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The economic crisis in northeastern Syria:between challenges and prospects for possible solutions

NE Syria | Brussels

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Report summary. This report examines the economic conditions in the regions of northeastern Syria (NES) in light of the geopolitical complications that the region is experiencing in general. The economic situation in all its aspects has become one of the most prominent challenges facing citizens in northeastern Syria, coinciding with the implementation of the Caesar Law, which, despite the exclusion of the regions of northeastern Syria, has left immediate economic effects after its implementation, which has made the situation worse. In this context, TEVN held a virtual dialogue session via the Internet with a group of civil society organizations working in northeastern Syria, the Kurdistan Region of Iraq and the European Union countries, numbering 22 participating organizations with the aim of discussing the current economic situation. The meeting dealt with a set of axes related to economic reality, with the aim of finding solutions that help alleviate the burdens of economic conditions and identify the mechanisms, obstacles and challenges that everyone faces, from the burdens facing self-management to civil society. This paper is based on the discussion of a set of basic pillars of the economic situation, which can be summarized as follows:

  1. The general economic situation in northeastern Syria.

  2. The effects and consequences of Caesar's Law.

  3. Roles and responsibilities of self-management in north-eastern Syria.

  4. The role of civil society organizations in alleviating the economic crisis.

  5. The role of the international community, including the United Nations, in dealing with the economic crisis.

Based on the mentioned axes, a set of outputs and recommendations were reached that summarize and highlight the mechanisms and foundations that the actors can play to alleviate the economic crisis in northeastern Syria and prevent their exacerbation from the viewpoint of the organizations participating in the dialogue.

The economic situation in NE Syria. The deterioration of the economic situation is due to a group of direct and indirect factors, as the protracted and ongoing Syrian war remains to this day the main reason for the collapse of the economy which has led to the destruction of infrastructure and the loss of the Syrian currency, the “ lira,” most importantly, in its purchasing power. Note the exchange rate to the US dollar: as this paper goes to press, the exchange rate is 2010 Syrian pounds to each US dollar.

And, according to opinions, this collapse led to a large imbalance in the purchasing power and a doubling of prices. In addition, there’s an imbalance in the purchasing value and the value of the salaries of the self-employed, who numbered about 250,000 in the region.

The participants also see that the war of liberation against ISIS has contributed to weakening the economy in NES in addition to the vast spending to eliminate the Islamic State. Moreover, the recent Turkish military operations that led to the crisis in the economy has also led to the collapse of the relative stability that was in the area, as the theft and looting operations carried out by the Syrian National Army factions, notably the agricultural wealth, have led to economic losses estimated in the millions, in addition to the displacement of more than 300,000 people. The UN Security Council issued Resolution 2165 in 2014, which permits the introduction of humanitarian aid to Syria through four border points, two of which are in Turkey (Bab al-Salam and Bab al-Hawa), one via Jordan (the Ramtha crossing) and one via Iraq (the Al-Yarobia crossing). After several attempts to bypass the Russian-Chinese veto, on the evening of Saturday 11 July, a German-Belgian draft resolution was adopted which renewed the work of the humanitarian aid mechanism across the conflict lines and border crossings for one year. The UN resolution will allow the delivery of humanitarian aid to the residents of northwestern Syria through only one crossing, which is the Bab Al-Hawa crossing. In this way, the residents of the north-east and the south were denied access to emergency humanitarian aid, as the Russian-Chinese double veto contributed to the increase in the economic blockade of the region and depriving the population of aid access to them, especially after the advent of Covid-19. The Coved Crisis-19 resulted in many citizens stopping their activities, especially the those dependent on their daily work and not on a fixed monthly income. This has contributed to an increase in the unemployment rate, accompanied by a significant increase in the prices of goods, food and medical supplies. These individuals have been severely affected by the quarantine imposed on the area, especially since no assistance was provided to the population. There are other, indirect reasons that have contributed to the further deterioration of the living and economic conditions. For example, some believe that Kurdish self-management is incomplete and cannot establish large economic projects, nor able to establish direct commercial relations with neighboring countries and other countries with no direct assistance is provided to them. The political conflict between the Syrian government and Kurdish self-management in NES has affected the purchase of agricultural crops and the corruption in institutions in general has led to a large price imbalance. Others believe that the lack of sufficient synergy from civil society organizations working in the region to deal with the crisis has also contributed to reducing opportunities for economic advancement.

As for Caesar’s Law, it was classified according to the opinions discussed from the indirect causes in creating the economic crisis, but there is no doubt that it has contributed significantly to the exacerbation of the crisis through the devaluation of the Syrian currency against foreign currencies in addition to the rise in commodity prices and other consequences.

Should these afore-mentioned reasons and difficulties persist further, it may well lead to a catastrophic collapse of the economic situation, widespread poverty, increased unemployment, and the spread of diseases and psychological and social symptoms in the region.

The effects and consequences of Caesar's law on NE Syria. Although Caesar's law was classified as one of the indirect causes of the deterioration of the value of the Syrian currency as mentioned earlier, and despite the statements of the United States of America that northeastern Syria is exempt from the penalties of Caesar's law, this law has left significant effects that caused the acceleration of the collapse of the Syrian currency and the rise of the price of goods. Also a group of factors and conditions that preceded the law, such as the absence of large and strong projects, the absence of stability and the blockade imposed on NES as a result of the closure of border crossings, it is expected that the negative effects will increase over time with the absence of prospects for a political solution, and we may witness popular unrest. Some participants believe that the consequences of Caesar's law will not be significant, as the law mainly targets armament and war machine tools. However, this does not seem to be the case, as there are several complex factors that may play a role with the implementation of Caesar's law. It will affect the amount of materials imported into the Syrian interior and restrict and reduce the amount of aid provided by civil organizations. The groups most affected by this crisis are women and children due to the lack of good job opportunities for women, as well as the category of displaced people who do not own homes or any property that might be their source of income; those who live in the camps will also be greatly affected.

