This interview is part of a series conducted by the Syrian Observer on the 10th anniversary of the Syrian uprising. It first appeared here.
Bashar al-Assad’s first decade in power saw some positive economic developments and a level of corruption that was high but not necessarily worse than in many other developing countries. Would it be unfair to describe Bashar’s policies during that period as bad from an economic standpoint?
In many respects, Syria during the 2000s was a story of two economies. In one, if we look at macroeconomic indicators, the country was doing well despite years in which the political landscape experienced some severe shocks. As you note, Gross Domestic Product (GDP) growth was reasonably high, inflation rates were moderate, foreign exchange reserves were healthy at about $18 billion, and government debt had dropped dramatically in 2003 after Russia forgave some outstanding loans.
Nonresident Senior Fellow - Foreign Policy, Center for Middle East Policy
Visiting Fellow - European Council on Foreign Relations
In the other economy, however, the picture was much more troubling. Positive macro-indicators obscured signs that many Syrians were losing ground. In 2007, for instance, the United Nations Development Programme (UNDP) published a study of inequality in Syria that found that “at the national level, growth was not pro-poor.” The limited data we have confirms that the 2000s were a decade of growing inequality. Unequal growth had lots of negative effects beyond increased inequality, driving a real estate boom that pushed housing costs out of reach for many people. And despite positive GDP growth, unemployment remained high, especially among youth, at around 20% or more for most of the decade. We also must recall that the onset of a severe drought in 2006 brought a sharp increase in rural poverty in eastern Syria and drove hundreds of thousands of people off the land and into poorly-served, informal housing around large cities, including Damascus. And as for corruption, Global Corruption Reports put out by Transparency International for the 2000s rank Syria just above the bottom. A few countries performed worse, but not many. So, I would not give Bashar’s regime too much credit for its integrity.
This tale of two economies is why, when the World Bank looked at the causes of the Arab uprisings, it concluded that if we simply looked at top-line growth, the protests should not have happened at all. But when we look at what the bank calls “perceptions of life satisfaction,” the Middle East and North Africa (MENA) region was the only region in the world to experience a decline in the 2000s, and the drop was biggest in the countries most affected by the uprisings, including Syria. No matter how well the economy was doing for a small minority, the majority felt they were being left behind and this clearly contributed to grievances that burst into public view in 2011.
There is a debate about what triggered the uprising in Syria. In Egypt and Tunisia, the socio-economic factors were clear and reflected in the protesters’ slogans. That was less the case in Syria. How important were socioeconomic factors in pushing people to the streets?
I would not be so quick to dismiss the role of economic factors in the Syrian uprising, for all the reasons I have just mentioned. But we must understand, as well, that economic grievances were not by any means the only factor that led Syrians to join protests ten years ago. Lots of other factors were part of the equation, including, of course, the widespread demand for dignity, karama, a term that came to define the uprising for many Syrians. People were simply sick and tired of living in fear, of being subjected to the daily humiliations of having to bribe officials to do their jobs or to get a job, of worrying about whether they had the right connections, the right wasta, to get their kids health care, get into the right programs at university, be able to get a passport, and so on. It made them angry to see the regime’s cronies get away with outrageous, often criminal, behavior with complete impunity. When I talked with Syrian friends in 2011, they used phrases like the ones we heard in the U.S. after the murder of George Floyd last summer: “we felt like we were suffocating.”
These sentiments and experiences were no less important in explaining the onset of protests in Syria than economic grievances, in my view. I think we can fairly say that the protests of March 2011 were an outpouring of pent-up demand for justice and fairness — social, political, and economic — for an end to the daily humiliations that the Assad regime imposed on the whole of Syrian society except for a privileged few.
I think we can fairly say that the protests of March 2011 were an outpouring of pent-up demand for justice and fairness — social, political, and economic — for an end to the daily humiliations that the Assad regime imposed on the whole of Syrian society.
Among the many changes that have affected the economy during the conflict is the composition of the Syrian business elite, including the demise of Rami Makhlouf, and the rise of Samer Foz, among many other new war profiteers. What are the factors that explain changes in the composition of this elite?
There is no question that the conflict destabilized pre-war business networks, producing whole new cohorts of “winners” and “losers.” But here too, I think we can trace some of the changes in regime-business networks that played out after 2011 to developments during the decade of the 2000s.
