Shaping a New Syria

Shaping a New Syria

For many local business owners in Syria, they hope that the economic transition will improve business and living standards. Photo: <a href="http://www.flickr.com/photos/hazy_jenius/2104095266/">hazy jenius (flickr)</a>
For many local business owners in Syria, they hope that the economic transition will improve business and living standards. Photo: hazy jenius (flickr)

Syria’s economy is undergoing some real changes. Once known for its socialist policies, Syria is now attempting to spur economic growth through market-based reforms. While such growth is expected to boost Syria's income, experts differ on how, or if, they believe money will reach the poor.

The reforms include cutting back on government subsides, expanding the private sector, and attracting foreign investment. A World Bank report states that between 2006 and 2007, Syria's foreign direct investment nearly doubled — reaching $885 million by the end of 2007. What's more, foreign investment is expected to expand following the opening of the Damascus Securities Exchange — Syria's new stock exchange.

Robert F. Worth of the New York Times says Syria is being forced into a new economic model.

Socialist self-sufficiency is no longer an option for Syria. The oil reserves that once provided the mainstay of state revenues are running out. Exports have tumbled in recent months, as have remittances sent home by Syrian expatriate workers.

In the mid 1990's Syria's oil output hovered around 600,000 barrels per day. Today, output has shrank to 350,000 barrels a day — a decline of nearly 60 percent.

But, as Syria transitions, critics question whether these changes will actually reduce poverty.

“In Syria the growth rate is a strong 6 percent, but the question is: who gets this growth?" says Safi Shujaa, director of the Syrian Economic Center. "According to some economists, 70 percent of gross domestic product goes to only 30 percent of Syrians.” Shujaa thinks that cut backs on government subsidies — which range from agricultural products to fuel, water, and electricity — have pushed many economically vulnerable Syrians directly into poverty. On the other hand, the subsides have simply gotten too expensive for Syria to bear along with its mounting debt. In 2008, subsidy costs for the government reached $7 billion.

Syria's economic transition comes at an interesting time. With talk of a new and improved relationship between Syria and the United States — and possibly Israel — Syria's economic strategy may be aided by improving political relationships with the west.

"If relations will improve," says Mohammed Salem, a Damascus perfume-shop owner, "the economy will improve too."

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