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Tue May 29, 2012
How Economic Reforms Are Contributing To The Conflict In Syria
This week in The New York Times Magazine, Adam Davidson writes about the surprising diversity of Syria's economy. Economic reforms opened up the economy to foreign investors and a growing class of entrepreneurs. But according to Ayham Kamel, an analyst at the Eurasia Group, the reforms undercut Syria's rural poor. We asked him to elaborate in the following post.
For more on Syria, listen to our latest podcast here.
For decades, Syria's economy suffered at the hands of inexperienced bureaucrats and corrupt officials. Nevertheless, since the 1960s, stability was maintained because the system was largely egalitarian; the economic conditions of most Syrian families were dire, but everyone shared the same plight.
That changed in 2000, when Assad's economic reforms liberalized Syria's economy and opened it to foreign investment. Connected officials in Damascus and Aleppo profited, becoming the fortunate few in a dual economy. Many entrepreneurs no longer needed an official patron—either in the security services or the military—to conduct business.
Meanwhile, the regime began to strip the rural population of the socialist perks that long sustained domestic stability. Authorities reduced subsidies, limited government-guaranteed employment, and prioritized IMF policy recommendations over local interests.
Crony capitalism created a zero-sum structure in which prosperity in urban areas largely came at the expense of rural improvement. Depriving rural communities, where half the country's population resides, of both their economic and political rights is proving to be one of the most fateful decisions Assad ever made.
Making matters worse, Assad decided to centralize his control over the ruling Baath party, which monopolized power for over four decades. Daraa and Homs, the hubs of the current uprising and traditionally the core support bases of the party, lost their influence and prestige. In an effort to lead the political process, Assad further marginalized the Baath party's periphery. Current officials from rural areas who long kept their constituencies in control became increasingly irrelevant.
Ethnic, religious, cultural, and economic diversity in Syria has promoted and prolonged the conflict. Protracted conflict is likely and the prospects of economic recovery are dim. Infrastructure has been severely damaged, state authority now has minimal reach, and investor confidence is essentially nonexistent.
An end to armed conflict would open a chapter of reconstruction, one that takes time and money. The role of the middle class in reviving Syria's economy cannot be overstated; after all, the rather astute business community survived decades in a paralyzing socialist regime. Irrespective of their policy of hedging, their skills and talents are essential to rebuilding a new Syria.