As the crisis in Syria continues, many observers are beginning to say that if the protesters cannot overthrow the regime, the economy will. With political uncertainty at a suffocating level, the Syrian pound has fallen against the U.S. dollar. As a result, Syrians are feverishly hauling their money out of banks — about 8% of all banks deposits have been withdrawn — and shifting it into more stable foreign currencies. GDP was predicted to grow at a steady 6% this year. Now, predictions are closer to a negative 3% contraction. “I think the crackdown on protesters will succeed in the next two months,” a senior western diplomat in Syria says. “But in six months time, the economy will have taken such a battering that [President Bashar al-]Assad will have lost the support of the majority of Syrians.”
The economy had been key to Assad’s popular standing before the uprising. Portraying himself as a political and economic reformer, Syria’s President spent the last five years moving away from the socialist, centrally planned economy that has failed Syrians. With a team of economic liberalizers, Assad began to open up the economy to the private sector, encourage free trade and reduce subsidies. Tourism started to boom and foreign investment began flooding in. Suddenly, middle-class Syrians were able to afford new cars and houses. Consumerism developed as cheap foreign products, like Chinese TVs and heaters, entered the market. The espresso-drinking urban business class grew.
Now, however, the pillars of the new Syria are collapsing. Today, people are not buying cars. Actually, nobody is spending at all in Syria. People are working fewer hours and there are widespread layoffs — some companies have stopped paying salaries. In three months, Syria’s economy has gone from growth to slump even as the government is desperately trying to pay off its disobedient citizens with subsidies — money it does not have.
Tourism, which possibly accounted for up to 18% of the entire economy, was the first to go. A year ago, sandal-clad and camera-wielding hordes of European tourists would shuffle through the cobble-stoned souk of Old Damascus, who patronized the businesses of cocky young Syrians, many of whom speak five languages to cater to the flow of foreigners. Now the tourist touts sit on small plastic stools and drink sweet tea in their shops full of dusty carpets and silver trinkets. “The Old City is still safe, but it’s empty,” one shopkeeper said as he tried to sell a box of old coins from Syria’s eastern deserts, a once-popular souvenir here.
Most travel insurance companies have blacklisted the country; and Middle East tour groups are now avoiding Syria altogether, even choosing to fly from Turkey to Jordan, rather than busing through the country as they used to do. The shopkeepers of Damascus say many tourist companies have closed and the boutique hotels of the capital and Aleppo, the country’s largest city, are empty. “We will have to close soon,” one said.
