The war economy amid the Syrian chaos – How inter-cities and foreign trade fuel the war

Author:  Samir Aita, Cercle des Economistes Arabes,

A research study was conducted to identify key methods of analysis, essential data collection, monitoring and frameworks to address the economic assessment of urban issues for the reconstruction of post-conflict Syria. The research identified some of the primary economic strengths and weaknesses, opportunities and constraints of Syrian cities in their present situation, as well as key issues for ensuring their resilience during and after the conflict.

As a first step, the research focused on ways to assess and identify the structure of the war economy in Syria and the complex relations it weaves among the inter-city trade networks. The study used the collection of price data at a certain point in the conflict (August 2016) for different types of products as well as for labour.

An original model of analysis of the war economy was developed based on price differentials between cities. The resulting analysis indicates the flow of goods and the trade interaction between cities. This is in keeping with the observations made on the ground. The price differentials are far above transportation costs and reflect the “transaction costs” specific to the war economy, thereby fuelling it.

For example, the model makes it possible to track how Turkish products flow from the “opposition”- controlled area in the North to all other regions, as Turkey has seen its exports to Syria increasing to their pre-conflict levels, changing their nature to basic consumption items. The model also tracks the oil produced in so-called IS (Islamic State) and SDF-controlled (Syrian Democratic Forces) zones, and how it crosses the “barriers” between the zones of control to be refined into fuel oil, mostly in “opposition” areas. This fuel oil is then traded all over Syria, blended with that imported and subsidized by the Syrian government. The price differentials for fuel oil are extremely wide due to the importance of the product for heating, electricity production and transportation.

In addition, the model also tracks the cost of labour, and how it varies significantly from one city to another. It indicates how aid and financial flows differ considerably between cities, even within the same zone of control.

Several cities assumed significant new roles during the conflict as platforms of internal trade: Tell Tamer and Afrin (SDF-controlled), Atareb and Sarmada (“opposition”-controlled), Abu Dali (ISIS- controlled), and so on. This creates opportunities as well as challenges when post-conflict resilience and reconstruction are considered in terms of the regional planning of production and trade, creating strong bonds between Syrian cities.




Author:  Samir Aita, Cercle des Economistes Arabes


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