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Syria's Assad watches war chest dwindle

As the economy contracts and sanctions make it difficult for the Syrian government to access international markets, Damascus is seeking help from its allies in a civil war that's getting harder for Assad to pay for.

Syrian Deputy Prime Minister Qadri Jamil's recent trip to Moscow suggested the extent to which Syrian President Bashar Assad's regime now depends on help from abroad. Negotiations over the delivery of gas, crude and refined oil as well as financial aid in unknown quantities points to the difficult financial situation facing the government in Damascus.

Some Syrian state employees are receiving just part or none of their salaries, while benefits are being alternately provided then denied. Islam scholar and economist Anja Zorob said she believes these are signs that international sanctions are beginning to impact the country. The energy sector plays a major role in Assad's ability to wage war.

"Before the boycott, profits from oil account for 30 to 40 percent of the state's proceeds. But the embargo by the EU and other nations has put an end to that," Zorob said. "Then you have to add in sinking revenues from taxes and tariffs."

Massive declines

Russian oil gaint Yukos oil rig is seen near Tyumen, Western Siberia (AP Photo/Alexander Korolkov, Izvestia)

Oil from Siberia is making its way to Syria

Sanctions have led Syria's crude oil production to contract severely. In 2010, the industry produced 385,000 barrels a day. That number has sunk to 182,000 today. The state's revenue in this area has dropped from $12 billion (9.5 billion euros) to $4 billion (3.2 billion euros).

Other data also underscore Syria's dire economic situation and its long-term consequences for Assad's battle strategy. Since the beginnings of unrest about a year and half ago, the Syrian pound has lost about half of its value. The gross domestic product is expected to shrink by 14 percent to 20 percent for 2012, and income per capita has fallen from nearly $4,800 in 2010 to $4,260 in 2012.

At the same time, prices are rising and expected to go up by more than 30 percent by the end of the year. As private households suffer, so, too, does the state, which will likely lose about 40 percent of its revenue this year. The government's worries are compounded by the expense of waging war.

Oil a key factor

Economic decline and international sanctions are making it hard on the Assad regime to import the refined oil products it seeks to fuel the war against rebels, said Samuel Ciszuk, a Middle East analyst with British management consultancy KBC. Ciszuk said Syria was able to cover its own crude oil needs before the conflict, but it had to import refined oil products. Now even crude oil production faces increasing problems.

"Pipelines have been blown up, workers haven't been turning up for work. The government regime has been forced to choose between not supplying the army or not supplying the civil population. Being pressured as they are, of course, they've chosen to supply security forces," Ciszuk explained.

Tanks seen in Douma City (Photo:Shaam News Network via AP video/AP/dapd)

Syrian tanks devour fuel to wage Assad's war

That spells increased dependence for Syria on its limited allies. Ciszuk counted three countries that Syria can especially count on: Russia, Iran and Venezuela.

"There's been a not unimportant amount of oil being delivered to Syria. It's hard to say whether it has been one of the main factors keeping it alive," he said.

A further complication for oil exporters is that the West's boycott policy is making their sales more and more risky. Ciszuk said some major, internationally active Russian banks now hesitate to bankroll moves that would support Syria due to a fear of being affected by sanctions from the West.

Holding out for how long?

The Assad regime will face many challenges if it tries to hold on to power. But neither the sanctions nor the recession have led the government to chart a new course so far. Ciszuk said he is convinced the regime will ultimately fall, but that could easily take quite a bit of time.

Zorob said she fears the populace will suffer severely in the meantime.

"It's clear that the situation is getting worse," Zorob said. "It's going to get much worse for the one or two million people that have now fled or who have to live in difficult circumstances and centers of the protest movement."

With all the difficulties the regime faces, its allies become that much more important.

"As long as the regime is able to count on their support, then it will be able to continue its war against its own people," Zorob said. "That will destroy the country and its economic foundation."

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