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Syria's shattered economy

Hilke Fischer / ag
October 31, 2013

From oil production to mining and the textile industry, Syria's civil war has brought the country's economy to its knees. Only agriculture has been saving the country - and a new, more sinister industry is thriving.

Damage and destruction litter a street in the battered city of Qusayr, southwest of Homs in western Syria, on June 20, 2012. (Photo: AFP/GettyImages)
Image: AFP/Getty Images

For over two years Syria has been in the grips of a civil war, which has all but leveled the country's economy. And it's the civilians who suffer the most: Before the war, unemployment was below 10 percent; now every second Syrian is without a job. Those who can, often the well-educated Syrians who were being counted on to bring the country forward in times of peace, are moving abroad.

But qualified personnel is not the only deficit the country is facing, according to Galina Kolev, an expert for international trade at the Cologne Institute for Economic Research. Significant parts of Syria's infrastructure are destroyed, she said, with many companies moving their production sites to Egypt or Turkey.

"The overall economic costs of the war already surpass the [country's] annual economic output," Kolev said, adding that investment has decreased by half from 2010 to 2012.

Few to no exports

Back in 2010, the country exported goods and commodities worth over 2 billion euros ($2.73 billion) - now it's down to merely a fourth of that. One of the reasons is the current EU sanctions - Europe's answer to the regime's repressions and human rights violations. One of the most important export items is the country's crude oil: its production of 400,000 barrels per day before the war has now shrunk to less than half that figure.

"Before the war, around 90 percent of German imports from Syria were in the area of crude oil and petroleum products - and the current ban has led to a significant cut in imports from Syria," Kolev said.

Galina Kolev, foreign trade adviser at the Cologne Institute for Economic Research (Foto: Institut der deutschen Wirtschaft Köln Medien GmbH)
Violence and instability has led companies to move production to Egypt and Turkey, Kolev saidImage: Institut der deutschen Wirtschaft Köln Medien

Most of Syria's crude oil exports used to head to the European Union with Germany had been the second most important buyer of Syrian products, after Italy. As a direct consequence from the war, German-Syrian trade has now all but collapsed.

Violence-based economics are spreading

Working at the Syrian Center for Political Research in Damascus, Rabie Nasser analyzed the economic situation his country is in for the United Nations. He said he doubts economic sanctions will make the regime in Damascus change direction: "The sanctions do affect the government, but they also affect the Syrian population: the regime hands down the sanctions to the people."

Europe's freezing of Syrian government bank accounts, for instance, has led to a shortage of funds to run medical services. "The European governments know this," Nasser said, "but they want to give the message to their citizens that they don't just passively look on to what's happening in Syria."

As a consequence of the sanctions, even European companies that dealt with non-sanctioned goods largely suspended their business relations with Syria. Instead, a new from of trade has sprung up within the country; one, which Nasser calls a "violence-based economy." A state that tears itself apart offers ample space for smugglers and people who have created their own monopoly for selling food and medicine.

"Those ones have no interest whatsoever in an ending of the conflict," Nasser said. "They make a lot of money without having to do much for it."

Agricultural growth

But it's the growth of yet another sector that has probably helped spare the Syrian public of even more suffering: Over the course of two years, the country's agriculture has soared from 17 percent of GDP to 27 percent.

Farmer is harvesting figs in the mountains of Sednaya, Syria, on 2013-09-28. (Photo: Martin Lejeune/dpa)
A light in the dark: Syria's agricultural sectorImage: picture-alliance/dpa

"The climatic conditions have been very good," Nasser said, "by and large, that has helped to assure the availability of enough food; on top of that, there was employment. Had there been a drought, the situation would have been a lot more severe."

Still: 60 percent of all Syrians now live in poverty - twice as many as before the war.

Like many, Naaser said he hopes for the conflict to end soon and for that violence-based economy to go away with it. "We need a negotiated solution - and we need it very soon," he added. "And the basis for that must be the needs of the Syrian public."

But for now that appears to be a case of wishful thinking: A speedy end of Syria's civil war is not in sight. For months, an international peace conference has repeatedly been postponed. It is now due to take place in November.

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