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The Future of Syria: Towards Inclusive Peacebuilding – Panel Summary: Conflict Economy Dynamics

On 15 March 2019, Chatham House’s Syria From Within project, hosted within the Middle East and North Africa Programme, held a public conference titled ‘The Future of Syria: Towards Inclusive Peacebuilding’.

Organized in four thematic panels, this conference brought together policymakers, experts, academics and civil society leaders to identify the main institutional and socioeconomic challenges to stabilization in Syria, and to offer policy recommendations in support of an inclusive peacebuilding process.

Session 1: Conflict Economy Dynamics


  • Basma Alloush, Norwegian Refugee Council
  • Haid Haid, Chatham House
  • Sinan Hatahet, Omran Center for Strategic Studies

Moderator: Emma Beals, Syria in Context

The Syrian economy has been drastically affected by war with cross-cutting destruction in physical capital, massive causalities, job losses and forced migration among other economic implications leaving 12 million people inside the country in need of humanitarian. As Basma Alloush demonstrated in figures, Syria’s GDP has contracted by 61% between 2011 and 2015 according to the World Bank. Oil GDP has declined by 93% and non-oil GDP by 53% with three key sectors representing the most affected sectors: tourism, oil and gas and manufacturing.

Agriculture, for instance, used to employ 20-40% of the Syrian workforce population in 2006 and constituted about a fifth of the overall GDP; however, this sector has contracted by at least 40%, suffering $16 billion of losses, turning into a mere self-sustaining sector according to the FAO in 2016. The loss is suspected to be much higher today, added Alloush.

Widespread unemployment has led to a rise in crime, looting, joining armed groups, child labour, early marriages, prostitution and organ trafficking as negative coping strategies. Access to available jobs is a huge issue. Populations who were under besiegement are no longer able to access livelihood opportunities. While most donors are mainly focusing on emergency response and in-kind assistance rather than resilience and livelihood programs, more efforts need to focus on individual resilience and community-based resilience, Alloush argued.

On the other hand, there is growing competition between multiple external actors, in cooperation with internal ones who are trying to benefit from the Syrian conflict economy. Sinan Hatahet provided an in-depth analysis of two main perceptions which seem to be widely dominating the political debate over Syria right now. The first one, according to Hatahet, is that the regime has won the war so the next phase will be building the economy, while the second perception is that Russia, to a large degree, has the capacity and the willingness to counter Iran in Syria, an idea which seems to be particularly appealing to some Gulf Arab countries.

However, although the Russian-Iranian intervention has been important in saving the regime and helping it keep control over the major cities—and both Russia and Iran are in a good place to reap the benefits of the next stage—recovering the Syrian economy would require a huge investment in different sectors, which might not be attractive for neither Russia nor Iran as both take a very opportunistic approaches when it comes to Syria’s economy, according to Hatahet.

Both are willing to only invest in certain sectors characterized by a faster return-on-investment such as the oil, gas and energy sector. While Iran is crippled by international sanctions and might not be able to provide the equities needed for reconstruction, it could seek to be more effective through trade rather than direct investment. Russia on the other hand has neither the interest nor the capacity to invest in the reconstruction of the Syrian economy according to Hatahet.

While both Russia and Iran tend to use the economy as a tool of control over the Syrian regime, Hatahet argued that Russia applies a top-to-bottom approach in helping the regime to reconsolidate its authority over Syrian territory and eventually the Syrian economy, while Iran tends to adopt a hybrid approach, investing more in loyal local communities in areas such as Aleppo and eastern Syria where it is providing low-priced livestock fodders in a bid to win the hearts and minds of local populations. Hatahet said that the regime might regain authority over certain areas and sectors and play the Iranians and the Russians against one another, which has been already manifested through particular cases where the regime has been promising some advantages and contracts to the Iranians yet giving them to the Russians.

Commenting on the impact of the economic situation on the conflict dynamics and the ability of the regime to maintain state functions, Haid Haid emphasised that despite the regime’s recapturing of up to 65% of the Syrian territory, it does not have unlimited access to all areas under its control. For example in Deraa there was a deal between Ahmed al-Awdah, commander of the forces of Shabab Al Sunna faction and the Russians, preventing the regime from enterting the area.

Importantly, the regime lacks financial resources to pay individuals of its allying militias, which is impacting the ability of the state on two levels. Firstly, the regime is no longer the only national power but rather one of the actors, as there are now other parallel and quasi-official powers such as the Fourth Armoured Division and the Fifth Corps and Local Defence Forces. Secondly, state military control is still far from ensuring services, protection and stability in those areas especially when it comes to security and controlling infighting between its allying groups.

As explained by the panel, the regime uses reconstruction as a tool to reassert its authority, pay back loyal followers and strengthen loyal networks. Moreover, the regime has imposed a huge control on humanitarian work pushing for its own benefits and controlling access of humanitarian actors to areas under its control. Although doing no harm is a key principle in humanitarian action, a lot of harm has been done so far, said Haid, who stresses that INGOs need to push back against regime attempts to dictate their work, and to work collectively. The pressure of being banned from working in Syria should not be used as a justification to accept what the regime is trying to impose, he concluded.


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