Syria faces long-standing economic problems that have been greatly exacerbated by its nine-year-long war. The cost of rebuilding the country will be enormous. But before there can be any discussion of sanctions relief or economic assistance, key political and economic reforms must be implemented. First and foremost among these is the devolution of power to the most local level of governance. A necessary step for any meaningful political or economic reform to take place, localized governance can work to counteract a deeply corrupt centralized state that pays no heed to the rule of law or constitutionalism. Localization must be prioritized and placed at the heart of the international community’s efforts to support the UN constitutional talks in Geneva.
A problem decades in the making
Over the past several decades, Syria’s ruling regime followed a slow and short-sighted economic program driven by the needs of the moment, highly dependent on natural resources, and oriented towards regime survival rather than growth and development. This strategy was modelled on the Soviet experience and supported by the Soviet Union. Yet Syria’s scarce resources and the Soviet Union’s eventual collapse (and loss as a key benefactor) led to a sharp economic downturn. Since the late 1990s, Syria has faced severe socio-economic instability, a situation that has grown markedly worse since the outbreak of the war. It suffers from high rates of unemployment, a dramatic increase in poverty levels, and deteriorating living standards, all of which have been exacerbated by the recent COVID-19 pandemic. However, the reality is that Syria’s devastating economic challenges are the result of its authoritarian political structure and the nature of political-economic relations developed under Ba’ath Party rule. Plagued by widespread corruption, clientelism, bureaucratic inefficiency, an unstable and underperforming agricultural sector, inefficient state businesses, and a lack of foreign investment, Syria’s economy has become increasingly unproductive.
The system in place since Bashar al-Assad first assumed power in 2000 has directly brought us to where Syria is today. Inheriting a country plagued by economic problems and facing growing discontent, Bashar initiated economic reforms in the early 2000s, which were to be followed by political reforms, to counter the risk of upheaval. The Assad regime and the Ba’ath Party adopted a social market economy — a Chinese model that, in principle, combined a market economy with social protections. It aimed to reform the public sector, which would remain the dominant employer in Syria, stressing the important role of the state in protecting society. The model is meant to produce economic growth without sacrificing political stability, but the Ba’ath Party’s lack of political will to engage in any meaningful economic reform of the public sector or include the private sector as a driver of growth made the Chinese approach unfeasible.
Following the so-called reforms, the situation only got worse. Unemployment increased, peaking in 2008 at 11 percent, alongside a spike in inflation and sharply rising living costs. As a result, between 2004 and 2011, poverty rates increased by 10 percent, mostly in rural areas, even as inequality worsened due to the rise of a wealthy new business elite. Dissatisfaction with the reforms grew and protesters began marching in the streets of Syria’s cities in 2011. At first, Syrians demanded “political and economic reform,” to be followed by “liberty, justice, and dignity.” Yet the Ba’ath Party met the wave of protests with brutal violence, killing and maiming countless civilians. It did not take long until protesters started demanding the fall of the Assad regime.
2012 constitutional referendum
A constitutional referendum was held on Feb. 26, 2012, as a cosmetic step to appease the population. Yet the most significant change was a theoretical end to the ruling Ba’ath Party’s political monopoly without actually putting in place measures to reform the political, economic, or social landscape. Indeed, the constitution already included many articles that, if properly applied, would improve the performance of the economy. However, under Ba’ath rule, the constitution has been mere words on paper and has failed to achieve ostensible objectives ranging from ensuring economic freedoms to freedom of opinion and expression.
Since 2012, the situation has gone from bad to worse. Even more state businesses have been established that operate through informal institutions enforced by either informal actors (e.g., the Makhlouf family) or by formal organizations, such as official agencies, acting in illegitimate ways (e.g., wasta or personal connections). These so-called state businesses are not a new phenomenon in Syria, however. Due to the scarcity of economic resources, and in particular material goods such as oil and remittances, the Assad regime shifted its political control of the economy decades ago toward indirect economic resources such as the establishment of state businesses through informal familial institutions (e.g., Syriatel, owned by Rami Makhlouf, Bashar’s first cousin). These informal institutions — including patron-client networks — have been more influential than formal ones in shaping Syria’s economy. And with increased international sanctions over the past nine years, more of the regime’s cronies like businessmen Samer Foz and the Qaterji brothers have benefitted from the war economy through illegal practices like smuggling, enriching themselves and providing short-term benefits to the regime at the expense of the public.
