How Syria Illustrates Iran’s Nefarious Economic Influence in the Middle East – Analysis – Eurasia Review


By Nadia Al Faour

After more than a decade of civil war, regime-controlled Syria is in a state of economic ruin. Conflict, endemic corruption, drought and the massive migration of skilled workers have taken their toll, leaving the country ripe for exploitation.

According to the World Bank, Syria’s gross domestic product fell by at least 50% between 2010 and 2019, leaving more than 90% of the population below the poverty line and more than 50% in extreme poverty. In this vulnerable state, Syrian domestic markets have been flooded with cheap imports.

Iran, capitalizing on its military and political support for the regime of Syrian President Bashar Assad, has expanded its exports to Syria, exploiting and exacerbating the disintegration of the country’s manufacturing base by monopolizing entire markets.

The collapse of domestic industry since the start of the war in 2011 has provided businessmen close to the Assad regime with lucrative opportunities to import cheaply made goods from Iran, to the detriment of producers Syrians.

While few grandiose reconstruction deals between Tehran and Damascus have yet emerged, Iran has managed to break into Syria’s pharmaceutical and food industries, crushing local competition.

Before the uprising that triggered the civil war, Syria had a thriving pharmaceutical industry; about 70 factories nationwide have satisfied 93% of domestic demand and exported to about 60 countries.

However, a decade of war left these factories and the power grid needed to support these industries in ruins. Violence and persecution have sent legions of skilled workers into exile, while sanctions have blocked access to raw materials and machine parts.

As a result, by 2020, Syria’s overall pharmaceutical production capacity had fallen by around 75%.

“The active ingredients of drugs are very difficult to import and are very expensive,” Hamed, a pharmacy student about to graduate from a top Syrian university, told Arab News.

“Many factories have stopped production lines due to active ingredient and energy shortages.”

The crisis facing Syria’s pharmaceutical industry, as well as similar challenges in the domestic agricultural sector, have been compounded by a sharp currency devaluation that began in late 2019.

Linked to the banking crisis in neighboring Lebanon, the devaluation has meant that the import of crucial components – including seeds, pesticides, fertilisers, diesel and raw materials needed to manufacture medicines – have become extremely expensive.

Syrian companies and industrialists had long since deposited their capital in Lebanese banks to avoid Western sanctions. When the value of the Lebanese currency plunged, Syrian deposits therefore also fell.

Meanwhile, the devastating decline of Syria’s power grid amid years of fighting and neglect has made production even more expensive as factories and cold storage facilities have been forced to rely on expensive private generators. .

All of this is on top of rampant corruption, which has long necessitated the payment of bribes to local officials, as well as the loss of key personnel to military conscription and displacement.

As prices for products made in Syria soared, foreign and domestic demand evaporated and the market for cheap foreign imports boomed.

The regime’s protectionist policies are equally disruptive. According to Hamed, “limitations imposed by the Ministry of Health” on the prices and export of medicines made in Syria have made local manufacturing unprofitable and have further fueled the growth of the black market.

The destruction of Syria’s production capacity, combined with the depreciation of the Iranian currency under years of Western sanctions, has been a boon for Iranian exporters, who have been able to flood the Syrian market with cheap goods.

Iran has been particularly successful in exporting pharmaceuticals to Syria, Lebanon and Iraq. It has organized trade fairs and signed distribution agreements in its favor, even though many consumers consider Iranian-made drugs to be substandard.

About 75% of drugs sold on the Iraqi market enter the country through illegal border crossings with Iran. These drugs are often close to their expiry date or lack the active ingredients needed to help patients.

According to Khedr, a Syrian pharmacist living in the west of the country, the quality of Iranian medicines is “not great” and they are mainly found in public hospitals rather than private pharmacies, where customers tend to favor higher quality alternatives.

Abdullah, a doctor at a hospital in Damascus, is also skeptical about the effectiveness of Iranian drugs.

“Iranian drugs are in all Syrian hospitals, and I also use them in my practice, but they are not of good quality,” he told Arab News.

For many people living in poor communities in Syria, however, any medicine is better than no medicine. And with shortages rife, in part due to a black market in locally made goods, few have any choice but to buy Iranian brands.

“Compared to locally made drugs, people try to avoid Iranian drugs,” Hamid said. “But, in recent months, some drugs made in Syria have completely disappeared from the market as they are smuggled into Lebanon. So people rely more on Iranian medicine. »

Opioids made in Iran also end up on the black market. These painkillers can be highly addictive or fatal if taken in large doses.

According to Abdullah, these drugs “require special types of prescriptions or can only be found in institutions belonging to the Ministry of Health, since they contain morphine and other opiates for painkillers.”

He added: “If someone is caught with this type of medicine (without a proper prescription), they can be arrested for drug trafficking. But they flood the market and everything is made in Iran.

In May, the Iran-Syria Joint Chamber of Commerce held a forum in Tehran, where representatives of the private sectors of the two countries exchanged ideas on how to develop trade relations.

“Our plan is to increase the level of mutual trade to $1 billion in the first phase, and achieving this goal requires the strong presence of the Iranian private sector in Syrian markets,” said Gholam-Hossein Shafeie, the head of the chamber, to the delegates. , according to the Tehran Times.

In part, the Syrian regime has been pushed into the arms of Tehran, for help to rebuild infrastructure and restart the economy, by virtue of their common pariah status. Both governments have been squeezed by Western sanctions and global isolation.

“We are ready to cooperate with the Iranian private sector to find solutions to remove barriers and neutralize the impacts of US sanctions,” Shafiq Dayoub, Syria’s ambassador to Iran, told the common chamber.

However, a major problem facing this developing partnership is the trade imbalance between the two economies, which means Syria is the junior partner and allows Iran to set the terms.

“There is not enough foreign currency in Syria to pay for Iranian exports and Syria does not have much to export to Iran in return,” Abbas Akbari, secretary of the development headquarters, told the forum. Iran-Syria economic relations.

It is Syrian farmers and industrialists who are paying the price for this trade imbalance. Much like the situation in the pharmaceutical industry, a flood of cheap Iranian imports, combined with the Syrian regime’s strict controls on exports, has devastated the livelihoods of local food producers.

Whereas once Syria was a regional breadbasket, teeming with fertile land and food production facilities, supplemented by imports from neighboring Turkey, it now depends almost entirely on imports of fresh, non-perishable produce from ‘Iran.

Again, the quality of these products is widely considered to be inferior to alternatives, but the lower prices mean they are nonetheless an attractive option for poor Syrian consumers.

“Today I cooked macaroni made in a factory named after Ayatollah Ruhollah Khomeini,” Bassam, a farmer living in Hama, told Arab News.

Abu Omar, a farmer from West Daraa, told Arab News that farmers in southern Syria are prohibited from exporting their produce until local market needs are met. Yet, at the same time, Iranian produce is allowed to flood the Syrian market during the harvest season, harming the ability of local farmers to make a profit.

“The farmer comes out losing money at the end of the harvest, having bought pesticides and diesel in dollars, paid the agronomist (providing the seeds) in dollars, and his workers,” Omar said.

Farmers in southern Syria have appealed to the government for additional help, but few dare to suggest that a halt to Iranian imports is needed to restore the balance.

“It’s a state policy. One person cannot change it,” Omar said. “And if you offer your opinion, you can walk straight to jail.”

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