New Lows as Syria Beset by Fuel, Fiscal, and COVID Crises
Syria is at a new crisis point as converging circumstances lay bare the extent of state fragility in the country. Syria is beset by three concurrent crises: acute fuel shortages, deepening fiscal instability, and spiking COVID-19 infections. Interruptions to the oil supply have paralysed public sector work and mobility in Government of Syria areas. Meanwhile, amid wild fluctuations in currency conversion rates, the state has slashed government offices’ working hours and enacted measures that will increase importers’ direct costs, auguring future price rises and potentially threatening the availability of imported goods. To make matters worse, these challenges come at a time when Syria is overset by a new wave of COVID-19 infections, which has ground public life to a halt, prompting some of the most serious state responses to the pandemic since the first wave of infections crested roughly one year ago.
Amid sweeping fuel shortages, queues at filling stations in Government of Syria areas have stretched for days, sidelining taxi and microbus drivers and grinding Syria’s ad-hoc public transit system to a halt (see: Syria Update 6 April 2021). To manage the public anger building over the shortages, the state has introduced an SMS-based system to reduce congestion at filling stations by alerting individuals when they are eligible to receive fuel allocations.
The fuel crisis can be attributed to two main factors, both of which are showing signs of improvement. The first is the interruption of Iranian oil shipments, which have been delayed due to the backlog of marine traffic in the Suez Canal. Although the canal has reopened following its blockage, the impact of that interruption was magnified by the diminished supply of oil from areas under the control of the Syrian Democratic Forces (SDF), which had reportedly clamped down on the cross-line oil trade under U.S. pressure. In response to the SDF’s crackdown, the Government of Syria shuttered crossings to SDF-held areas, thus preventing the flow of goods and people into northeast Syria. On 4 April, local and media sources reported that crossings between SDF and Government of Syria areas had opened, after some two weeks of closure. The crossings have reportedly opened under a new agreement through which the Self-Administration will provide the Government of Syria 200 fuel tanker trucks weekly, via the Qaterji Company. On 10 April, the Syrian Arab News Agency reported that the Banias oil refinery, which reportedly processes oil supplied to Government-held areas from eastern Syria, has now come back online. The fuel crisis is therefore expected to abate in the near term.
Fiscal crisis is yet another indicator that the Government of Syria is careering further down the path toward collapse. On 4 April, Syrian Prime Minister Hussein Arnous announced that ministries’ working hours would be reduced. The scale of the reduction will be determined at the discretion of individual ministries, although employees’ salaries are to remain unchanged. The stated reason for the reduction is to cut operational costs related to fuel and electricity consumption, and to prevent the spread of COVID-19. That lights will go out at state offices is a troubling indicator of service shortfalls that may lie ahead, even as the fuel crisis relents.
This maneuver coincides with a significant change to import financing as a result of currency depreciation. On 7 April, the Damascus Chamber of Commerce reportedly adjusted the conversion rate at which foreign traders purchase dollars — which are needed to finance imports — to 3,375 SYP/USD, more than double the rate of 1,256 SYP/USD that had previously been in effect. As of writing, the black market SYP-USD exchange rate is 3,510. The change therefore brings import financing costs into closer alignment with reality, but in so doing, it threatens the mechanism that is a pillar of the state’s import subsidisation strategy. In the past, the Syrian Government has supported critical imports by artificially depressing the conversion rate for importers dealing in a list of strategic goods. Changes to this mechanism, along with other restrictions on imports, have become progressively more extreme as the state’s fiscal straits have deepened since 2019 (see: Syria Update 26 June 2020). Raising traders’ costs may put more Syrian pounds in the Central Bank’s coffers, but the heightened costs are likely to be passed on to consumers, and the move may have knock-on effects, such as further goods shortages and a heightened reliance on the black market.
