition-held areas.

Life in Damascus has come to a standstill. The streets are almost empty of cars, electricity runs to homes for a few hours a day at best, and the prices of food and other necessities have skyrocketed.

Mounting economic pains have led to protests in areas controlled by President Bashar al-Assad's government, which have sometimes met with a violent response.

In this report, we look at the cause of the worsening economic situation and its potential impacts.

How bad is the crisis?

The Syrian pound recorded its lowest level ever at seven thousand pounds to the US dollar on the black market last week, before improving to about six thousand pounds, which still represents a significant decline, given that the rate was about 3,600 pounds to the dollar one year ago.

The central bank raised the official exchange rate from 3,015 to 4,522 on Monday, apparently in an attempt to entice citizens to use the official rate rather than the black market.

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

At the official price, 20 liters (5 gallons) of petrol now amounts to 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 could not afford transportation.

The Syrian-Swiss researcher and professor at the European University Institute in Florence, Italy, Joseph Daher, said that wages do not come close to covering the cost of living, and therefore most people live on remittances, two or three jobs, and humanitarian aid.

The UN Special Envoy to Syria, Geir Pedersen, stated to the UN Security Council on December 21 that meeting the needs of the Syrian people has reached the worst levels since the start of the conflict.

Protests broke out in some areas controlled by the government, particularly in Sweida and Daraa in the south.

In Suweida last month, a demonstrator and a police officer were killed after a demonstration turned violent.

reasons for deterioration

Aside from years of war, sanctions, and endemic corruption, the Syrian economy has experienced 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, both of which are increasingly cash-based economies, their markets are closely linked," said the former Lebanese Minister of Economy, Nasser Saidi.

He added that the collapse of the currency and the lifting of subsidies in Lebanon led to a depreciation of the currency and an increase in prices in Syria.

Syria was also affected by the global economic downturn caused by the “Covid-19” pandemic and the Russian war in Ukraine, which led to a rise in the prices of fuel and other commodities globally.

However, analysts said the most important factor was the recent slowdown in oil shipments from Iran, which has been the main source of fuel for Damascus since the early years of the conflict. east of the country, so Damascus has to import oil.

The economist and editor-in-chief of "Syria Report", Jihad Yaziji, indicated that Damascus buys oil from Iran on credit, but "when they sell oil in the markets... they sell it for cash." Therefore, the decline in oil supplies also reduces the government's cash resource.

In an interview with state television last November, Syrian Oil Minister Bassam Tohme blamed Western sanctions and long delays in oil supplies for the fuel shortage, without explaining the reasons for the delay.

Iranian officials did not respond to a request for comment.

The situation in opposition areas

Residents of makeshift displacement camps in the last opposition-held stronghold in Idlib governorate, in the northwest of the country, suffer from storms and freezing weather every year.

Analysts say they have suffered from the economic crisis in neighboring Turkey this winter, as well as rising prices and reduced aid because of the war in Ukraine.

Idlib has seen long queues form for fuel.

Meanwhile, battles take place in the United Nations between Russia and other international players from time to time over allowing aid to cross the border from Turkey into northwestern Syria.

The six-month extension of the "cross-border assistance mechanism" expired yesterday, with the Security Council voting to renew it a day earlier.

Russia is calling for the aid to arrive through Damascus, under the pretext that the aid coming from Turkey is being exploited by armed groups, and says that the international community does not provide adequate aid to the residents of the areas controlled by the government.

However, humanitarian organizations paint a "terrifying picture" of the consequences of cutting off cross-border aid. Tanya Evans, the country director of the International Rescue Committee in Syria, says that fuel and food prices are rising, while funding for humanitarian aid is shrinking.

She added that this, along with the weather and an outbreak of cholera, "would be a deadly combination if the only remaining lifeline to this part of Syria was closed."

Violence erupted again

Analysts say that if the ongoing crisis continues, more protests are likely to be organized, but they have largely ruled out the possibility of a new nationwide anti-government uprising, such as the one that erupted in 2011, which exacerbated the crisis and plunged the country into civil war.

Daher pointed out that the recent protests were "fragmented and local," adding that the country is currently almost living on aid and financial transfers from abroad.

Daher mentioned that the Syrians surveyed in a soon-to-be-published study reported that they receive between $100 and $200 per month, on average, from their relatives abroad.

He continued, "The population is very exhausted, and they think about survival above all."

• Life in Damascus has come to a standstill. The streets are almost empty of cars, electricity reaches homes for a few hours a day at best, and the prices of food and other necessities have skyrocketed.

• Syria has been affected by the global economic downturn caused by the "Covid-19" pandemic and the Russian war in Ukraine, which led to a rise in global prices of fuel and other commodities.

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