The Syrian economy is entering its most fragile phase yet in the country’s nine-year-long conflict. After being devastated by the fighting, constrained by biting Western sanctions, and ravaged by widespread corruption, it is now witnessing the sharpest rise in inflation in its history.

Several dynamics have combined to push the country toward a looming economic implosion. This will not happen overnight, but rather over a long-drawn-out period of time. The Syrian pound has experienced intense volatility and currently trades at around 1820 to the dollar. Just eight months ago, in October 2019, the currency was largely stable at around 500 to the dollar, but since then the situation has quickly spiraled out of control.

The current crisis started in October 2019 — the beginning of the protest movement in Lebanon — and in the eight months since Syria has seen a sharp devaluation of its currency. The number of Syrian pounds to the dollar has quadrupled, marking a 30-fold increase from the pre-war exchange rate of 50 to the dollar. The already difficult economic situation has been exacerbated by Western sanctions, which are set to be ratcheted up following the imminent implementation of the U.S. Caesar Syria Civilian Protection Act, as well as the impact of large-scale domestic profiteering and economic mismanagement.

Salaries have become worthless

Today, the average government salary is 50,000 Syrian pounds a month, and in the current economic climate that doesn’t go far at all. For the majority of people working regular jobs the choices are bleak; one month’s salary buys slightly more than two watermelons, or if one really pushes the boat out, a kilo and a half of mabrumeh, a popular local delicacy.

In short, workers on an average salary will quickly spend whatever money they earn on basic necessities, before running up debts, relying on assistance from family and friends abroad, or becoming locked into a circle of poverty. Currency exchange companies in Damascus have already registered a 20 percent increase in money sent from abroad over the last few months.     

To compare, the pre-war average income was 10,000 Syrian pounds, which at the time was worth around $500, as opposed to a meagre $27 today. To make matters worse, prices are rising steeply and the Syrian government seems paralyzed and unable to do anything about the situation, like adopting a genuine economic strategy, while sanctions hinder any potential outside investment. 

The pressure-cooker atmosphere in government-held areas has been exacerbated by grossly unrealistic statements from state officials. After Minister of Finance Ma’moon Hamdan was quoted as saying, “A citizen is able to live on his salary if he handles his finances accordingly,” the responses on social media came thick and fast and the displeasure was clear. One user joked, “Please give us a way in which we can manage our livelihoods, we would be grateful for your elaboration.” Although an official denial of the minister’s quotes was issued, the damage was already done.  

Damascus is now bearing the brunt of the rising economic pressure. Famous actor Bashar Ismael was one of the disgruntled who called out the beleaguered minister of finance, saying, “We are citizens, minister, not puppets that you and others are entertaining.” Meanwhile, former Economy Minister Lamia Assi criticized the Central Bank of Syria for “continuing a deep sleep amid the devaluation of the Syrian pound,” adding that “criminalization laws for those dealing in dollars” were not adequate to contain the sharp fall of the currency.

Prices have increased so much that Syrian sweets are now cheaper in Germany than they are in Syria. Pistachio ma’moul, for instance, a famous Syrian sweet often enjoyed during Eid and other holidays, now costs 30,000 Syrian pounds per kilo — a luxury many Syrians simply cannot afford. Food prices increased by a staggering 25 percent in the month of May alone, prompting criticism of traders and the government’s economic policy. Food distributers have been reluctant to show their bills and invoices for fear of repercussions from the customs authorities — and to hide their healthy mark-ups. According to the UN World Food Program, food prices in Syria are now 115 percent higher than they were just a year ago — with no sign of a reprieve.          

Economic hardship, sanctions, and fuel shortages

As the economic burden intensifies, so too does the dark humor in government-held areas. According to one common seasonal anecdote making the rounds, “The government denies its role in raising the temperature of the weather, insisting that it can only raise prices.” While discontent with the economic situation is now widespread, the stories of just how hard it has become are testament to the dire state of affairs in which Syrians from all walks of life are affected. Soccer player Mohammed Bash Yuyuk, who plays for Hama club Nawa'er, recently posted a picture of himself on the street, claiming he had been kicked out of his apartment because he was unable to pay the rent given delays in getting his salary from the club.

Many Syrians are now facing similar financial insecurities, with house prices in upmarket areas of Damascus and Aleppo rivaling top European capitals. But with salaries so low, it can often cost up to three or four times a monthly salary for a decent apartment in a respectable Damascene neighborhood. Much of the real estate trade is unrestricted and not subject to governmental scrutiny. Landlords can raise rents for tenants whenever they feel like it by using the excuse of wanting prices to reflect the declining value of the pound against the dollar.

Meanwhile in Syria’s oil and gas sector demand is now far exceeding supply, which has forced the government to take measures to address the imbalance. Syrian Oil Minister Ali Ghanem cut government subsidies for large vehicles with engines over 2000 cc — a move he defended by suggesting that it only affected 9 percent of vehicles, while maintaining that with current Western sanctions Syria is spending much-needed money on petroleum transport and financial transfer costs.

Syrian economist Samir Aita told MEI, “The balance of fuel in Syria is negative, with demand surpassing supply. Countries such as Algeria and others were able to export oil, resources, and goods to Syria, but that all stopped. Syria relies on the import-export system to maintain its economy, and is dependent on exchanging goods.” The decision to cut subsidies indicates that unless a sustainable supply-and-demand balance is reached, further rationing of resources may be on the agenda in the near future. The fuel crisis could be set for further escalation as the European Union has extended its sanctions on Syria for an additional year.     

