Syria Brief – Economic Crisis – 8 March 2022

The effects of Russia’s invasion of Ukraine are already reverberating through the Syrian economy, exposing ordinary Syrians to some of the worst economic vulnerabilities yet experienced during more than a decade of conflict and upheaval. The catastrophic rise in global prices of grain, fuel and other basic commodities will lead to price hikes and supply shortages in Syria as the regime struggles to afford imports. The most severe shocks will be to Syria’s grain supply, as Russia and Ukraine together account for as much as a third of the world’s wheat and barley supply; Syria is already suffering from severe shortages due to a disastrous domestic harvest season. At the same time, the regime continues to rollout severe austerity measures as an already beleaguered population is pushed further into extreme poverty and socio-economic instability. In a series of protectionist policy decisions, the Syrian regime severely restricted trade, especially exports of food products over the next few months. It is the regime’s attempt to self-sufficiently weather further global economic uncertainty that will curtail what revenue Syria does generate from agricultural exports. Sanctions on Russian financial institutions will complicate business dealings for some regime business cronies, although punitive measures imposed by the US and EU states are not expected to deter prospective trade between Syria and Russia––provided the regime itself is able to finance it––since this already occurs on the peripheries of the international financial system.




Economic Indicators

  • Exchange rate: Following months of relative stability, the Syrian pound once again weakened against the dollar following the onset of Russia’s hostilities in Ukraine. The pound dropped to a rate of 3,800 SYP = $1 US, its lowest point since March 2021. In an effort to stabilize the pound, the regime is limiting daily cash withdrawals to 5 million Syrian pounds (approximately $1,300 USD), constricting currency supply and restricting imports. The further erosion of the Syrian pound is expected given the rapidly changing financial landscape and limited fiscal measures available to the regime.
Syria Brief - Economic Crisis - 8 March 2022


  • Wheat:
    – Ukraine: The rapid escalation of Russian violence in Ukraine has sent shockwaves through the global food supply, and Syria will suffer immensely from price surges on the global market. The disruption in supply chains comes as Syria already finds itself in the middle of an historic drought, which has accelerated its dependence on Russian wheat imports to feed the population. Wheat prices were already increasing rapidly before the conflict in Ukraine, and the price surged past an all-time record of $11.50 per bushel at the beginning of March. Furthermore, economic crisis and uncertainty in Russia raises the possibility that Moscow may face its own supply disruptions in the months ahead, creating yet more disruption in Syria as a result.
    – Shortages: All signs increasingly point to a disastrous wheat harvest for the year ahead, with yields expected to be significantly lower than in 2021. Despite a marked increase in rain later in the harvest season, this is unlikely to impact crop volumes for 2022. The regime’s revamped agricultural policy, which prioritized domestic wheat production and dedicated a significant portion of the annual budget to subsidizing this strategic crop, has been beset by corruption and inefficiency at every step of the supply chain. For example, the volume of seeds delivered to farmers decreased by 40% from last year, despite a massive increase in supplies and funding by Damascus.
    – Humanitarian assistance: The World Food Program (WFP), which provides monthly food assistance to 5.6 million Syrians, also obtains the majority of its wheat supplies from Ukraine. In addition to surging prices, the new conflict has shifted the WFP’s focus toward emergency relief in Ukraine, further stretching tight budgets and imperiling relief for the millions of Syrians receiving direct assistance from the UN agency.

Regime Mitigation Measures

  • Public sector:
    – Subsidy cuts:
    The surge in wheat prices threatens the regime’s projected budget for 2022, causing the cash-strapped government to start preemptively slashing benefits for the year ahead. Officials have moved ahead with plans to vastly reduce the number of Syrians receiving subsidies on a range of goods, making only slight adjustments to the draconian cuts announced in January that sparked protests and unrest. Critically, the regime has cancelled a public sector pay rise scheduled for this month, which was to be funded by savings from subsidy cuts.
    – Food prices: As a result of events in Ukraine and new austerity measures, animal feed prices have already increased by 35%, which will mean a jump in the costs of animal products for Syrians in the weeks to come. An index of Syrian food commodities is up by 25% since last week, the sharpest increase in a year.
    – Fuel prices: The surge in energy prices around the world are also severely impacting the Syrian regime. Officials announced new restrictions on fuel allocations for public institutions as well as heating oil for families, cutting heating oil and gasoline allocations by half to every family. Fuel prices on the black market leapt by 25% after the new policies were announced.
  • Economic isolation:
    – New measures:
    The regime announced two packages of decisions in anticipation of fiscal and supply chain disruptions from Russia’s war in Ukraine. The first trade announcement (24.2) directed relevant departments to reduce imports to Syria, suspended import licenses for a number of goods and materials, released domestic reserves of flour, fuel, sugar, oil, rice and potatoes onto the market, and halted a number of public infrastructure projects. The second (3.2) restricted Syrian exports of fresh produce and animal products for a period of two months. Central to the new rules are stiff restrictions on any wheat exports. This appears to completely dismantle the regime’s one-year-old agricultural policy, which was prefaced on selling Syrian wheat on the international market and using revenues to fund wheat imports from Russia.


Economic Conditions

  • Migration:
    – Living conditions: While living conditions are dramatically deteriorating across all of regime-held areas, the scale of inequality between Damascus and previously opposition-held areas in the south is rapidly widening. Unemployment in Daraa has reached the highest point in three years, with the agricultural and construction sectors cratering in the face of corrupt administration and high inflationary costs.