The origins of the Syrian crisis, its socioeconomic impact, & prospects for the future of the Syrian economy

The Syrian Center for Policy Research (SCPR) is a new research center based in Syria, conducting policy-oriented research on economic and social issues. Despite the very difficult political and economic circumstances, the SCPR has issued a series of rigorous research papers on the origins of the Syrian crisis, its socioeconomic impact, and prospects for the future of the Syrian economy. The following is an interview Mr. Rabie Nasser, one of the co-founders, and the SCPR team.

Omar Dahi (OD): Thank you for your time. Can you tell us a little bit more about SCPR. What is it, why was it created and what its goals are?

Syrian Center for Policy Research (SCPR): The Syrian Center for Policy Research is an independent non-governmental, non-profit think tank based in Damascus which undertakes public policy-oriented research to influence and facilitate policy dialogue and advocate policy solutions to promote sustainable inclusive development.

In Syria, there are substantial weaknesses in national development institutionally, socially and economically; and the current situation unmasked the lack of efficiency, transparency, and accountability in national institutions. These institutions have failed to bridge the gap between societal needs and development policies, programs, and outcomes. Intermediate channels (the parliament, the media, and political parties) have come to be highly exclusive and have widened this gap. SCPR aims to bridge the gap between policy making and public opinion, and between policy-making and the accumulated knowledge, necessary for rational and effective policies. Thus, it could be said that SCPR is not created as a reaction on the current situation, yet, institutions in general are more likely to be changed during crisis either negative or positive changes; and SCPR is working to contribute on the positive changes.

The main operational goals of SCPR include producing evidence-based research and utilize knowledge to support good governance, creating a forum for policy dialogue among key representatives, providing access to information and participation in policy making, and expending institutional policy capacities in order to assess and communicate innovative ideas and research outputs.

OD: Your first research paper attempted to explain the root causes of the Syrian uprising. What were your main findings and how do they differ from other analysis of the origins of the crisis?

SCPR: According to Socioeconomic Roots and Impacts of the Syrian Crisis (January 2013), the factors that led to the current crisis in Syria are mainly rooted in “institutional bottlenecks” which reflects deficiencies in the nature of formal institutions and diversions in de facto institutions. This has led to the marginalization of large segments of society, and relatively deprived them from being effectively contributing to political, economic and social development. The state of “institutional bottlenecks“ in Syria is reflected in the loss of political and economic institutional ability to change over time and to respond to the aspirations, interests and expectations of society.

Poor Institutional performance in Syria was manifested in a lack of political participation and accountability, government effectiveness, regulatory quality, role of law, and control of corruption. These were partially reflected in mismanaged public funds, complicated judiciary procedures, and lack of transparent public policies. Consequently, political institutions in Syria have failed to address the need of a broad-based and empowered process of development with strong monitoring and evaluation system of development results, and have failed also to create a strict system of accountability to effectively address poverty and social injustice.

Syria’s development model has led to a “low equilibrium” development represented in crony capitalism, poor productivity, and a large informal sector; paralleled with subsidized but inefficient social services, including health, education, and subsidized basic commodities.

The rising human capital, coupled with increasing aspirations, especially among the youth, clashed against decaying institutions, which blocked the possibility of using such human capital to achieve prosperity and justice. The wave of revolutions in Tunisia and Egypt substantially raised the level of expectations for rapid transformation and the building of a more just society.

This analysis concentrates on the main root of the crisis unlike other analyses, which mixed between roots, and results of the situation, many of them exaggerated the economic and social problems like poverty and ethnicity, which probably guided to misleading results and conclusions. SCPR tried to give objective analysis of the weaknesses and strengths of the development situation and concluded that the main cause that could lead to such crisis is the stagnation of the formal and informal institutions.

OD: You recently issued a report on the Syrian economy called “War on Development.” Can you summarize the main findings?

SCPR: The armed-conflict in Syria is also a war on development. Its prosecution is obliterating physical, financial, human and social capital, with economic devastation and ruin as destructive to the country as warfare. This has resulted in a sectorial restructuring of the economy toward dependency on agriculture, which is subject to significant annual and seasonal fluctuation and low-productivity.  This distorted pathway is evidenced by de-industrialization and rising informality, degrading infrastructure and services, weakening human capital, a low import-export regime and an insecure business environment. Moreover, rising economies of violence and rapaciousness are increasing Syria’s economic fragility.

The report shows that total economic loss until 2013-Q2 (the end of June 2013) reached 103.1 billion US dollars, which is equivalent to one hundred forty-seven per cent of Syria’s GDP in 2010 in constant prices. GDP loss, estimated at 47.9 billion US dollars over the period, accounts for forty seven per cent of the total economic loss. In 2013-Q2, GDP contracted by 39.6 percent, compared to the parallel quarter of 2012. The loss of capital stock, due to damage and destruction, is assessed at USD 49.6 billion, accounting forty-eight per cent of the total economic loss, while additional military expenditures of USD 5.5 billion account for five per cent of this loss.

The total loss of job opportunities decreased slightly in the quarter due to short-term employment during the harvest season, although 2.33 million people were unemployed by 2013-Q2. As a broad measure of social well-being, the Syrian HDI is estimated to have lost 20.6 per cent of its value compared to 2011, and 23.1 percent from its potential in 2013-Q2. More than half of all Syrians are now poor and the population has been hollowed out by over eight per cent by 2013-Q2 due to the flight of 1.74 million refugees and the departure of another 1.37 million “voluntary” migrants.