The sanctions system has hit Syria’s economy hard, with the lack of imports leading to price rises. According to Nicholas Frakes, a journalist covering Syria, Damascus cannot affect much with regards to the economy. “The government can only do so much in order to try and solve this crisis on its own. But the two main problems — the inflation and devaluating currency — the government can’t really do anything about. Prices are going to inflate if businesses have to pay more to import [goods].”

With the Caesar sanctions set to come into effect in mid-June, it remains to be seen if the situation can be stabilized or whether Syria’s main allies, Russia and Iran will perhaps step in to assist. Frakes continued, “They can’t import to Syria directly anymore, especially not with the Caesar Act coming into effect next month. The sanctions, the war, and the economic crisis in neighboring Lebanon have all contributed to the devaluated Syrian lira. The government can’t do much about that either. The two biggest backers of the government, Iran and Russia, aren’t in any position to help them.”

The impact of Syria’s poor economic performance and sky-rocketing exchange rate have been felt throughout the country. In southern Syria, in the province of Sweida — which is becoming increasingly vocal about government policies and retains a robust sense of semi-autonomy due to its majority Druze status — a silent protest recently took place in response to inflated prices. Dozens of protesters held placards calling on the government to assume its economic responsibilities.

Despite Syria’s current economic predicament and the grim outlook, prices are expected to decrease slightly in the post-Eid al-Fitr holiday period as demand eases. Economist Abed Fadlia told the pro-government Al-Watan newspaper that the current price increases were the result of three fundamental factors: Ramadan, when prices always increase on a year-to-year basis; the fighting, which has greatly affected shipping and imports; and lastly COVID-19, which has shut down parts of the supply chain. Although Syria registered a low number of COVID-19 cases, a curfew and lockdown were imposed for the best part of six weeks. Since then both have been fully lifted due to the low infection rates and need to restart the economy.

Lebanon’s crisis is a big problem for Damascus

The evidence that Lebanon’s turbulence has had a major detrimental impact on Syria is now irrefutable, and with Western-imposed sanctions halting any serious reconstruction efforts or investment, it has been nearly impossible to maintain cash flow. Lebanon has been Syria’s main economic outlet throughout the war, and most if not all Syrian businesses and traders have significant sums of money in Lebanese banks.

For a period of four years from 2015-19 the Syrian pound was largely stable at around 500 pounds to the dollar, partly because of the limited nature of the day-to-day fighting and the stable flow of commerce with Lebanon. This changed, however, as Lebanon’s own economic crisis worsened and widespread protests broke out, creating a new layer of problems that Syria has struggled to deal with. Economist Samir Aita put the drastic changes in Syria’s economic fortunes down to the troubles with neighboring Lebanon. “Syria’s foreign trade with Lebanon has been harmed. Almost all Syrians have a bank account in Lebanon, and since the financial crisis there they have all tried to withdraw their money. The situation in Lebanon is as much as an important factor as the Caesar sanctions with regards to the impact on Syria’s economy.”

The two economic crises are now inextricably intertwined, and with Lebanon’s economy expected to remain troubled for the foreseeable future, Syria will continue to suffer as a result. Lebanon was not only Syria’s economic get-out-of-jail card, but it is the beating heart of Syria’s business community.

Organized crime is on the up

As the economic situation continues to worsen, there has been a rise in illegal narcotics activity and petty theft in government-controlled areas — partly driven by desperation as well as efforts to exploit the delicate security situation. This has been a recurring issue in Syria as priorities remain fixed on more pressing matters, such as COVID-19.

In late May, Syria’s drug enforcement administration seized 800 kilos of hashish in Damascus that were hidden in vegetables, while the narcotics branch in the Damascus countryside arrested a drug smuggler and confiscated six kilos of hashish in al-Tabbalah district. Narcotics has grown into a profitable and widespread industry in Syria, especially during the worst years of the fighting, when it was given an understandably low priority by authorities.

Smaller crimes have also been on the rise. In Latakia, for instance, one individual was arrested after several robberies of homes were reported, while in Damascus the owner of an agricultural pharmacy was arrested for stealing around 2 million Syrian pounds in al-Zablatani market. While it is not unusual for Syria to see small-scale crimes, the desperate nature of life in government areas and rampant poverty are pushing people toward illegal activities.  

The economic pressures have come hand-in-hand with rising tempers. In the Martini neighborhood in Aleppo, security forces were injured and damage was done to several cars in the area after an altercation between security forces and auxiliary forces who had been causing trouble during the evening COVID-19 curfew.

Syria today is fixed on a path of growing economic hardship, with no clear end in sight. The situation in Lebanon is unlikely to improve anytime soon and the chances of a rapprochement with the West are limited, so everything points toward a long impasse. With the Caesar sanctions looming, Damascus’ economic problems may only get worse before they get better.


Danny Makki is a journalist covering the Syrian conflict. He has an M.A. in Middle East politics from SOAS University, and specializes in Syrian relations with Russia and Iran. The views expressed in this article are his own. 

Photo by DELIL SOULEIMAN/AFP via Getty Images

The Middle East Institute (MEI) is an independent, non-partisan, non-for-profit, educational organization. It does not engage in advocacy and its scholars’ opinions are their own. MEI welcomes financial donations, but retains sole editorial control over its work and its publications reflect only the authors’ views. For a listing of MEI donors, please click here.