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The Economic Menace of the Syrian Conflict

According to a report prepared by Sandra Sinno, a consultant at ESCWA, deposits moved to Lebanese banks from Syria have so far amounted to $11 billion
The Economic Menace of the Syrian Conflict

At first glance, one can say that economic activity is presently nonexistent in Syria. Unemployment has reached a whopping 49 percent, while the country’s debt to GDP rose to 65 percent. The value of the Syrian pound has plunged to 200 pounds per dollar.


This data, collated by a UN team in Syria, was discussed at a panel meeting held by the UN Economic and Social Commission for Western Asia (ESCWA) in Beirut on July 4 to discuss the impact of the Syrian crisis on the Lebanese and Jordanian economies.


In truth, the claim that Syrian economic activity is “nonexistent” misses the mark. To be sure, the Syrian government continues to pay the salaries of public sector employees, and to provide basic services, including electricity. Some traditional industries – such as soap and low-grade pharmaceutical products – are still being exported, bypassing sanctions by means of Iraqi certificates of origin.


“Syrians are experts in this,” according to Abdullah Dardari, senior economist at ESCWA and Syria’s former deputy prime minister for economic affairs, in reference to his countrymen’s resourcefulness in difficult times.


According to Dardari, the bulk of the money transferred out of Syria – mainly to Lebanon – was moved in the early stages of the conflict, and even before. Dardari said, “Some financiers in Aleppo even transferred money with the start of the uprising in Tunisia.”


Those transfers acted like a cushion for the Lebanese economy, helping it deal with the refugee crisis. According to a report prepared by Sandra Sinno, a consultant at ESCWA, deposits moved to Lebanese banks from Syria have so far amounted to $11 billion. Another billion dollars was injected in the Lebanese economy through Syrian consumer spending.


Although the effect of these transfers on the Lebanese economy was initially positive, any benefits have long been exhausted. Today, there is tremendous pressure on the economy because of the refugee crisis, according to Sinno’s report.


According to a report prepared by Sandra Sinno, a consultant at ESCWA, deposits moved to Lebanese banks from Syria have so far amounted to $11 billion. If Lebanon’s labor market fails to absorb the Syrian refugees, unemployment will soar to 29 percent, and the per capita income in Lebanon will decline by up to 20 percent. Even if additional resources become available to the economy, the sudden and large jump in the population, with the refugees amounting to 25 percent of Lebanon’s population, will still push the per capita income down by 12.3 percent.

Dardari said, “Based on this study, we will prepare a comprehensive report on the importance of strengthening Arab economic unity, particularly these three countries, which we will release in 2014.”


But what about now? How could we characterize the impact of what is happening in Syria on Lebanon?


Nicolas Nahas, minister of economy and trade in the caretaker government, expressed grave concern over the economic crisis in Lebanon, and even said that there was “a bloody ferocity” in the competition between the residents and the refugees. Such concerns only increases, he said, if the refugees were to fully integrate into the community and find jobs that meet their needs.


The Ministry of Economy has also obtained alarming estimates from the UN High Commissioner for Refugees (UNHCR), indicating that by the end of 2013, the number of Syrian refugees in Lebanon will have reached 1.1 million.


Nahas said, “The Lebanese economy already has a problem meeting local demand for jobs. Out of the 25,000 jobs we need to create each year, we are only creating 3,000.”


In the meantime, according to a survey by his ministry, businesses set up by Syrian refugees are mushrooming throughout Lebanon. In the six regions covered by the survey, 360 small businesses have been established by Syrians.


“We will take urgent measures on this front, as it has become clear to us that the creation of these Syrian businesses produces social tension, as well as friction with Lebanese businesses,” the minister said. However, it seems that these measures remain unlikely for the time being because of the absence of a clear national plan to deal with the refugee crisis since March 2011.


The economic repercussions of the Syrian crisis are very plain. For one thing, the UN expects the number of tourists traveling to Lebanon this year to drop by 25 percent.


The principal question, the minister continued, is “how to strengthen Lebanon to be able to cope with growing numbers of refugees.” There is no easy answer, especially since the international community – including donors – has turned its back on Lebanon.


This article is an edited translation from the Arabic Edition




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