Moreover, the population pattern and settled communities have been disrupted by the displacement of 4.8 million people from their homes and neighborhoods by violence, homelessness, fear and intimidation. The educational system is in a state of deep crisis with damage and destruction to two thousand nine hundred ninety-four schools and other educational infrastructure, while the national dropout rate reached forty-nine per cent. Moreover, half of all school children are out of school and the absence and irregular attendance of teachers and the difficulties of teaching under traumatic psychological conditions negatively affect the quality of education.

In the health sector, by 2013-Q2, fifty-seven hospitals were damaged, with thirty-seven of them are out of services, with Al-Raqqa losing all its main public health facilities. During this crisis, the doctor/population ratio fell from 1:661 in 2010 to 1:4,041 by 2013-Q2. At the end of this period, there were hundred thousand conflict-related deaths, while another approximately four hundred thousand persons were injured during the conflict, many with life-long and life-changing disabilities and chronic conditions that will affect their future capabilities and burden the healthcare system. Disease and illness are on the rise, particularly among the vulnerable groups including women, children, IDPs, and refugees.

The armed conflict has created a humanitarian calamity of startling proportions. Today, Syrians fleeing the conflict are the most rapidly growing refugee population worldwide. If local, regional and international actors are to act in the interests of the Syrian people then they must exert their full political and diplomatic leverage to end hostilities and create a credible negotiation process that can stop the dissolution of the country and bring hope to its entire people. 

OD: How are you able to conduct research in Syria under these circumstances both in terms of the ability to get information as well as maintaining an independent analysis?

SCPR: SCPR maintains its intellectual independence through establishing as a civil non-governmental entity representing the public interest, engaging strategic partners in public, private, and civil sectors, forming an advisory board composed of respected independent intellectuals, securing seeds money from the founders to establish the institution in addition to diversifying financial portfolio to avoid undue influence, and depending on dedicated human capital of Syrian researchers who allocated a part of their time to work with SCPR on a voluntary basis. Moreover, the objectivity of SCPR results and work process and the partnership with technical people within institutions enhance its credibility among partners from all sectors.  

OD: You conducted a survey of Syrian political and economic experts about the nature of the Syrian crisis, the role of different actors, and different possible scenarios for its resolution. Why did you conduct this study, what were your findings?

SCPR: SCPR is working on the alternative development policies for Syria, and this project covering several issues including the understanding of the socioeconomic roots and impacts of the crisis, identifying in a participatory approach the “vision of future Syria”, and exploring the scenarios of the crisis and its alternative solutions for Syria to come up with concrete basis on which development policies can be built during crisis and post crisis phases instead of jumping directly to the “day after” era.

SCPR depends on scientific and participatory methodologies to explore the crisis scenarios. The study conducted a mapping of internal, regional and international actors in the crisis, and measured the probabilities of each suggested scenario of the crisis, taking in consideration the weight of supportive actors for each scenario, and finally assessed the compatibility of each scenario to the “vision of future Syria”, to consider the “most favorable scenario”. A questionnaire was prepared, tested and used to collect and analyze experts’ opinions on the weight and influence of actors, the most probable scenarios, and the most favorable of them. It was sent to one hundred twenty Syrian experts and activists from different backgrounds have capacity of objectivity, and the interest in public issues.

The results show that sixty-three percent of the total Syrian crisis actors’ impact is related to external actors, as forty percent of the total impact is a result of within external actors influences, reflecting the international competition between world powers to increase its influences; whereas twenty-three percent of the total impact is due to the effect of these external parties on the internal ones. However, the effect of the internal parties on the Syrian crisis is thirty-seven percent of the total impact; this includes the impact of these parties on each other negatively or positively in addition to the impact of internal parties on external ones, which is the lowest at 15.5 percent. This shows that the Syrian crisis is internationalized to a large extent, and this has a negative effect on the possibility of finding internal solutions that take into account the priorities of Syrian people.

The study results show that among the eight suggested scenarios the most probable one for the Syrian crisis is “negotiations with substantial external influence” and the least probable scenario is “failure state”. However, the close probabilities of the scenarios show the crisis complications and the possibility of radical transformations throughout the different stages of the crisis.

The study concludes that the most favorable scenarios toward the values and principles are: negotiations with substantial internal influence that takes the priorities of Syrian society into consideration, followed by negotiations with substantial external influence. The least favorable scenario is the “continuation of armed conflict.” The negotiations in general, and internal negotiation in particular, achieve the highest percentage of the values and principles, and much higher than percentages achieved by other scenarios. This reflects clearly that most Syrians prefer a political solution through negotiation for the current crisis.  

OD: From a socio-economic perspective, what are the current priorities for Syria and what are the priorities post-conflict economic recovery? What outcomes do you expect from the Geneva II conference and what do you think are the chances it will reflect the priorities you mention?

SCPR: As shown in the crisis scenarios study, Syrians currently aims to end up the current armed conflict through a negotiation that takes their priorities into consideration. In general, Syrians priority is to build the country of justice and well-being and to insure the optimum use of Syria potentials, in order to achieve sustainable, inclusive, and human-centered development that contributes to human civilization, especially, through its knowledge production. The achievement of such development needs to establish and recreate formal and informal institutions that are able to fulfill Syrians’ expectations at all levels including the socio-economic perspective. This priority implies the need of inclusive economic growth, proper health and education systems and infrastructure available for all, decent jobs, equal opportunities, transparent and accountable institutions, social equality, and effective participation in development policies. The focus should be on human, social, and cultural capitals through appropriate policies and tools; and not only on rebuilding the financial and physical capitals.

Any negotiation attempt should take into account the Syrians priorities and reach a basic agreement that establishes solid foundations to trigger the future process to build the nation. These priorities should be identified, determined, and applied in endogenous and home-grown approach.