World Bank: Syria is broken, and will be hard to fix

On just the economic front, the statistics speak volumes.

14 September 2017 | 13:35

Source: Associated Press

  • By TK Maloy
  • Source: Associated Press
  • Last update: 14 September 2017 | 13:35

Man saving child after an airstrike in Aleppo (AP Photo)

BEIRUT: The little girl in the picture is grimacing and holding diminutive fists above her head, a classic posture of surrender. She is Syrian. 

Taken in a non-regime area by a photojournalist with a telephoto lens, she mistook it for a gun and raised her hands in fear.

The damage to Syria from the war has thus far not only cost hundreds of billions in destroyed infrastructure and lost productivity but also an incalculable amount in terms of ripping apart society - something that will also take money (and more) to fix but how much, asked World Bank officials at an American University Beirut forum that focused on the Bank's recent report “The Toll of War: The Economic and Social Consequences of the Conflict in Syria.”

The photo of the child was shown during the forum to demonstrate the complex costs of war.

“The war in Syria is tearing apart the social and economic fabric of the country,” said Hafez Ghanem, World Bank Vice President for the Middle East and North Africa in the report. “The number of casualties is devastating, but the war is also destroying the institutions and systems that societies need to function, and repairing them will be a greater challenge than rebuilding infrastructure – a challenge that will only grow as the war continues.”

Six years of conflict in Syria have taken a severe toll on the country’s people, with more than 400,000 estimated deaths and over half the population driven from their homes in what is the largest refugee crisis since World War II.

The Bank report provides a detailed analysis of the physical damage caused by the war, the impact of casualties and the forced displacement of the population, the effect on the economy and the overall condition of the Syrian people.

On just the economic front, the statistics speak volumes.

According to the World Bank, the conflict has cost the Syrian economy some $226 billion -- about four times the country's gross domestic product in 2010.

The fighting has damaged or destroyed 27 percent of Syria's housing stock and about half the country's medical and educational facilities.

About 85 percent of the population lives below the poverty line and half are unemployed.

The report finds that on average about 538,000 jobs were destroyed annually during the first four years of the conflict and that young people now facing an unemployment rate of 78 percent have few options for survival.

The education system has similarly been disrupted by damage to facilities and the use of schools as military installations, while fuel shortages have reduced the supply of electricity to major cities to around two hours per day, affecting a range of basic services.

Further, the report notes: that the Syrian economy suffers from severe twin deficits, depleted foreign exchange reserves, and an unsustainably high public debt. Conflict-related disruptions and international sanctions reduced Syrian exports by 92 percent between 2011 and 2015.

In the report, the current account deficit was estimated to have reached 28 percent of GDP in 2016, up from 0.7 percent of GDP in 2010. The gap has increasingly been financed by withdrawing foreign exchange reserves, which declined severely, from nearly US$21 billion in 2010 to less than US$1 billion in 2015.

Study lead author and senior World Bank economist Harun Onder pointed out that the report considers the effects of all the shocks of war collectively: casualties, physical destruction, and economic dislocation. The impact of all these things combined, particularly the dislocations of the economic systems, what are referred to by economist as the supply chain, have effectively wrecked the economy, and like the traumatized social order, will take years to rebuild.

He noted for an audience of professors, students and media that filled AUB’s Issam Fares Institute auditorium to overflowing, with attendees sitting on steps and out the doorways into the hall, that when the war ends will greatly affect how fast the country recovers economically.

“Our results show that if the war were to end this year, the economy would recover 41 percent of the gap with its pre-conflict level over the following four years, and the losses from conflict would amount to 7.6 times the pre-conflict GDP over two decades,” Onder said.

He added: “But if the war goes on to a tenth year, less than one third of this gap would be recovered in four years after its end, and total losses would amount to thirteen times the 2010 GDP over two decades," further noting, "We also estimate that the number of Syrians fleeing across the border in search of safety would double between the sixth and twentieth year of the conflict.”

Political and military observers of the war, have pointed that for those who say the war is almost over, more likely is a small-scale insurgency that will continue for years. Adding, that Syria's President Bashar al-Assad inherits a country that is balkanized into different zones of influence such as the Kurdish zone which will not effectively rejoin the body politic of former Syria.

Reconstruction expectations are further complicated by the fact that regional and financial powerhouses that would be capable of definitively reconstructing a broken Syria, such as the European Union, the wealthy Gulf States, or the World Bank, have signaled no intention of doing so. That leaves Iran and Russia, both with strained economies, to pick up the tab.

Forum panelist Maha Yahya, director of the Carnegie Middle East Center acted as a devil’s advocate to the World Bank's study noting that, “The report’s historical narrative glosses over the political dimensions” of the ongoing conflict."

"Any economic analysis that suggests that this was a struggle between two equal partners is mistaken," Yahya added.

She rebutted any suggestion that the conflict arose out of ancient sectarian grudges, but instead said it resulted out of a lack of equitable economic reforms and from a society left largely impoverished even before any fighting started. "The only reconstruction that will take place will be in regime held areas, and will be plagued by cronyism."

"There will be no Marshall Plan (the large-scale program to assist Europe after WWII) to rebuild Syria," said Yahya. "It is just a pipe dream."

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