Money, Hunger and Crime: The disturbing economics behind the Syrian conflict
In the news on the Syrian war we hear much about Islamist groups, international power struggles and political grievances. But there is another side to the conflict, one where financial aid, smuggling, misery and crime are sometimes decisive in shaping the war.
Unemployment, heat and the causes of the crisis
We may mark the start of the crisis as March 2011 when, spurred by the Tunisian and Egyptian protests, predominantly young and provincial Syrians took to the street. To understand what led to that point, let’s make a quick historical detour.
At the end of the rule of Hafez al-Assad, father of the current President, Syria’s socialist-oriented economy was facing the challenge of a fast-growing population. Its model was sustained by state subsidies and largely dominated by the public sector, which was increasingly unable to provide jobs for this new generation. Youth unemployment was growing dramatically.
When Bashar Al-Assad took power in 2000, he announced the liberalization of the economy and cuts in public expenditure. But what he really did amounted to what economists call “crony capitalism”. The state’s alliance with big companies was strengthened at the expense of small business and the majority of Syrians who depended on subsidies.
In the 2000’s, the country experienced droughts and dust storms that affected millions of people, devastated the agriculture and prompted massive rural-urban migration. At the very moment extremes in climate were making the need for agricultural aid more pressing than ever, the government was cutting subsidies. Crucially, this further heightened the sense of inequality in Syrian society. Big cities were able to absorb migration more easily than provincial centers. Idlib, heavily impacted by the cuts, became a hotbed for the rebellion.
By 2011, the economic slump stoked political grievances contributing to the outbreak of protests.
A vicious cycle of violence and profit
More than five years on, the war has left the Syrian economy in tatters.
On the ruins of the formal system, a new war economy has flourished and profoundly reordered the Syrian social fabric. Dominated by the leaders of armed groups and their ties in business, the middle class has been left deeply impoverished and dependent on foreign aid, and a growing underclass has been deprived of livelihoods.
Looting, bribery and criminal activities form the basis of this new economy. Trafficking is rife, with fuel and tobacco smuggled to Turkey, antiquities pillaged, and weapons sold to rebels by corrupt government officers. The smuggling of refugees and kidnappings are widespread. Drug trafficking has expanded, with narcotics labs found in various regions. Even refugee camps have been turned into profitable businesses, with landowners asking for rent for people to stay. According to an aid worker in Atmeh, “some people there are selling their organs to survive and help their families”.
Importantly, what all these economic activities have in common is that they rely on the continuation of violence. In a war economy, key actors have an interest in ensuring war goes on, thus creating a vicious cycle of violence and profit.
Numerous local ceasefires have failed in part due to armed groups wanting to retain control over massively lucrative checkpoints in besieged areas. In several cases, rebels have prolonged battles to receive further funding from allied Gulf states. Some have prefered to sell arms rather than to use them to defend civilians against the regime’s forces.
Rim Turkmani, researcher at the LSE, summarizes the logic of the vicious cycle: “the main economic activities depend on violence and violence depends on those same economic activities.” It is hard to escape the conclusion that economic factors have been a significant driver in the duration of the Syrian conflict.
Economic forces do not only prolong the war but also shape its very dynamic.
In the case of the so-called Islamic State (IS), the economic strategy of the group helps explain a lot about its expansion. Many of IS’ first troop movements were aimed at controlling new resources. Rebels and government alike soon became dependent on IS for oil, especially in Idlib and Aleppo, which considerably strengthened the group’s positions.
Even IS’ recruitment is largely based on economic needs. In many areas, unemployment and starvation leaves men exposed to recruitment. The organization indeed pays the highest salaries for fighters in Syria, starting from USD 400 per month. According to various accounts, the bulk of IS forces is formed of men who do not necessarily believe in its ideology but had “little choice” in the face of widespread destruction and misery.
So, where can the country go from here? There are no easy answers. The country and the region’s economic and natural resilience are both exhausted, and the war economy will likely plague post-conflict reconstruction.
Breaking this vicious cycle therefore has to be a critical step in any reconstruction plan. Recommended strategies, which all require political dialogue, have included counter-smuggling programs with Syria’s neighbors, lifting sanctions and rebuilding legitimate infrastructures profitable for both parties.
Considering the war economy the opposite way – as a paradoxical tool for peace – may also prove efficient. In Burma for instance, the regime granted informal business ventures to rebels as compensation for peace, leading to remarkably robust ceasefires.
Another step is to realize that one of the best prospects for reconstruction is to help ensure it is homegrown. Research has shown that the usual formula – planning reconstruction from a distant capital – has not worked, and has called for the involvement of communities as a way to increase efficacy and legitimacy.
Empowering the Syrians’ potential is key. And it is bigger than we may think. Many reconstruction initiatives already exist on the ground. A new project led by World Bank researchers is using satellite imagery and social media analytics to identify these “low-hanging fruits”.
Empowering the Syrians also means encouraging the return of the skilled population that fled the country. According to a UN survey in Greece, 86% of refugees have secondary or university education.
Finally, it is crucial that reconstruction and the ensuing economic boom benefit Syrians. It is important to learn from the past experiences of Iraq and Afghanistan, where most of the building materials used were imported, creating money and jobs elsewhere. To avoid this in Syria, one idea selected by the World Bank is to create an Advance Purchase Fund for potential buyers to give preference to construction materials made in the country.
As World Bank official Ferid Belhaj puts it: “Even before the dust settles, a post-war effort needs to be launched … to create the jobs and economic expansion that will restore hope, and help pave the long, uncertain way to reconciliation and peace.”