On April 22, the European Union lifted its embargo on Syria’s oil exports to enable the purchase of crude oil from the opposition. The diplomatic move also permitted the sale of oil equipment to the opposition and allow the investment in oil fields located in rebel-held areas.
As violence expands across Syria, fears over the future of the country are increasing. They range from the potential use of chemical weapons in the conflict to the unleashing of a full-fledged sectarian war and to the potential disintegration and partition of the country along sectarian and ethnic lines.
The following article is the transcript of a phone interview with Jihad Yazigi on the challenges posed by the Syrian uprising on reconstruction efforts and future economic policies.
As the Syrian conflict enters its second year, it is obvious that the war economy is becoming structurally entrenched and can no longer be considered merely a temporary episode. This entrenchment demands immediate analysis in order to help us understand the long-term consequences of the conflict. These include the ability of the country to engage in a meaningful reconstruction process, the new relationships between the current elite and the post-conflict authority, and, most importantly, the possibilities for refugee repatriation as well as the alleviation of the long-term socio-economic ramifications of protracted conflict.
The Euphrates Dam, once the most potent symbol of the centrally planned development policies of the Syrian Baath Party, was taken over by rebel forces in early February. The fall of the dam is one of many recent successes of the opposition in the resource-rich northeast, which is now almost entirely out of the hands of the government.
The signing of several economic agreements on January 16 between Iran and Syria confirmed the persistently strong strategic relations between the two countries.
One of the main questions surrounding the Syrian uprising at the beginning of 2012 was if and when an economic collapse would occur. As the year draws to a close, the question has instead become whether one can still talk of “a” Syrian economy as such.
While there is a general consensus that the uprising gripping Syria since March 2011 is part of the broader regional movement for better governance and more freedoms, there has been little debate as to the extent to which the economic and social conditions prevailing in the country contributed to the uprising. The question of whether Syrians revolted because of their thirst for freedom, justice and dignity or whether they did so because of their poor economic and social conditions remains, however, important if one wants to understand the reasons that led to the uprising and produce viable economic reconstruction plans.
The Syrian government is using its many remaining allies of the emerging world to try to reduce the financial constraints weighing on it.
Price levels in Syria vary enormously depending on where one lives, on the intensity of the violence in that area, on the ease of distributing and transporting goods there or on its political or strategic importance for the central government. Thus while inflation officially stood at around 36 percent in June, this should be read only as a broad indicator rather than a reflection of the actual levels of inflation across the country.