Long, hard road to de-weaponizing Syria’s economy – Asia Times
The Arab government’s fall on December 8, 2024 marked a turning point for the Middle East. It is still unclear how the insurgent alliance, which is a diverse group of political and ideological organizations supported by local powers, quickly overpowered government forces.
However, it is obvious that the government’s downfall has been largely caused by the frequent social and economic decay, which has worsened every aspect of Arab life over the past 13 years.
The humanitarian crises that displaced the majority of Syria’s people and destroyed the government’s system also contributed to this deterioration as well as the weaponization of regional and global supply chains through economic restrictions.
Since 2011, numerous tides of sanctions have been imposed on Syria, aimed at draining state money and causing harm to nearly all of the nation’s economic and social activities. The outcomes of the steps were a general deindustrialization and a serious decline in the economy.
It’s still unclear whether Syria, a country of corporate global importance, is on the verge of lasting peace or will experience another prolonged period of instability.
The origins of turmoil
When the Arab Revolution started in 2011, Syria was on a fairly good financial trajectory. Poverty was at about 8 % and the middle class formed about 60 % of the community.
But, economical developments were mostly concentrated in urban facilities, while remote areas — home to most Syrians — lacked social and economic system.
The most attractive business activities in Syria were dominated by government elites, despite the growth of small and medium-sized businesses. Common institutions were rife with corruption and government.
This disparity led to anger, and the rural community eventually emerged as a driving force behind the start of the Arab Revolution. In the end, a series of events that culminated in a difficult international proxy war were the product of the revolution.
On both sides, some people were imprisoned or disappeared, and many others fled to neighboring states or sought shelter in Europe.
The position gotten worse as the battle wore on. In 2024, the United Nations described the Palestinian issue as “one of the country’s most complex situations”. Hundreds of thousands of Syrians feared losing their lives in locations all over the world.
Syria’s economic decline
Since 2011, Syria’s GDP has fallen by 87 %, its currency has lost more than 99 % of its value, and its inflation rate has soared above 300 % on basic consumer goods.
Arab corporations have fully been disconnected from regional and global supply chains as a result of the deteriorating economic and social problems in Syria, which have been made worse by increasingly strict restrictions. The majority of companies had to close, and just a small number were able to do so in neighboring nations.
Businesses that were able to succeed have turned into zombie companies, meaning they are no longer commercially viable but are being kept alive by using alternative sources, such as government subsidies.
Improper economic activity flourished, there were uncovered supply chains, and corruption was deeply entrenched within common organizations.
Rebel partnership rule
In the midst of the Arab government’s collapse, experts — though positive — remain wary about the country’s future.
Hayat Tahrir al-Sham ( HTS), a former branch of al-Qaida and the principal force in the rebel coalition, is the new ruler in Damascus. Units used to be competent to govern Idlib, a city in northwest Syria, but it now relys on Turkish assistance to provide simple services to its citizens.
Detractors argued the Units authorities in Idlib was “dictatorial” and “authoritarian” enough to flash rally earlier this year. Units requested on December 9 that the Idlib state, which is made up entirely of HTS unionists, continue to rule Syria until March 2025. Beyond that day, the organization has never made any changes.
Idlib, a remote, traditional province in Idlib, is a vastly different thing from managing a complicated nation like Syria. However, despite growing concerns about HTS’s one-party interim state, the party is likely to capitalise on the government’s pleasure at the death of Assad’s regime and the end of 13 years of civil war to create short-term political stability.
Another opposition groups, some with violent histories, appear to support HTS’s short-term program, seeking to discuss their role in the new political arrangement. However, early indications suggest Units, while adopting diverse speech, continues to adhere to an totalitarian and authoritarian style of governance.
Challenges ahead
HTS’s key backers, Turkey and Qatar, will likely provide financial aid and funds to boost public opinion in the short term. However, long-term political stability in Syria hinges on sustained public support, which is deeply tied to the country’s economic situation. The new rulers in Damascus must tackle the difficult task of reviving the economy.
The de-weaponization of regional and global supply chains, which includes more than removing Syria’s economic sanctions, is a necessary prerequisite for the revival of the country’s economy. It requires revitalizing small and medium-sized businesses and rebuilding public organizations that can support regional and global supply chains.
Small and medium-sized businesses and the middle class have been destroyed over the course of 13 years of civil war, which is easier said than done. Public and private organizations in Syria have already gone through the zombification process, relying heavily on aid to survive.
Zombie firms typically exhibit sub-optimal production performance, low innovation and a negative impact on economic activity. In this context, it’s likely that local organizations are unable to participate in and/or strengthen regional and global value chains. Establishing a robust innovation ecosystem and effective domestic supply chain governance will be necessary to restore these capabilities.
Early signs point to HTS’s desire to rule both social and economic activities in favor of its loyalists. Such an approach risks recreating an Islamic version of Assad’s economic governance, long characterized by a state-directed economy, capital controls and cronyism. Important regional players, Arab nations, and international players have already expressed concerns about working with Syria’s economy under the new Islamic regime.
Throughout the past 13 years, the Assad regime emphasized a winner-takes-all approach — a stance that HTS appears now to adopt. HTS has no choice but to abandon such a mindset in order to revive the Syrian economy and de-weaponize supply chains. Otherwise, the new ruler in Damascus will soon face the same challenges that led to the previous regime’s collapse.
Hassan Wafai is associate professor, Faculty of Management, Royal Roads University
This article was republished from The Conversation under a Creative Commons license. Read the original article.