Lebanon becomes ‘lung’ for Syrian economy

Al-Akhbar is currently going through a transitional phase whereby the English website is available for Archival purposes only. All new content will be published in Arabic on the main website (www.al-akhbar.com).

Al-Akhbar Management

A young Palestinian refugee, who fled the Yarmuk refugee camp in Syria where he was previously residing due to the ongoing conflict, pushes a cart loaded with belongings as he and his family leave their tent to move to new houses built by the United Nations Development Programme (UNDP) at the Palestinian refugee camp of Ain El-Helweh, near the southern Lebanese coastal city of Sidon, on January 31, 2014. (Photo: AFP- Mahmoud Zayyat)

By: Ziad Ghosn

Published Tuesday, February 18, 2014

Despite the impact of politics and security on the relationship between Lebanon and Syria, economic and trade interests are trying to disengage from the situation. The investments are built on the realities of geography, common interests, and possibly the ongoing crisis.

Damascus – In the 1980s, it was not uncommon for a Syrian official to travel to a Lebanese border town to secure some of his family's needs. At the time, the economic sanctions on Syria and the weakness of local production gave "legitimacy" to smuggling between the two countries, albeit in an unofficial and undeclared manner. Smuggling became a career for many on both sides of the border, raking in a lot of money for its practitioners.

Today, despite a situation similar to the sanctions– with enormous damage done to local industry – the scenario of the 1980s has not been repeated. On the contrary, the situation directly impacts official trade between the two countries. Statistical data and the analysis of the composition of commodities reveals the nature of trade relations between Damascus and Beirut, and future expectations.

The balance is in Lebanon's favor

In the first two years of the Syrian crisis, the trade balance between the two countries had remained in favor of Syria. However, unofficial data from the General Directorate of Syrian Customs shows a first-time surplus in favor of Lebanon in 2013, reaching 875.6 million Syrian pounds (around US $6 million). In 2012, the balance was leaning toward Syria with an amount of 445.8 million Syrian pounds, with a sharp decline of 97 percent from 2011. Formal data, adopted by the General Directorate of Syrian Customs, showed that the trade balance recorded a surplus of 14.6 Syrian pounds billion that year.

Data on the trade balance between the two countries reveal that Syrian imports from Lebanon doubled between 2011 and 2013, from 7.4 billion Syrian pounds to 15.8 billion, a 115 percent increase. In 2013, it rose by a further 0.37 percent to reach 15.9 billion Syrian pounds.

On the other hand, Syria's exports to Lebanon showed a clear decline. Preliminary data indicates that the value of Syrian exports to Lebanon in 2012 was around 15 billion Syrian pounds, with a decline of 7.7 percent compared to 2012, and 31 percent from 2011.

Figures from the UN Economic and Social Commission for Western Asia, published at the end of last year, indicated that the value of Lebanese exports to Syria in 2012 was around $294 million. The value of its imports in the same year was around $266 million. This means the trade balance was in favor of Lebanon in 2012.

Changes in the composition of the trade balance between the two countries in the past two years reveal two things:

– Lebanon has become a vital gateway, providing the Syrian market with its goods and materials during the crisis. The international sanctions imposed gradually on Syria since mid-2011, and the decrease in agricultural and industrial production due to the ongoing war, has pushed Syria to increase its reliance on the Lebanese market.

For example, cement topped the list of goods imported from Lebanon in 2012, by 1.9 billion Syrian pounds and liquid gas with 1.2 billion. Also notable is the presence of agricultural imports, which are not produced by Lebanon in quantities allowing their export and which have not been imported by Syria through Lebanon in the past. Remarkably, wheat flour imports ranked seventh on the list, with a value of 396.3 million Syrian pounds. Refined white sugar ranked eighth with 282.3 million Syrian pounds, rising from 77.8 million in 2011.

– The second issue is related to Syrian exports to Lebanon. The value of these exports dropped due to declining local production and several governmental decrees prohibiting the export of some goods to keep them on the local market and control their prices. This is in addition to the change in the composition of such exports.

According to a study by the Syrian Ministry of Trade and Economy on economic relations between the Syrian and Lebanese economies before the crisis, the main exports to Lebanon in 2008 were: iron and steel bars, shoes, bed linens from natural or artificial fabrics, fabrics, yarn, foldable boxes and crates from paper or unmixed cardboard, plates and sheets. However, reviewing the customs lists on the most important exports to Lebanon in 2012, phosphates topped the list with a value of 3.4 million Syrian pounds. Other noteworthy exports to Lebanon include: fresh cheeses with 665.2 million Syrian pounds; animal rendering products with 635 million; tomatoes with 514.5 million; and carrots and turnips with 307.6 million.

Prospects

Most analyses of the future of trade relations between Syria and Lebanon concur that the repercussions of the crisis will continue to control the direction of such relations, until the country regains its economic health and international standing. This is based on the following factors:

– Syria will continue to rely on the Lebanese window to meet some key needs of basic imports.

– Syria will be in urgent need for more imports, quantitatively and qualitatively, when the fighting stops and during the reconstruction phase, which is something that Syrian ports alone would not be able to provide.

– Many Syrian businessmen relocated to Lebanon during the crisis.

– Economic and productive facilities sustained great damage over the past three years. Thus, their return to business at a later stage will require a long period of time depending on various conditions. This would allow the trade relations between Syria and Lebanon to keep functioning outside the scope of what was known in the past.

This article is an edited translation from the Arabic Edition.

Comments

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd><img><h1><h2><h3><h4><h5><h6><blockquote><span><aside>
  • Lines and paragraphs break automatically.

More information about formatting options

^ Back to Top