The Ballooning Cost of Living in Damascus

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People build a snowman on 10 January 2013 in the Syrian capital of Damascus after heavy snow falls. (Photo: AFP - Louai Beshara)

By: Anas Zarzar

Published Thursday, January 10, 2013

Damascus – Various factors have gradually led the Syrian economy into a severe crisis. During the past four months, inflation has reached an unprecedented level, exceeding 60 percent amid an ongoing bread crisis and gas shortages.

There is little hope that the foreseeable future will bring any improvements.

Since the start of the Syrian crisis – and its subsequent transformation into a war – the official discourse of the Syrian government on the economy has not deviated; the source of all economic problems is Western economic sanctions.

These sanctions, according to official statements, “are designed to destroy the Syrian economy, by introducing structural anomalies to the overall balance of the Syrian economy.”

In addition to the sanctions, trade restrictions have impacted imports and exports in the country. Large numbers of businesspeople and investors have gradually closed down their projects and plants and left Syria, taking with them significant amounts of foreign currency.

All this has contributed to a price hike for basic goods and foods, primarily impacting the livelihoods of ordinary citizens.

With the end of 2012, the Syrian government approved a 2013 budget of approximately $20 billion, which marks a four percent increase from last year. According to official statements by the Syrian Minister of Finance Mohammad al-Jililati, the government took “the negative repercussions of the economic sanctions imposed on the country” into account in its budget.

Ordinary Syrians are not interested in such analyses and excuses. What they really care about are the actual measures on the ground that would prevent the violations that exacerbate their daily suffering.

Abdallah, 33, told Al-Akhbar, “At best, my net monthly salary does not exceed 16,000 pounds ($160). This was not enough for me and my family for even 15 days a month, when the exchange rate of the dollar was about 65 pounds before the war, let alone now with this rate being in excess of 110 pounds.”

Abdallah, a first class civil servant employed by a government agency, also said, “The majority of basic goods that my three kids and my wife need have now disappeared from the local market, and if they become available, they are sold at double the original price.”

He then added, “No one questions the impact of international sanctions on Syria, but I have the right to ask our government: Are the relevant ministries and agencies fulfilling their duties with regard to keeping monopoly by the major merchants in check and their price manipulation that is earning them outrageous profits?”

A short tour of Damascus’ markets provides a clear picture of how much sales have plummeted as a result of the rapid and unprecedented rise in prices. Abu Mohammad, owner of a grocery store in the Shaalan neighborhood, spoke to Al-Akhbar about the issue.

He said, “Most residents in Shaalan are relatively wealthy, yet the majority of customers are complaining today about the dramatic increase in prices. There also are many goods and items that are gradually vanishing from the market.”

When asked about the reasons behind this, Abu Mohammad said, “The big merchants who have import licenses and large warehouses are deliberately monopolizing their goods. Many goods are no longer imported from the countries of origin, in compliance with the economic sanctions on Syria. This is something that the customers accusing me of raising prices do not realize or understand.”

Qais Khodor, an economic analyst, had a different view. “We must make the distinction between real inflation, and artificial inflation. The market is governed by supply and demand,” he said. “Therefore, withholding a particular commodity will unavoidably increase demand for it. This allows merchants to monopolize such goods and manipulate their prices, creating artificial inflation.”

Khodor, who teaches economics at the University of Damascus, stressed that 85 percent of basic goods in the Syrian market are now fully subject to the control of major merchants, adding that “it is no longer a secret that the Syrian government has been very late and has failed to prepare studies and economic plans commensurate with the economic crisis and the war. This has given the merchants the chance to monopolize goods, and set prices as they pleased.”

Concerning real inflation, which is determined by the exchange rate of the Syrian pound against foreign currencies, particularly the US dollar, Khodor went on to say, “The Syrian government was very late to keep the market and prices in check, causing the devaluation of the Syrian pound against the dollar. The real danger today lies in the government’s attempts in the coming period to tackle the crisis, specifically the issue of tying wages to the new prices.”

Yet economic crises and setbacks in Syria are nothing new. At the turn of the millennium, a radical transformation occurred in the country’s economic system, where middle class and low-income families always have ended up paying the bill for experiments in developing an economy that is riddled with corruption.

Back then, the government implemented the so-called social-market economic model. They began to gradually eliminate subsidies on fuel and many basic goods. This meant that the supply and demand relationships imposed by the new social-market system soon became a nightmare for a large segment of Syrian society, which now had to cope with more financial burdens.

Whenever the government raises wages and salaries for its employees, Syrians realize that the prices of all goods and fuels would quickly eat up the increase in their modest wages. This has prompted the vast majority of government employees to look for a second job after their official work hours were over.

Some worked as taxi drivers, accountants, or waiters, but with the beginning of the Syrian conflict, the security conditions deteriorated, and roads were cut off by security checkpoints.

All this has forced many to remain at home, and government employees must be content with just their day jobs. As a result, the financial and economic crisis experienced by the majority of Syrian families today has grown ever sharper.

This article is an edited translation from the Arabic Edition.

Comments

well this is not really surprising...

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