All this has come against the backdrop of surging COVID-19 cases. Perhaps more than at any point since the pandemic first hit Syria one year ago, the country is now contending with large-scale closures of government works. For instance, the Ministry of Transportation has reduced working hours and completely halted work in some areas to contain the spread of the virus. Likewise, the Ministry of Economy has also halted all non-essential work. Meanwhile rumours continue to swirl that Ramadan — expected to begin on 13 April — will bring with it a new set of mobility restrictions and other preventive measures in Government of Syria areas (see: Syrian Public Health after COVID-19: Entry Points and Lessons Learned from the Pandemic Response). Flaring COVID infections are especially troubling, given that hospitals in Damascus have already reached capacity, and patients are now being redirected to hospitals in Homs and Rural Damascus Governorates (see: Syria Update 6 April 2021).
The convergence of these events has brought about unforeseen outcomes. For one, the peril brought on by oil shortages in Government of Syria areas has apparently induced Russia and Iran to cooperate more closely to shore up the Syrian state. In response to the threat of Israeli naval attack on Iranian oil tankers bound for Syria, Russia is reportedly providing a naval escort to the Iranian oil lifeline, which passes through the Eastern Mediterranean en route to the Syrian coast. Cooperation between the Syrian Government’s partners is not unheard of, but the escort system does add a new wrinkle to a long-running debate among analysts over Russian-Iranian competition in Syria.
The multi-causal resource shortages that have starved the Syrian state have, in effect, heightened its reliance on the civilian population as an alternate revenue stream. In all likelihood, the Syrian Government will continue to innovate new means of revenue extraction from the populace as its own resource base shrinks. Exorbitant fees charged for passport renewal and other services are one such method, and they are particularly worrisome at a time when 90 percent of Syrians now live below the poverty line. Perhaps most worrying of all is the cyclical nature of the crises that now periodically grip Syria. Bread and fuel shortages have recurred with increasing frequency for at least two years (see: Syria Update 21 September 2020). Relief has come, but it has been modest and temporary. Oil tankers now arriving in Government-held areas of Syria will bring some respite, yet there is every reason to believe it will be short-lived.
Finally, it is also important to note the regional effects of Syria’s cyclical crises, particularly in Lebanon and for the branch of the Syrian aid response that is based in that country. Smugglers reportedly continue to trade subsidised Lebanese fuel in Syria, where it sells for as much as double the price it would demand in Lebanon. This raises considerable risks for social tensions; amid fiscal collapse in Lebanon, 55 percent of Lebanese nationals are now impoverished, and popular outrage has already been directed at aid convoys passing through desperate Lebanese border towns for Syria. Reports of illegal smuggling from Lebanon will only fan the flames, thus exposing vulnerable Syrians in the country under greater social pressure. Although donor fatigue concerning Syria is high, it behooves the international community to bear in mind that — for good or ill — Syria remains a key player in the interlinked politics, economies, and social fabric of the eastern Mediterranean, and what happens in the country does not necessarily stay there (Two Countries, One Crisis: The Impact of Lebanon’s Upheaval on Syria).
Growing Bolder, IS Abducts 59 in Badia Attack
IS attack on several sites in the eastern Hama countryside, killing and abducting several people
Al-Salamiyeh, Hama Governorate: On 6 April, the Syrian Observatory for Human Rights reported that Islamic State (IS) fighters have carried out a large-scale surprise attack and mass kidnapping in Government-held areas in the eastern countryside of Salamiyeh in Hama Governorate. During the attack — in the Syrian Badia near the villages of Al-Zuwaynah, Al-Oqayrabat, and Al-Sa’ean in the eastern countryside of Hama Governorate — IS killed at least two Government-affiliated security personnel and kidnapped another 59 people, including civilians, police officers, and security figures. Reportedly, IS has since released 46 civilians, while the remainder of those targeted in the incident have not been accounted for as of writing.