Today’s constitutional committees have the overwhelming task of addressing many of the problems articulated above, including economic principles and separation of powers, which are stated in the current constitution but not applied in practice. There is simply no guarantee that those laws and principles will be enforced. There is strong resistance to respecting constitutionalism and implementing the 2012 constitution, either from within the Assad regime or actors outside of it. This is a result of Syria’s political settlement and the distribution of organizational power, including the structure of the regime and patron-client networks, which are “personalized” and not based on formal contracts that can be legally enforced.
The two main issues
Syria’s political economy suffers from two primary issues. First, the Assad regime — copying the Soviet model — consists of several overlapping hierarchical structures designed to maintain political stability. These top-down structures allow the leadership to control all aspects of the country from the regional to the village level, including the judiciary. This system has been in place since the time of Hafez Assad and is not conducive to political or economic reform. Efforts to implement changes are blocked or severely constrained at different levels. Rather, this configuration of power is good for repression and maintaining state support and power.
Second, over-centralization negatively affects the performance and efficiency of the bureaucracy. In Syria, fear of punishment contributes to institutions taking more conservative approaches, and indeed the lower level of government has minimal interest in being productive. Asking technocrats to negotiate with foreign officials or local actors to increase the efficiency and the quality of the bureaucracy will put them at risk of being penalized if they don’t deliver the expected outcomes. Moreover, political elites are part of the economic networks or rent-seekers (engaging in corrupt activities to gain wealth without any contribution of productivity), and thus have no motivation to create a fair playing field for other actors.
Changing the political and economic model
These two issues have led to deficiencies in Syria’s political structure, namely the ruling party’s monopoly over the distribution of power. Looking at the structure of the Assad regime and the nature of the political settlement in Syria, the only way that the constitution can be implemented and enforced is by shifting the internal distribution of power downwards and building trust. Currently, the Assad regime exists in a state of extreme paranoia and is focused on the primary objective of controlling the country. It rewards loyalty, rather than outcomes, with access to resources. A better political (and thereby economic) model, though, would require Assad and top leaders to devolve power and autonomy to lower levels of governance to benefit from initiatives and reward those who pursue them based on outcomes. While the seeds of this model have already been planted in the Law of Local Administration (Law 107/2011), which focuses on devolving power and establishing administrative units, this law has yet to be implemented.
Indeed, it will not be easy to obtain such a concession from the regime. However, given the current economic and political situation as well as Syria’s existing legal framework, which envisions decentralized rule, there may be a window to implement such a reform. Russia is not only backing the Syrian constitutional process, but it is also pushing Assad regime officials to sit and negotiate. Lifting the international sanctions on the Syrian regime depends on the outcome of this process. And with almost 65 percent of Syria’s infrastructure destroyed since the start of the uprising, Russia is focused on securing foreign direct investment to finance reconstruction. Further, Syria’s economic situation is growing increasingly dire, as it suffers from the impact of the crisis in neighboring Lebanon and the fallout from the COVID-19 pandemic. The hope is that all of these factors will push the regime to take the Geneva process more seriously.
The notion of separation of powers in the constitution is designed to hinder the aggregation of political and economic power. Syria’s economy will continue to suffer until political power is constrained and directed toward limited objectives. The hope is that a new constitution, if taken seriously and properly implemented, will help Syria transition from a state whose institutions, rules, and policies depend on the dictates of its leadership to one where the distribution of power is restructured so that the lower levels of government can take on a greater role.
Ammar Shams Aldin received his MSc in the Political Economy of Development from SOAS University of London with a focus on the MENA region. He previously managed U.S. government-funded civil society and governance programming in Syria and Turkey for several years. He is currently based in the U.S. The views expressed in this piece are his own.
Photo by Dursun Aydemir/Anadolu Agency via Getty Images
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