War Economy of Syrian Crisis Syrian Center for Policy Research WB/IMF Spring Meeting April 21, 2017
Syria War Actors Subjugating powers ( political tyranny, fanaticism, fundamentalism, conflict elite) vs civil powers External Foreign governments West: War on terror, Sanctions, humanitarian support, military support East: Rising south, military support, and humanitarian support Regional: military including personnel, identity politics, humanitarian and social support Transnational conflict elite UN Global civil society Internal Regime Opposition ISIS YPG Conflict elites Civil society People
Global crisis Size of the Syrian economy and its resources are not enough incentives for the battle between global and regional actors at this magnitude The size of loss is far beyond the Syrian economy capacity Direct involvement of various internal and external subjugating powers Shrinking role of global civil society Institutionalising of war economy Investment in identity politics Fragmentation of geography, economy High exposure to the external influence: Humanitarian aid, diaspora, governments
Billions SYP Economic Impact Unbearable Economic losses GDP crisis and accumulated GDP loss in constant 2000 prices in billion SYP (2010 2015) 2010 2011 2012 2013 2014 2015 4500 4000 3500 3000 2500 4159 By 2015, the crisis total GDP loss reached USD 163.3 billion: three times Syria s GDP in 2010 seven times of the projected GDP in 2015 2000 1385 1500 1000 512 500 0 GDP (crisis scenario) Accumulated GDP loss scpr-syria.org 4
Agriculture Mining Manufacturing Utilities Construction Internal trade Transport & commmunication Finance & real estate Government Services Social Services Economic Impact Unbearable Economic losses Real GDP accumulated loss by sector till the end of 2015 and real sector GDP in 2010 (in billion SYP) 1000 967 2010 GDP Accumulated loss 630 660 500 0 240 483 186 44 154 37 136 52 160 297 191 585 69 236 207 59 167 GDP loss (till2015)/ GDP 2010: o Utilities sector 3.65 times o Manufacturing 3.51 times o Finance 3.40 times o mining 3.39 times GDP growth 2015: + positive growth of agriculture, internal trade, finance, and NGOs -- recession for the rest scpr-syria.org 5
Economic Impact Unbearable Economic losses 7000 6000 5000 4000 3000 2000 1000 Acumulated Economic Losses 2011-2015 and GDP 2010 in constant SYP Loss/GDP 4,7 Loss/GDP 12,7 26% GDP2015 By 2015, the crisis total GDP loss reached 254,7 USD billion: 4,7 times Syria s GDP in 2010 12,7 times of the projected GDP in 2015 Military expenditure 26% of GDP 205 0 GDP loss Capital stock damaged Increase in military expenditure Oil Loss Total economic losses GDP 2010 GDP 2015 Military exp 2015 scpr-syria.org
% of GDP Economic Impact Huge deficit and military expenditure The budget deficit decreased from 41.2 % in 2014 to 28.1 % in 2015. This reflects the government strategy to increase public revenue based on subsidies rationalization policy that reduced dramatically the subsidies. However, this strategy has adversely impacted the economy and contributed to deeper recession as, it increased the cost of domestic production and the inflation pressures, and thus, devaluated the currency. 40. 0 20. 0 0. 0-20.0 Fiscal policy and reduction of subsidies 2010-2015* 2010 2011 2012 2013 2014 2015-40.0 Revenue Expenditure Budget Balance Deficit with Off Budget Subsidies Plus military scpr-syria.org 7
Means of War Economy Means of War Economy - Destruction - Weapons - Pillage of wealth and resources - Using fear and subordination of people - Reallocation of resources towards conflict related activities - Discrimination in services and basic goods - Impoverishment Policies - Economic elite privileges - Inequality of subsidies and aids distribution - Transnational conflict related networks Means of identity politics - Invest in rejection of the other - Triggering hater through killing - Media - Education - Discrimination policies - Destroying the social capital networks and trust