Limited ability to contain IS activities
IS attacks have increased in scale, frequency, and quality in Syria in recent months, with the Badia desert witnessing what is perhaps the most comprehensive uptick. In response, Russia has led an ongoing military operation since January 2021, in conjunction with Syrian Government forces and local militias, targeting suspected IS pockets extending across Ar-Raqqa, Aleppo, Hama, Deir-ez-Zor, and Homs Governorates. Since the beginning of April, there have reportedly been more than 295 Russian airstrikes targeting IS positions in the Badia. However, military operations will have limited effectiveness in curbing IS’s increased activities. This reflects the difficulty of combing a sparsely populated area of more than 4,000 square kilometers. A martian terrain in this region facilitates IS fighters’ movement and allows them to carry out operations in the whole of the Syrian Badia, from the Euphrates River to the east to central and southern Syria in the west. Eliminating IS across such an expanse will be difficult, particularly if the U.S.-led International Coalition remains at odds with Russia over the political deadlock in Syria. In the meantime, Russia and the Syrian Government themselves have limited capacity to carry out effective anti-IS activities, given the myriad security, stabilisation, and social challenges now prevailing in Government-held areas.
Worryingly, IS is seemingly working to rehabilitate its cadres and activate sleeper cells in areas outside its centers of influence in the Badia. The kidnapping of dozens of people in Hama may therefore be a wake-up call alerting the Syria response to the group’s continued presence and its ambitions, which persist despite its seemingly diminished capacity. Taking advantage of the conflict stalemate, IS-linked and inspired cells will likely have a continuing impact on military operations for the foreseeable future.
Vote to Strip Syria of OPCW Membership
Sparring on a vote to punish Syria over chemical weapons use
Various Locations: Debate over Syria’s chemical weapons program has renewed following 6 April remarks by Izumi Nakamitsu, the UN High Representative for Disarmament Affairs, concerning chemical attacks committed during the conflict. Debate among global powers kicked off following Nakamitsu’s remarks that “gaps, inconsistencies, and discrepancies” in the Government of Syria’s declarations to the Organisation for the Prohibition of Chemical Weapons (OPCW) mean that Syria remains out of compliance with the OPCW convention. Nakamitsu’s speech, given at the monthly United Nations Security Council meeting discussing Syria’s chemical weapons, has led to sparring between Russia and China on one side and the U.S., UK, and others over a French-led initiative that would strip Syria of its voting rights in the OPCW. The campaign stems from Damascus’ failure to satisfy the OPCW executive council’s request that it “declare within 90 days … the facilities where the chemical weapons used in the 24, 25, and 30 March 2017 attacks [in Latmana in Hama Governorate] were developed, produced, stockpiled, and operationally stored for delivery,” and “declare all of the chemical weapons it currently possesses.” A vote on the measure will take place during the next general meeting of OPCW member states on 20 April in The Hague.
Accountability at large
Chemical weapons use has been among the most troubling aspects of the conflict in Syria, although OPCW investigations have so far failed to prompt meaningful steps toward accountability. The OPCW’s April 2020 investigation into three chemical attacks in 2017 unequivocally assigns blame to the Government of Syria, for instance, yet concrete steps to act on these findings have proven to be as elusive as accountability and justice related to other aspects of the conflict. Stripping the Government of Syria of its right to participate in OPCW decision-making bodies is a largely symbolic step, unless it can be paired with additional measures under international law and Article XII of the Chemical Weapons Convention, for instance. Western states have generally maintained that a punitive approach to Syria is necessary to underscore that chemical weapons use remains an inviolable red line. However, the suspension of Syria’s OPCW membership would also risk unintended consequences, including by reducing Syrian cooperation with future OPCW investigative missions. Such considerations are indicative of the dilemmas that complicate accountability measures more broadly.