One of the most important shifts that followed Bashar al-Assad’s rise to power was a narrowing of what we might call “networks of privilege” within the Syrian business community. Under Hafez al-Assad, regime-business networks were more encompassing. They offered opportunities for enrichment to groups the regime felt it needed, including the Sunni business community. In political economy terms, we would say that Hafez acted like a “stationary bandit.” His regime was corrupt and predatory, but he recognized that his own position would be stronger if he gave others a stake in expanding the economy overall. Bashar and his generation of the Assad clan never seemed to understand this. This mindset and the intense predatory behavior of Rami Makhlouf and other peak cronies had a devastating effect on business actors who found themselves frozen out, forced to take Makhlouf on as a partner or to sell him their businesses. The businessmen on the receiving end of this sort of conduct were among those who supported the opposition. In addition, other business owners left the country as violence escalated, not for political reasons but to save their businesses.
On the other side, there were those who saw the conflict as an opportunity and moved to fill the gaps left by business owners who had fled or joined the opposition. War is a hugely demanding economic enterprise, and meeting its needs created all kinds of possibilities for relative unknowns to make money and to become celebrity loyalists as a result. What is also important, if much less visible, is the role of the conflict in creating a vast new cohort of wartime profiteers at the provincial and local levels, including through participation in criminal activities. Anyone with the resources to fund a militia was able to become rich as a result and many local warlords did just that. Now, these wartime profiteers are looking to launder their illicit gains and buy themselves the trappings of legitimacy and respect that will solidify their positions — including through election to seats in parliament. Will the pre-war business establishment be able to restore its position? I am doubtful. The changes we saw during the war are being consolidated and show every sign of becoming permanent.
Russia seems to be capitalizing relatively well on its political and military influence. It appears to be much less the case for Iran. How do you explain that?
Whether formally or informally, Iran and Russia seem to have established something of a division of labor in Syria, even as they compete to consolidate their influence through vastly different approaches. At times, their ambitions bring them into conflict, and I would not be surprised to see tensions increase in the coming years. For now, however, they seem able to navigate the frictions in their relationship. For Russia, the key to stability in Syria is to strengthen state institutions, especially in the security sector, and restore the capacity of the state to govern. Russia cares little about the quality of governance: it cares a lot about the quantity of governance. To Moscow, expanding and strengthening formal institutions is not only a way to consolidate its influence and expand its commercial ties in the country but also the best strategy for reducing the risk that it will find itself in a quagmire, forced to keep a dysfunctional regime on life-support as the country continues its downward spiral.
Iran, on the other hand, is working to expand and consolidate its influence through entirely different channels, by cultivating and strengthening its presence within non-state sectors, especially non-state armed groups but also among tribes and other local influentials. It is working more quietly to establish a cultural and religious foothold, to build its own clientelist networks, to leverage its control of Hezbollah to assist in these efforts, and in general to put in place the foundations it sees as crucial for its long-term ambition to lock Syria into its strategic, economic, and cultural orbit as a critical member of the resistance front.
These different approaches have mitigated tensions between Russia and Iran to some extent. But where the two conflict — especially over issues relating to non-state armed groups — the potential for tensions to escalate is certainly present. In addition, Russia is clearly not on board with Iran’s continued efforts to develop Syria as an additional front in its conflict with Israel. Their differences on this have caused frictions in the relationship, but not an outright break. Still, the possibility that Russia and Iran could experience a more severe falling out is real, especially if it seems that Iran’s presence undermines Russia’s interest in the eventual normalization and legitimation of the Assad regime and the restoration of a stable, functioning (if deeply authoritarian) state.
The Syrian economy in 2021 is in a particularly bad shape and regime allies seem helpless. Do you think that these economic difficulties can impact the strategy of Moscow and Tehran?
Thus far, Russia and Iran seem willing to bear the economic costs of their role as the leading patrons of the Assad regime. Just last December, for example, Iran extended another $1 billion credit line to the regime. So, neither country seems to have reached the limits of its willingness to keep the regime afloat, albeit barely afloat. And they have managed to keep the costs of their involvement in Syria relatively low, out of necessity. Neither Iran nor Russia can offer Syria much in the way of reconstruction support. Neither provides significant humanitarian assistance. Neither is prepared to be saddled with the burden of preventing Syria’s economic collapse or take the lead in some sort of “nation-building” enterprise. This approach has limited Iran’s and Russia’s financial exposure in Syria and helped them avoid tough choices about the costs of their support for the Assad regime. Now that oil prices are recovering from pandemic lows, their domestic economic pressures may be easing, as well. Whether this tolerance and patience will continue indefinitely is an open question, but in fact, we cannot really say what kind of economic conditions might trigger a shift in policy in either Tehran or Moscow. So far, both have weathered significant economic pressures at home and internationally without changing course.
There is a lot of debate on sanctions. Although they may not aim to hit the economy per se, many argue that in practice the indirect impact of sanctions on society is harsh. Over compliance by banks seems to be particularly problematic. Where do you stand on this?