The role and responsibilities of self-administration in NE Syria. Although Kurdish self-management does not have the great potential to cope with a crisis of this kind, and although it does not bear direct responsibility for the deteriorating economic situation, this does not deny that the greatest responsibility rests with it. They are the holders of political and economic power, especially if we know that it is the one who monopolizes the management of the economy and also the political and social administration. There is a set of measures that no one can implement except the Kurdish self-management that would mitigate the economic effects on citizens. Although the self-administration in NES has raised the salaries of its employees, there is still a big gap between the salary value in dollars and the level of prices and living rates per person in the northeast of Syria. Therefore, this increase must be reconsidered in a way that contributes to raising the per capita income and is not an ill-considered increase which must be accompanied by a set of other measures in order for the increase to have a greater positive impact. The administration also has to change some administrative procedures. For example, self-management follows the system of joint leadership in senior positions, and this is unhelpful in several respects. This leads to greater bureaucracy and produces higher administrative and financial costs. Self-management should also control the supply committees, reduce merchants’ monopoly in commodity pricing, and combat corruption and favoritism in all institutions. It must also reduce customs taxes on transportation and crossings to reduce the prices of goods, in addition to setting up large projects that contain the region's needs to satisfy local requirements, which in turn will create more job opportunities, and it must support local production, especially in the agriculture. Additionally, there should be cooperation with civil society institutions so as to ease restrictions on project implementation, especially development. Also, we should not forget that civil society organizations, whether local or international, contribute to the introduction of large financing that would move the local economy and enhance the purchasing power. Also, the self-administration must find solutions to open the border crossings in order for aid to freely enter and establish strong trade relations with neighboring countries and major countries.

The role of civil society organizations in alleviating the economic crisis. Without a doubt, civil organizations may play an effective role in facing economic conditions, reducing unemployment rates and raising the level of purchasing power, which lead to the revitalization of markets and commercial movement, Also, there should be effective response plans that target vulnerable groups such as women, youth, and people with special needs, and focus on setting up small and medium enterprises, to harness the capacities of the displaced within the camps in setting up projects that serve their living conditions, and to allow organizations to work to promote local initiatives and mobilize and advocate to appeal to donors in order to provide the necessary support for development projects. These may include livelihood programs and economic empowerment of women and youth and support sustainable development projects such as agriculture, livestock and industrial projects. The focus should also be on strengthening governance within civil institutions, which would increase their effectiveness and provide an opportunity for all to be equal in employment. The role of the international community, including the United Nations, in dealing with the economic crisis. There is no doubt that the international community with all its bodies can play an active role in alleviating the consequences of Caesar’s law on the northeastern region of Syria and the economic crisis that the region is witnessing, through pressure on countries that hinder the arrival of humanitarian aid through border crossings (note above wherein Russia and China have used the right to veto, and hinder the opening of humanitarian crossings for the arrival of aid in the Syrian regions, in particular northeastern Syria). As to the necessity of opening the Al-Yarobia crossing, allowing freedom of movement, exchanging goods and facilitating the passage of humanitarian aid, this veto has impeded the efforts of international organizations in providing aid to the peoples of the region, which further aggravated the economic situation, which also coincided with the spread of Corona Covid-19. The international coalition must submit and establish economic projects that would reduce unemployment, provide jobs and revitalize the region. As for the camps where thousands of displaced people are living in stifling economic conditions, the United Nations should take effective steps towards providing food, health and social security.

Solutions and recommendations. First, it is no secret that security and political stability will have significant implications for improving the economic situation, so it is the responsibility of the international coalition and the Security Council to continue to fight terrorism, restore stability and remove all foreign forces occupying parts of northeastern Syria, the continuation of the Kurdish-Kurdish dialogue and the inclusion of the rest of the components will contribute to the strengthening of political stability, which may constitute an initial step for a comprehensive solution in Syria in accordance with Resolution 2254. Second, The Security Council should reach an agreement to reopen the Yarobia crossing in northeastern Syria and the Russian Federation and China should stop using its veto to nullify efforts to reopen the crossings, as millions of Syrians need urgent assistance. Russia and China's allies, the Syrian government, are unable to provide any assistance to their people, but they are the ones who increase their suffering and are the root cause of everything that happens to their people. Third, Kurdish Self-administration should restart existing facilities and establish sustainable development projects such as sugar, rice, and oil factories, activate the mineral and pharmaceutical industries and associated retail businesses smoothly and must also provide general electric generators for cities and set a price that suits the citizens’ income. Generators are currently private, and their costs are high for the average citizen. It should restart the mills and all facilities that were suspended from operation as a result of the Syrian war. Finally, self-administration and civil society organizations are asked to join hands in order to rehabilitate medical centers, establish new medical points and provide them with the necessary equipment and tools, as well as provide the region with advanced equipment in anticipation of facing the Corona Virus Covid-19 situation. Fourth, Local civil society organizations should increase coordination and enhance cooperation among themselves in order to unify their efforts to avoid crises, pressure and mobilize to cancel the veto (Russian-Chinese) decision and open border crossings to enable aid to enter the region, that there be strategic planning and governance, as well as focus on development projects, livelihood and empowerment. Fifth, The United Nations bodies, the European Union and international organizations can greatly assist in providing several kinds of support for the projects and solutions mentioned in the third and fourth points above and be a factor in achieving economic and political stability, if there is political will.


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