April 18, 2013
The Economics of Civil War in Syria
By Faysal Itani
Postwar reconstruction efforts that do not account for the economic logic of civil war and the interest groups it creates may well fail, and even lead to a resumption of fighting. Policymakers involved in building a new Syrian economy will therefore face fiendishly difficult choices.
Civil wars present unique challenges to rebuilding efforts, due to the destruction they inflict on state institutions and a country’s social fabric. Syria has already seen two years of fighting, and there is no indication of an end to the war. The collapse of government authority and services in much of the country has led to a proliferation of militias and the emergence of a war economy led by new elites. In addition to the current problems of inflation, soaring unemployment, a shortage of basic goods, and a weakening currency and financial system, economic reconstruction efforts will have to contend with troubling new realities: a vast informal economy and black market; the rise of militia leaders as business actors, rent-seekers and patronage distributors; unemployed fighters who will need to demobilize and rejoin civilian life; and rising sectarianism coloring many aspects of economic, political, and social life.
Lebanon faced many of the same challenges following the end of its own civil war (1975-1990). Fifteen years of fighting had essentially destroyed the state by the time a peace accord was signed, leading to near-total economic collapse. Significantly, the war began as a conflict between two broad political factions but, as in Syria, within a few years the number of factions and front lines multiplied exponentially. Rival militias carved out their geographic and economic spheres of influence, and many of their leaders grew exceedingly wealthy. Civil war took on an economic logic of its own.
Lebanon’s war was not fought over economic issues, but the deepening parochialism of the conflict and focus on war as a money-making enterprise certainly complicated peace efforts and postwar development. Something similar appears to be happening within the Syrian rebellion, with reports of looting by fighters. Some rebels treat private property in captured territory as spoils of war, and a mentality of plunder is taking root among militias (jihadist groups are reportedly more disciplined, but constitute a fraction of total fighters and, in any case, are not likely to play a significant role in post conflict development). Lebanon witnessed the same wartime phenomenon, and was only able to end its civil war and begin to recover economically by granting rival militia leaders a major stake in the postwar economy. This was seen as the only way to commit the civil war elites to peace and demobilization, and led to the emergence of postwar business elites closely connected to and sometimes overlapping with the political elite.
Syria’s dominance of postwar Lebanon allowed it to act as an arbiter and distributor of economic largesse to rival factions. Thus far, no one foreign actor appears ready to assume responsibility for postwar Syria. On the contrary, local militant groups fighting the same enemy (the regime) are backed by rival foreign powers, and increasingly fear and distrust one another. The absence of an overlord of sorts may complicate efforts to enforce a division of public services, jobs, and resources among militia members and supporters, and hinder economic recovery in general.
In addition to the rise of new elites from the ranks of militias, there is likely to be some continuity between pre and postwar power groups in Syria. This applies to the Sunni business class, which has been slow to turn against a regime that historically protected its commercial interests. Less obviously, it also applies to the Alawite elite: some analysts predict that a rebel victory would trigger an Alawite migration to a sectarian enclave in the northwest, leaving the cities and their lucrative economies to the Sunnis. This is one possibility of course, but not a very likely one. Elites, including or perhaps especially minority elites, seldom cede hard-won power and economic privileges easily. The Alawites share a vivid collective memory of their misery and crushing poverty in pre-Assad Syria. They will probably use any means to ensure they retain a stake in the postwar economy, in which they will almost certainly play some role. Whether this is a spoiler role—perhaps in the form of an insurgency—or a helpful one will depend on the postwar order’s ability to extend state patronage to Alawite groups.
The emphasis on access to patronage and rents is especially likely to endure in Syria given its decades-long experiment with a statist economy. This has fostered dependence on the state for benefits, jobs, and - for the more fortunate during the younger Assad’s rule—preferential business opportunities. