Lebanon and Syria: Got Each Other’s Backs
By: Mouhamad Wehbe
Published Wednesday, June 13, 2012
The events in Syria are showing a significant impact on commercial exchange with Lebanon. The disruption of agricultural and industrial production, along with the economic sanctions beginning to impact foodstuffs, means that Lebanon can play a bigger role in providing basic goods to the Syrian market.
With the flare up of the Syrian crisis, trade between Lebanon and Syria has witnessed changes. In the first four months of this year, Lebanese exports to Syria rose by 17 percent, while imports from Syria into Lebanon fell by 19.5 percent.
It is an inevitable result of the Syrian crisis, which has had an obvious effect on the nature and volume of production, while Syrian consumers’ habits have altered in light of current events.
These events will, of course, have an effect on trade with Lebanon, be it trade that passes through borders and legal crossings or that which is smuggled between the two countries. Syria is now experiencing a “war economy” or “crisis economy,” similar to that which Lebanese businesses have learned to adapt to since the beginning of their civil war [in 1975].
However, economist Albert Dagher sees it differently. He believes the Lebanese economy to be “an economy of sustainable chaos,” pointing out that the Syrian economy has started to move in a similar direction because “the attempt to fragment Syrian society is clearly a current project.”
According to Dagher, this change in the nature of the Syrian economy is taking place with one difference. Syria’s economy was a “war economy” until the year 2000, virtually closed to the outside world. It had adopted self-sufficiency in response to the majority of its consumer demands, particularly food and basic commodities.
As it began the process of opening up to the outside world [following the death of Hafez Assad] and relaxing its regulations, foreign goods began to invade its markets and affect its local production. Turkish products played a major role in the systematic destruction of some sectors and the manufacturing of some products, according to Syrian economists.
Currently, “Syria is passing through a transitional period where there are shortages of certain commodities and disruption of internal trade networks .... Therefore, the economy and the consumer are trying to adapt to this new situation,” Dagher says.
He points out that “the Syrian market is currently suffering from US and European sanctions and there are disturbances in areas which used to produce certain goods.”
This adaptation has its repercussions on the Lebanese market. Customs statistics for the first four months of this year confirm that there are major changes in commercial exchange between the two countries.
During this period, Lebanese exports to Syria increased to 111.67 billion Lebanese Lira (LL) ($74 million) at the end of April 2012, in comparison with LL95 billion ($64 million) at the end of April 2011, an increase of 17%.
The statistics show that commodities which have seen an increase in exportation are products such as onions, bananas, coffee, corn, wheat, some paper products, tissues and raw materials necessary for food and industry, metal products (metal cans), small, medium and large electricity generators, sanitary towels and diapers, and some some sweets and chocolates.
This rise is connected to the disturbances inside Syria. According to Al-Akhbar correspondent, Rola al-Sallakh, it seems that Syria has lately been importing from Lebanon raw materials for the food industry, fabrics, and some seeds. She points out that agricultural production in certain areas has been suffering.
In the Eastern Province, areas planted with wheat and cotton have increasingly given way to lentils and cumin. This is because there are shortages in the diesel used for cultivation and irrigation. The Syrian market is also suffering from a shortage of eggs and chickens, which are largely produced in the province of Homs.
According to the head of the Lebanese Farmers’ Association, Antoine al-Howayek, the Syrian market now needs seasonal agricultural products such as herbs and vegetables, because production has fallen in certain areas. Businessmen also confirm that there are goods which Lebanon imports and re-exports to Syria as Lebanese products.
Some wheat merchants in Lebanon maintain that the need for flour in the Syrian market, due to insufficient local production, has prompted some international merchants to send wheat to Lebanon first in order to then export it to Syria. This is done to avoid the sanctions.
Although foodstuffs are not included in the sanctions, banks refuse to give Syrians credit and therefore international producers, needing guarantees that they will get their money, sell to a third country first.
The same thing applies to soya exports, which are needed by poultry farmers because soya is a main ingredient of the feed mixture, in addition to corn.
The behaviour of Syrian consumers began to change and adapt to the security and political crisis, depending more on the Lebanese market to satisfy certain requirements.
According to Dagher, this means “that the Syrian market will depend on Lebanon more and more. This allows a bigger role for the Lebanese to provide certain goods and products to Syria.”
However, Dagher confirms that the traditional exchange between the two countries is no longer there. The Lebanese who used to benefit from cheap goods from Syria can no longer do so because of the difficulties of transport and security fears.
The traditional crossings used for smuggling are no longer available following strict measures by security forces due to the fact the crossings are also being used to smuggle weapons.
Observers say that the smuggling of foodstuffs, basic goods, cigarettes and other materials from Syria into Lebanon has been reduced so much it is now negligible.
$1.8 million = the value of sanitary towels and diapers exported to Syria in the first three months of 2012, 3 percent of overall exports.
223 lorries entered Lebanon in the first four months of this year, compared to 255 lorries in the same period in 2011. A small decrease.
Recently, Beirut’s seaport and international airport witnessed a rise in the numbers of cars and tourist vehicles transported to some Gulf countries.
Some Gulf Arabs who had brought their cars to Lebanon overland through Syria can no longer take them back through the same route because of fears over the security situation in Syria, particularly with news of bandits, kidnappings, and the like.
This article is an edited translation from the Arabic Edition.