Syria’s Economic Collapse and Its Impact on the Most Vulnerable
February 18, 2021
The Path Forward is a CSIS Humanitarian Agenda series of reflections from humanitarian organizations on the challenges in food security, disrupted health systems, humanitarian access, civilian protection, and, ultimately, recovery for the Syrian people.
The devastation to the Syrian economy from 10 years of violence cannot be underestimated. Targeted attacks on civilians and civilian infrastructure, including attacks on markets, hospitals, and schools in rural and urban areas, have led to estimates of more than 400,000 civilians killed and half of the pre-war population displaced internally or as refugees in the region of Europe. Destruction of essential infrastructure and loss of life coupled with years of economic negligence have left the Syrian economy in tatters.
According to the World Bank, the Syrian economy has shrunk by more than 60 percent since 2010, and the Syrian pound has crashed. Pre-war, the Syrian pound traded near 50 SYP to the dollar. As of January 2021, it was formally trading at over 1,250 SYP and informally at over 3,000 SYP. This equates to a 300 percent inflation rate increase on consumer goods.
Syria’s economic crisis is not entirely due to its own economic malpractice and corruption in the system. In fact, the ongoing Lebanese cash crisis has accelerated Syria’s economic collapse. After years of anti-government protests, political and financial mismanagement and corruption, and a banking crisis caused by spiraling debt, Lebanese banks trapped Syrian cash. In 2020, the Lebanese central banking authorities put restrictions on the amounts of hard cash and cash transfers individuals and businesses could take out or process. This put enormous strain on the failing Syrian government’s economic policy and the private sector, which for decades has been linked to Lebanese financial institutions. While not explicitly linked, the run on Lebanese banks in 2020 led to a 200 percent increase in the inflation rate of the Syrian pound. More importantly, the lack of cash in Lebanon resulted in the Syrian government having to navigate a drastically reduced available national budget to continue subsidizing the economy.
A secondary impact of the collapsing Syrian pound and cash crisis was the pinch on employment. Even pre-war, the Syrian employment outlook was less than rosy, with 8.6 percent of Syrians out of work and 20.4 percent of youth unemployed. Additionally, the war completely gutted the Syrian middle class, which comprised 60 percent of Syria’s population in pre-war years but represents just 10 to 15 percent today. The agriculture sector took the biggest hit. Many displaced populations that relied on agriculture prior to the war now seek informal work on farms in nearby host communities to financially support their families. However, there are very limited informal or formal employment opportunities for people inside displacement camps. The Covid-19 pandemic is only accelerating the decimation of the informal work sector in Syria, particularly in the hard-hit northwest.
Due to this economic collapse, sanctions regimes, and a limited national budget to subsidize commodities such as bread and fuel, displaced families and other vulnerable households are caught in the middle of a financial crisis caused by a rapidly depreciating currency and lack of available jobs. This means it is incredibly hard for Syrian families to provide for themselves, particularly amid growing food insecurity. Reports from December 2020 describe families waiting for hours in bread lines, causing children to miss school or caregivers to miss work in order to find loaves of bread.
On top of the strain on families’ ability to secure basic food rations and household items, the economic impact of the war continues to drive serious child protection concerns, including negative impacts on education. Parents are forced to remove children from school due to the inability to pay fees, and teachers are not receiving their salaries. Some children go to schools in the displacement camps but arrive covered in mud, having walked miles upon miles to attend. Many girls who drop out of school are severely impacted by child marriage.
One particularly heartbreaking story reported by World Vision is of a single mother in northwest Syria with two exceptionally bright girls in middle school. Due to cultural customs, when their father died, their mother remarried their deceased father’s brother. After their new father and mother had two boys, the stepfather began mentally and physically abusing the two girls and their mother. The stepfather eventually took the two bright girls out of school due to the personal and financial burden they imposed and forced them into child marriage. Unfortunately, stories like this are very common. The overlap between forced displacement, economic fragility, and negative coping strategies is keenly felt in places like northwest Syria.
Vulnerable Syrians continue to bear the brunt of ongoing crises, from the outbreak of the conflict 10 years ago, to the horrible levels of death, destruction, and economic collapse today. Most often, this drastically impacts the future for innocent children. While the conflict itself has done irreparable physical damage to communities, families, and children, the economic crisis has also caused additional hardships. However, there are ways the international community and humanitarian actors can be part of the solution moving forward.
Specifically, the U.S. Agency for International Development (USAID) and other donors should emphasize cash-based programming inside Syria, particularly in camp settings. Cash programming is effective and efficient and reinforces existing economic activity. Donors should emphasize programs that prioritize sustainable livelihood and food security interventions. Additionally, because the impacts of the economic collapse have had detrimental impacts on young children, the United States should prioritize sustainable and adequate funding to address ending forced child marriage and all other forms of violence against children in northwest Syria by fully funding the UN Syria Humanitarian Response Plan (HRP) that supports those programs. Finally, the United States and other donors should review existing sanctions regimes to ensure that sanctions meant to target individuals responsible for human rights violations do not inadvertently impact the livelihood and opportunities of innocent civilians.
Barrett Alexander is a senior policy advisor at World Vision U.S. Alham* (pseudonym) is a protection advisor at World Vision Syria Response.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2021 by the Center for Strategic and International Studies. All rights reserved.