Armed Conflict Crushing Syrian Economy

Syria has been engulfed in military conflict for more than four years. These battles have cost the Middle Eastern nation more than a quarter million lives and led to a population decrease of 23 percent with over four million refugees registered in neighboring countries.

Syria has been engulfed in military conflict for more than four years. These battles have cost the Middle Eastern nation more than a quarter million lives and led to a population decrease of 23 percent with over four million refugees registered in neighboring countries.

These numbers are staggering by themselves, but the long-term effects these losses will have on the Syrian economy may long outlast the conflict itself. The Syrian economy has lost more than 60 percent of its output since the conflict began in 2011 according to a report by the BBC. Exports have dropped from $12 billion before the war to just $2 billion today, while the Syrian Pound has lost 80 percent of its value.

Unfortunately, measuring Syria’s total economic output is difficult during the conflict. Government propaganda, missing data, and the fog of war mean that the numbers given are merely estimates and may actually be much lower. However, most analysts believe that the Syrian economy has contracted by between 50 to 65 percent.

Syria’s population has suffered the most because of the contraction. The value of everyday goods has already increased by 51 percent between January 2012 and March 2015, and will likely continue to rocket higher until the conflict resolves.

At the forefront of the contraction has been a ban by the European Union (EU) of Syrian oil. Government oil production has been virtually wiped out by the EU export ban, international sanctions, and oil fields lost to opposition groups. Syria’s own official figures show a drop in state oil output from 387,000 barrels a day in 2011 to a mere 10,000 barrels a day in 2014. As a result, Syria has tried to plug the funding gap by taking on enormous loans to subsidize essential services to its citizens. Nevertheless, the nation has been forced to cut fuel and food subsidies.

On the other hand, Syria’s black market has begun to thrive. Warlords in ISIS controlled portions of the country have used pilfered resources to raise enormous capital to fund their war in Syria and elsewhere in the Middle East. According to the BBC, business people have reported that illegal activity is so rampant and widespread that the entire nation feels like it has degenerated into utter chaos.

Nevertheless, much to the surprise of every observer, electricity and water companies remain functional and government employees receive salaries, even in heavily contested parts of the country. In addition, the Syrian Pound remains the primary currency, even in ISIS controlled areas of the nation. Still, this small glimmer of optimism does not do much to assuage the fears of most financial experts who believe that Syria may never recover from this conflict, even if the state manages to retain control against ISIS.