Almost ten days after the earthquake, little information or data is available about the economic impact of this event.
In what is the first estimate made public so far, Zulfiqar Abboud, professor of economics at Tishreen University in Lattakia, told Al-Akhbar, a Lebanese daily, that estimates for the direct cost of the earthquake stood at around USD 1.1 billion. Of this, around USD 1 billion is the cost for “the government,” while the balance is the value of the buildings that have collapsed. Mr Abboud did not specify what he meant by “the government,” although he likely referred to state-owned institutions. He did not provide details on the methodology he used and his estimates should therefore be taken with caution. Meanwhile, the government has published no estimate so far.
As we reported last week, most of Syria’s main economic assets appear to have been preserved. Besides the large-scale destruction of residential buildings, the power distribution network and the Banias Refinery appear to have been most affected, although the latter is supposed to have restarted operations by now. In the north of the country, a few small dams are reported to have been partially damaged. There are no reports of serious damages to the Lattakia or Tartous ports.
The Syrian government may see some political benefits from the catastrophe, namely a broader détente with the Arab world. Since the opening of the Embassy of the United Arab Emirates in Damascus at the end of 2018, Syria’s attempts at rebuilding ties with the Arab world have largely failed, although it re-engaged a handful of countries. From an economic angle, a potential détente may lead to improved trade ties and some financial flows, such as those already coming from the UAE.
Besides the UAE’s commitment, France, the U.S. and a few other countries have announced new financial aid for Syria and on February 14, the United Nations launched a USD 397 million funding appeal, although the money will go to various parts of the country, including outside government control.
The mixed consequences of the earthquake on the economy can be seen in the exchange rate of the dollar in the Syrian market. While the dollar gained in the black market in the first month of the year, climbing from SYP 6,650 to SYP 7,250 on the eve of the earthquake, it remained stable in the following days. The dollar then weakened sharply after OFAC issued a general licence on February 09, before returning to its previous level over the past couple of days, possibly as Damascus traders realised that the loosening of restrictions by the West will be limited. On February 14, the dollar traded at SYP 7,150.
Data on economic damage is still scarce in the cities of Lattakia and Aleppo, which among Syria’s larger cities were the most affected by the earthquake. The Sheikh Najjar Industrial City in Aleppo seems to have been preserved. However, in the city, which was the country’s second economic centre before the uprising and a major manufacturing hub, it will be difficult to escape the feeling that it continues its slow descent into irrelevance, which began before the uprising and continued during the conflict when it was heavily destroyed.
Meanwhile, Idlib is the area that suffered most from the earthquake. In the past few years, the Syrian Salvation Government (SSG), the civilian administration of Hayat Tahrir Al-Sham, had sought to improve its governance structure. It has established some state-led economic institutions (state in the sense of the SSG), such as financial institutions acting as quasi-banks and telecommunication providers. It also attracted some levels of private investments.
The town of Sarmada, near the Bab Al-Hawa border crossing with Turkey, which boomed in previous years and acted as the region’s economic centre, hosting 43 percent of all licensed companies in the Idlib area, was largely destroyed. This will have a significant impact on economic activity in the next few years.
The city of Idlib has been relatively preserved, however, which enables the SSG to continue to function.
For the SSG, and more generally the HTS, the earthquake also provides some openings. The SSG may see some form of normalisation with the outside world or, at least, an expansion of the economic, and eventually political, actors with whom it deals. At the same time, the challenge for the SSG will be to prove its governing capacity.
In the northern Aleppo area, controlled more-or-less directly by Turkey, the situation is not much clearer. While it faced significant destruction, it will seek to capitalise on the opening of two border crossings with Turkey, in Bab Al-Salameh and Al-Rai, provided it manages to expand their opening beyond the initial three months.