Social Concerns as New Northeast Tax Law to Go into Effect
The law risks instability by alienating critical social constituencies
Northeast Syria: On 1 April, Salwa Sayyed, co-chair of the Self-Administration’s Financial Board, announced that a new, far-reaching tax scheme will go into effect in northeast Syria in July. Sayyed stated that the tax law aims to: “achieve social justice … and finance local expenditure on rehabilitating infrastructure and subsidies of basic goods.” The new law — which has not yet been published in full — will reportedly consist of 93 articles. It has been reported that taxes will be divided into two categories: direct taxes such as income and corporate taxes; and indirect taxes such as the luxury tax and general fees. It is especially noteworthy that the new law exempts several classes of individuals from paying income taxes, including members of military and internal security forces (Asayish), families of “martyrs,” and agricultural sector workers.
Taxation without representation?
The introduction of a new taxation system in northeast Syria raises questions of foremost importance concerning social stability and community acceptance. The difficulty of tax enforcement also presents an obvious concern. This is especially true in predominantly Arab areas in Ar-Raqqa and Deir-ez-Zor, which have proven unreceptive to the imposition of the Self-Administration’s governance paradigm. In May 2019, a tax scheme implemented in the Self-Administration’s Euphrates region administrative territory (Ain Al Arab, Tell Abiad, and Ras Al Ain) was suspended only a few months after it was introduced.
Since the establishment of the Self-Administration in 2014, taxation has been a fundamental pillar of its governance strategy. Law No. 3 (2018) has been the most important framework regulating income tax in northeast Syria. The current law creates nine tax brackets, taxed at rates beginning at 1 percent for whose income is between 1.2 million – 2 million SYP (approx. 343-571 USD), and peaking at 25 percent for those whose income exceeds 100 million SYP (approx. 28,571 USD). Meanwhile, a flat tax of 1,000 SYP (approx. 0.27 USD) is in effect for those whose incomes are less than 1.2 million SYP (approx. 343 USD). Moreover, the law specifies 14 categories of taxed individuals, among whom are Self-Administration employees, traders, foreign companies, and professionals (i.e. doctors, lawyers, engineers, and craftsmen). Meanwhile, members of the military and security forces are exempted.
In addition to questions over the Self-Administration’s capacity to enforce the forthcoming tax law, there are concerns over the unintended effects of its implementation. First is the problem of exempting social categories seen as politically loyal to the Self-Administration, such as military and security forces and the families of martyrs, a term which is vague and susceptible to politicisation. Second, some have already expressed doubt that the new taxes will bring better services or job opportunities. Doubts such as these will seed doubt over the taxes’ legitimacy. Third, the Government of Syria still maintains a presence in governorates otherwise under Self-Administration control. As such, a sizable proportion of the population of northeast Syria is still reliant on the administrative services provided by the Government of Syria, such as civil registries and education, and continues to pay for them. These communities may balk at the prospect of double taxation.
Rumours of Syrian Mercenaries Being Sent to Ukraine
Though plausible, the rumour is unlikely
Ankara, Turkey: Rumours circulated last week that Turkish intelligence was mobilizing Syrian mercenaries to travel to Ukraine. Tensions with Russia have come to a head in Ukraine, as Russian troops amassed near that country’s eastern border and in the occupied territory of Crimea.
Although such a policy is fathomable given the widespread recruitment of Syrians as mercenaries (see: The Syrian Economy at War: Armed Group Mobilization as Livelihood and Protection Strategy), the rumours are entirely uncorroborated as of writing. More than any other foreign power, Turkey has made headlines in the past year for recruiting Syrians for deployment to foreign battlefields, including Azerbaijan and Libya, a trend predicated upon dismal employment prospects for many young Syrians living in Turkish-controlled areas of Syria and in Turkey. Reports have circulated of Syrians being offered attractive salaries and sizable pensions for ambiguous military assignments abroad. The conditions surrounding such mercenary recruitment has led to charges that impoverished Syrians are being exploited as cannon fodder in foreign conflicts. It is possible that political considerations are a factor in the spread of the latest rumours concerning Syrians in Ukraine. Such rumours can be expected to spark outrage against the Turkish government’s reliance on immiserated Syrians as low-cost shock troops used to project force abroad.
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