Earthquake to Have Significant Impact on Syria’s Economic Prospects

The earthquake that struck Syria on February 06 will significantly impact the country’s economy, which is already suffering from serious challenges.

On the evening of February 07, reports indicated that thousands of buildings across the country’s northwest had totally or partially collapsed or sustained cracks. Although less information was made available on economic infrastructure, the government reported that several segments of the Banias Refinery were cracked, and the power transmission network was also affected. According to a government statement, the Banias Refinery was temporarily shut down and should restart within 48 hours.

The only positive note is that most of the country’s prime economic assets, i.e. power plants, gas processing plants, oil and gas wells, phosphate mines, and dams, appear to be largely intact, being located in the country’s central or eastern areas, which were little affected by the earthquake.

But this will be of little comfort given the scale of the devastation and the urgent needs of the population.

While it is much too early to provide estimates on the cost this event will have on the economy, it is evident that the substantial financial effort required to rebuild what was destroyed by the earthquake is out of the reach of the Syrian government and the local administrations governing Idlib and the northern countryside of Aleppo, i.e. the Syrian Salvation Government and the Syrian Interim Government.

For almost a decade, the Syrian government has not invested in its infrastructure, instead dedicating most of its spending to the war effort and civil servant salaries. Since the end of 2019 and the collapse of the Lebanese banking sector, economic conditions across the country have significantly deteriorated. Thus, the government is unlikely to devote the necessary funds to rebuild affected areas. The financial situation of the Syrian Salvation Government and the Syrian Interim Government is not much better.

At the end of 2016, after the fall of Aleppo, Damascus claimed that the time for reconstruction had come and expected funding to flow from regional and international actors. The unwillingness of the regime to make political concessions, the absence of any reconstruction strategy, widescale and systemic corruption, and western sanctions were among many factors that prevented the reconstruction drive. Now, references to reconstruction by government officials and state media are increasingly rare. Thus, international aid will therefore be crucial.

However, while there will be significant cash inflows for the rescue efforts and to help feed and house people affected by the earthquake, funding to help rebuild what has been destroyed is unlikely to come. For years, the humanitarian financial support from the international community, mostly from western countries, has been insufficient to meet the needs of the Syrian population. So-called ‘Syria fatigue’ among western donors, funding pressures following the invasion of Ukraine, and Turkey’s own disaster relief needs suggest that little funding would be allocated for Syria.

In addition to these woes, the destruction of much of Turkey’s infrastructure in its border area with Syria will also impact the Syrian economy. In 2021 (the last year for which full data is available), Turkey supplied around 40 percent of all Syrian imports, excluding Iranian oil. Turkish production and distribution capacity shortages will likely generate inflationary pressure and strain supplies in North Syria.

Every year since 2011, Syrians have told themselves that the new year could not possibly turn worse than the previous one. Almost every time, they have been proven wrong. Unfortunately, 2023 proves to be the rule.