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Bleeding Syria: Fleeing of Syrian Capital Forces Development to Stop

All “fleeing” capital has its own reasons, but the final result is the flight of capital and the stopping of the wheel of production in the Syrian economy
Bleeding Syria: Fleeing of Syrian Capital Forces Development to Stop

With the continuing bleeding of various Syrian economic sectors, the movement of Syrian funds abroad in search of safe havens is increasing, stopping the heart of development inside the country while ensuring the sustainable development of “downstream” countries.

The flight of local capital began with the first year of the revolution with a number estimated by the British magazine the Economist at about 20 billion dollars in 2011 alone.

Since that year the rupture has widened in the Assad regime, and the bleeding of Syrian funds has continued. All “fleeing” capital has its own reasons, but the final result is the flight of capital and the stopping of the wheel of production in the Syrian economy, reducing it to a mere ghost, and cursing even classes loyal to Assad because they are unable to afford living between the jaws of unemployment and inflation.

Acquisition of Companies

Turkey is one of the main neighboring countries receiving fleeing Syrian funds, which the shape of investments after reaching safe territory. In Turkey it is not possible to estimate precisely the amount of fleeing Syrian capital, but it may be able to reach it through a number of points published through the Anadolu news agency on June 15: Syrian deposits in Turkish banks reached 1.2 billion Turkish lira ($400 million) in the first half of the year.

Among the indications of the expansion of fleeing Syrian capital to Turkey is the acquisition by Syrians of three companies with foreign capital in Turkey during the first six months of 2015. They also contributed to the establishment of 750 companies out of 2,395 during the same period, according to numbers of the Turkish Union of Chambers and Commodity Exchanges.

The Turkish Disaster and Emergency Management Agency (AFAD) said that Syrian investments in Turkey over 11 months of last year amounted to around 205 million Turkish lira ($70 million).

But the value of Syrian money fleeing to Turkey is bigger than the amount of the accounts and the amount of capital of companies established there ($200 million), because much of the money which has fled to Syria’s northern neighbor has not taken the route of announced “investments”, perhaps because of what their owners believe to be the difficulty of working in Turkey or because of the difficulty of its laws or a lack of Turkish language proficiency.

Intersection of Numbers

According to Dr. Abdullah Hamada, financial professor at the University of Aleppo, the head of the Syrian Investment Authority previously said that the volume of Syrian investment abroad ranges between $70-100 billion. Hamada estimated in comments to Madar al-Youm the ratio of investments (capital) that has fled Syria at more than “70 percent of the total funds present in the Syrian market.” This money has headed to several Arab countries, led by Egypt, Lebanon, Jordan, and Arab Gulf countries, as a result “the circumstances of some of these countries surprised many of the owners of the capital with the difficulties hindering the investment of their funds in these countries.”

Previously the Global Financial Integrity group published on their website a study of illegal financial flows from developing countries between 2004-2013, in which it pointed out that money leaving Syria in this period was $47.6 billion, noting that the amount leaving before 2013 did not account for the departure of massive amounts, but were in fact limited to the transfer of small amounts.

The class of industrialists pulled their money outside Syria after divesting their work for many reasons, including: electrical cuts, the rising price of diesel, the scarcity of dollars needed to import raw materials, Assad government restraints and their strengthening on imports, shrinking of the Syrian market, and its modesty compared to the volume of business before the revolution, shrinking export markets, and lastly the quotas and partnerships imposed by Assad’s shabeeha.

Textile Sector

According to available information, Egypt has received the “lion’s share” of capital fleeing Syria, and this from the beginning of 2013. Head of the Syrian businessman’s association in Egypt Khaldoun al-Mowwaqa told the Russian Sputnik agency last month that Syrian textile makers “have injected no less than 10 million garments a month in the Egyptian market” in clear evidence of the size of Syrian capital employed in the textile sector.

The estimates of capital which has fled Syria and been invested in Egypt intersect with 10 billion dollars, the number which 25 Syrian businessmen who met the Egyptian president in January 2013 pledged to inject into the Egyptian market. This news was confirmed at the time by the Syrian coalition.

Facilitation of Flows

In the Jordanian kingdom, to facilitate the flow of Syrian capital fleeing across the southern border to Jordan, Amman permitted Syrian investors to recruit up to 60 percent Syrian labor for factories in industrial cities.

Statistics from the first nine months of 2013 indicate that Syrians injected $150 million, or about 15 percent of all foreign investments in that period.

Since there are no precise statistics for the amounts which have fled to Jordan, it is enough to approach it through knowledge of a group of this data which was published by the Jordanian Trade and Industry Ministry at the end of 2013 in which the number of Syrian companies registered in the industrial sector reached 1,047 companies in the first quarter of the year. The number of commercial companies was 1,161 companies, and 78 agricultural companies, 68 contracting companies, 643 services companies — that is, a total of about 3,000 companies.

This article was translated and edited by The Syrian Observer. Responsibility for the information and views set out in this article lies entirely with the author.

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