The sanctions debate is fraught, no question, but has also been sharply distorted by critics of sanctions. I do not think anyone who supports sanctions, as I do, underestimates their impact on civilians. The risk-averse behavior you mention on the part of banks and businesses that support nongovernmental organizations that do essential work on the ground is a huge problem. More could be done to temper these effects. We need safe harbor provisions for businesses that support legitimate, non-sanctioned actors on the ground. And we need to make it easier to get exemptions for essential goods.
This said, critics of sanctions routinely exaggerate their impact, describing them as the central cause of economic suffering while disregarding other factors that contribute far more to the hardships that Syrians are facing. These include the effect of the regime’s massive destruction of Syria’s infrastructure; mass population displacement; the collapse of the Lebanese economy; the regime’s corruption and predation; and the refusal of its major international patrons, including China and Russia, to provide any meaningful assistance. Look at the bread crisis Syria is experiencing. Sanctions have nothing to do with this. It is mostly the result of Russia’s refusal to sell wheat to Syria last year as the pandemic hit. Yet sanctions become a convenient excuse for the crisis among regime supporters.
Critics of sanctions also vastly exaggerate the benefits that ordinary Syrians would experience if they were lifted. The Assad regime has a terrible track record in its management of humanitarian funds. Yet we never hear from critics of sanctions anything about the imperative to ensure that if sanctions are eased, the funds and goods that move into the country are managed fairly, equitably, with accountability. Without such guarantees, how can we have any confidence that easing sanctions would, in fact, improve the conditions of ordinary Syrians?
There are two other major arguments against sanctions, but neither is compelling. One is that they do not affect the regime and its cronies who continue to live lavishly while ordinary Syrians suffer. Not true. To be sure, the Assad regime treats itself quite well while ordinary Syrians go hungry. But sanctions have had huge effects on the regime, including by dramatically raising the costs of every transaction it makes with any external market, forcing it to develop vast, complicated schemes to avoid sanctions, forcing it to shuffle personnel around as those in responsible positions are sanctioned, and creating huge incentives for third parties to avoid doing business with the regime. Asma al-Assad may still be able to buy her Louboutin heels, but let us not pretend that the sanctions are not affecting the regime.
The second argument is that sanctions are ineffective in achieving their political goals. This is true, so far at least But sanctions are not only about diplomatic leverage, even if this is the focus of so much of the Syria sanctions debate. They are also a moral statement about the illegitimacy of a regime that engages in mass violence against its own people.
Sanctions are not only or exclusively a diplomatic tool. They also signal the repudiation of and the denial of legitimacy to a regime that is responsible for war crimes, crimes against humanity, and massive violations of international law. This matters. In fact, the importance of this aspect of sanctions is growing as new efforts to hold the Assad regime accountable are gaining momentum.
To me, therefore, whether sanctions produce diplomatic leverage or not is not the only or even the most important metric to use in weighing their importance. Rather, it is their value as a stark message that what the Assad regime has done is totally inadmissible and will carry consequences.
Finally, critics of sanctions should be willing to acknowledge that easing sanctions will vastly increase the likelihood that Bashar al-Assad will succeed in preserving the Assad dynasty into the next generation. This would mean subjecting Syrians to an indefinite future under the brutal control of a murderous ruling family. It means we are trading the possibility of short-term relief now for additional decades of further suffering. I understand deeply that to those today who are starving the long-term holds little importance. But for those who have the privilege of taking a longer-term view, we can not kid ourselves about what the consequences would be if a government that has caused its people so much pain and hardship is given a new lease on life.
The effects of the conflict will be generational.
How long-lasting do you think that the socio-economic consequences of the conflict (flight of capital and skilled labor, destruction of productive capacity, the emergence of war-related economic activities and behavior, impoverishment of the population, etc.) will be? How much will they impact any reconstruction drive?
The effects of the conflict will be generational. I do not think we can predict when, or even if, Syria will recover. Syrians are creative, capable, and resilient. They are being tested today, but I do not doubt that even now, as dire as things are, there are stirrings of new activity that will contribute to recovery. But the needs dwarf the resources available and so much has been lost that recovery in any meaningful sense is a very distant hope. Even under different political conditions, even if a political settlement is achieved, even if reconstruction assistance is available, Syria’s recovery will be painfully slow. Thirty years after it ended, Lebanon is still plagued by the effects of the civil war. Syria is much worse off. I would never bet against the determination of Syrians to do whatever they can to restore normalcy in their lives and to give their children the best possible opportunities. I do fear, though, that those opportunities will be very, very constrained for the next several decades.