World Economy

Syria War Crushing Economy

Syria War Crushing EconomySyria War Crushing Economy

 A middle-aged salesman sat glumly among an array of shorts, khaki leisure suits bedecked with gold belts and dresses with plunging necklines in the ancient Damascus bazaar — luxuries few can afford in today’s Syria.

He, like many traders, lost most of his customers when Syria’s uprising erupted in 2011 against the government of President Bashar Assad, and his new clientele is far poorer: Syrians fleeing the fighting with barely any possessions.

Now, he fears there’s even worse to come, as the US-led bombings of the Islamic State group target the country’s modest oil reserves under the militants’ control, sending oil and diesel prices soaring, AP reported.

The effect is rippling through the economy, and traders fear they won’t be able to absorb the increased costs, pushing them out of business and unraveling yet another key sector of Syrian society, already badly frayed by conflict.

 Prices Shoot Up

Earlier this month, the government raised the subsidized price of diesel from 36 cents to 48 cents a liter. The price of heating oil went from 73 cents a liter to 85 cents.

The increased prices were tied to the US bombing of small oil wells, tankers and pumping stations under the control of the Islamic State group in the eastern Syrian provinces of Deir al-Zour and Hassakeh, which began in late September.

The militants had been selling the fuel at a cut-rate price — including some $1 billion to the Syrian government.

Syria has modest oil reserves. Before the conflict it was pumping 360,000 barrels a day; since the fighting it has only managed 16,000 barrels, said Syria economy expert Abdul-Qader Azouz. That has made it reliant on exports, and militants selling back the country’s resources.

The knock-on effects of the latest fuel price hike and continued bombings have already impacted the price of bread, yogurt and milk. The price of a loaf of unsubsidized bread rose to 97 cents from 85 cents — more than four times the 21-cent price tag before the crisis. Milk rose to $1.13 from $1. Before the crisis it was 30 cents.

 Economic Pulse

The prices of other goods are likely to rise in the next few weeks, said traders at the Damascus bazaar, known as the Hamidiyeh Souk, who are an important measure of the economy’s pulse.

Prices have already quadrupled over the past four years for most products in the market.

The printed leisure suit cost $6 pre-war; now it’s $21. While that appears cheap by Western standards, salaries are low in Syria: Most civil servants and soldiers are paid around $100 a month.

The price tag for a bottle of perfume at another stall was $4.30. Pre-conflict it was $1.50. “And at the lower price, we were making a better profit on it,” because of the increased cost of raw materials, said trader Hussam.