2010 2011 2012 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4-2300 -2291-2281 -2272-2262 -2253-2243 -2234-2224 -2215-2205 -2196-2186 -2177-2167 -2158-2148 -2139-2129 -2120-2110 -2101-2091 -2082-2072 -2063-2053 -2044-2034 -2025-2015 -2006-1996 -1987-1977 -1968-1958 -1949-1939 -1930-1920 -1911-1901 -1892-1882 -1873-1863 -1854-1844 -1835-1825 -1816-1806 -1797-1787 -1778-1768 -1759-1749 -1740-1730 -1721-1711 -1702-1692 -1683-1673 -1664-1654 -1645-1635 -1626-1616 -1607-1597 -1588-1578 -1569-1559 -1550-1540 -1531-1521 -1512-1502 -1493-1483 -1474-1464 -1455-1445 -1436-1426 -1417-1407 -1398-1388 -1379-1369 -1360-1350 -1341-1331 -1322-1312 -1303-1293 -1284-1274 -1265-1255 -1246-1236 -1227-1217 -1208-1198 -1189-1179 -1170-1160 -1151-1141 -1132-1122 -1113-1103 -1094-1084 -1075-1065 -1056-1046 -1037-1027 -1018-1008 -999-989 -980-970 -961-951 -942-932 -923-913 -904-894 -885-875 -866-856 -847-837 -828-818 -809-799 -790-780 -771-761 -752-742 -733-723 -714-704 -695-685 -676-666 -657-647 -638-628 -619-609 -600-590 -581-571 -562-552 -543-533 -524-514 -505-495 -486-476 -467-457 -448-438 -429-419 -410-400 -391-381 -372-362 -353-343 -334-324 -315-305 -296-286 -277-267 -258-248 -239-229 -220-210 -201-191 -182-172 -163-153 -144-134 -125-115 -106-96-87-77-68-58-49-39-30-20-11-1918283747566675859410411312313214215161701801891992082182272372462562652752842943031322332341351360370379389398408417427436446455465474849350351252253154155056056957958859860761762636456556646746836937027127217317407507597697787887978078168268358458548648738838929029119219309409495968978987997 100 101 6102 6103 5104 5105 4106 4107 3108 3109 2110 2111 112 113 0113 0114 9115 9116 8117 8118 7119 7120 6121 6122 5123 5124 4125 4126 3127 3128 2129 2130 1311 132 0132 0133 9134 9135 8136 8137 7138 7139 6140 6141 5142 5143 4144 4145 3146 3147 2148 2149 150 151 0151 0152 9153 9154 8155 8156 7157 7158 6159 6160 5161 5162 4163 4164 3165 3166 2167 2168 169 170 0170 0171 9172 9173 8174 8175 7176 7177 6178 6179 5180 5181 4182 4183 3184 3185 2186 2187 188 189 0189 0190 9191 9192 8193 8194 7195 7196 6197 6198 5199 5200 4201 4202 3203 3204 205 206 1207 1208 0208 0209 9210 9211 8212 8213 7214 7215 6216 6217 5218 5219 4220 4221 3222 3223 224 225 1226 1227 0227 0228 9229 9230 8231 8232 7233 7234 6235 6236 5237 5238 4239 4240 3241 3242 243 244 1245 1 0 Means of War Economy - Destruction and dispersion 1.00 0.98 Estimated level of Capital Stock, from 2010 to 2015-Q4 at constant prices (2010=1) The Syrian population pyramid by age and gender (continuous and crisis scenarios 2016) 0.76 0.70 0.64 0.58 0.53 0.51 0.50 0.48 0.46 0.45 0.44 0.44 0.43 80+ 75 to 79 70 to 74 65 to 69 60 to 64 55 to 59 50 to 54 45 to 49 40 to 44 35 to 39 30 to 34 25 to 29 20 to 24 15 to 19 10 to 14 5 to 9 0 to 4 F_16_crisis_withinSYR F_16 M_16_crisis_withinSYR M_16 Source: Population survey 2014 and SCPR s calculations
Means of War Economy Reallocation of resources to conflict Consumption GDP by its components in constant prices 2000, (SYP Billion) Sectors (SYP Billion) Public Semi public Private 2010 2011 2012 2013 2014 2015 Consumption GDP 2010 and accumulated loss till 2015 in constant prices of 2000, SYP billions 242 295 364 37 469 537 54 355 163 68 346 1 21 555 430 776 633 Private Consumption: Recession by 2.6% in 2015 Increase of poverty Public consumption: - A substantial fall in by 33.1%, 2015 - A decline to 31.6 % of GDP in 2015 - It includes projected military expenditure semi-public consumption: Increasing share from 2.1 % in 2012 to 13.2 % in 2015 A shift in public economic policies Sectors (SYP Billion) 2010 2015Q4 364 776 473-182 2341 Public Semi public Private scpr-syria.org 10
Means of War Economy Impoverishment Policies Overall poverty incidence in Syria by governorate (2014, 2015, a map for each year) Overall Poverty Syria 2014 Overall Poverty Syria 2015 0.747 0.772 0.769 0.798 0.804 0.820 0.805 0.824 0.806 0.824 0.807 0.831 0.814 0.843 0.837 0.855 0.846 0.862 0.853 0.869 0.856 0.869 SCPR projections 0.884 0.895 0.896 SCPR projections 0.901 0.905 0.916 scpr-syria.org 11
Means of War Economy Discrimination in services provision HeRAMS Composite Index for health centers in Syria 2014 HeRAMS Composite Index for public hospitals in Syria 2014
Means of War Economy Workers for violence Number of employed and unemployed 2011-2015 (in thousand) 3273 3025 2908 2819 2749 2682 2644 2636 2608 2589 905 2015 2116 2298 2486 2688 2778 2833 2882 2929 2942 2923 2921 2908 3987 3757 3536 5175 Involved in illegal activities 2011 2012 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 military personnel (formal and informal) Employed Unemployed 13
Questions What is the cost of the Syrian crisis on the global economy? including: 1- the military and intelligence costs by the main global actors who directly involved in the battle 2- The indirect cost related to the contested relation triggered by Syrian crisis: Russia vs Turkey Saudi vs Iran Eu, US vs Russia 3- The cost of refugees crisis 4- The cost of resurgence of political tyranny 5- The cost of resurgence of terrorism Can we face the war economy in Syria on the national level?
Dismantiling War Economy Institutional dimension to create just and trustful governance - Ceasing the killing - Decomposing the institutional foundations and powers associated with the violence and oppression. - Activating the role of de facto nonviolent institutions towards resolving the crisis - Expanding the participation regardless political, social, cultural, and economic backgrounds. - Raising the level of accountability and integrity. - Developing national political tools to resolve the crisis through developing a shared vision at national level. - Constructing efficient institutions through strengthening the values of work, participation and accountability. - Achieving the political and developmental independency. The war main message that oppression can repeatedly destroy any developmental achievements
Dismantiling War Economy Economic dimension to create negative incentives to the war economy - Decomposing the foundations of violence and rent-oriented economy. - Supporting private sector development and increase the constraints on conflict elite - Institutionalizing and activating of a civil society economy. - Development role of the state is crucial to overcome the war economy - Constructing a flexible, comprehensive, and participatory plan. - Applying effective and accountable policies to alleviate poverty and inequality. - Creating job opportunities through public and civil work programs. - Supporting local production process in all sectors. - Achieving an independent, efficient, and just economic policy. - Increasing productivity by enhancing the role of knowledge and technology. Conflict elite cannot be part of build sustainable development
Dismantiling War Economy Social dimension to decompose the identity politics and polarisation - Restoring social fabric and trust, and dismantling the tools of fragmentation and hatred. - Respecting the right to life. - Activating the role of NGOs and civil society organizations. - Building a new social contract based on the culture of rights, equal citizenship, justice, and collective national identity through open public dialogue. - Empowered human capital, protecting fair opportunities, and safeguarding the environment of freedom of speech and intellectual production. - Investing in health and wellbeing for all, on individuals and society levels. - Preserving natural resources and reducing pollution. Reinvest in society and solidarity, and countering identity politics for peace and prosperity
Thank You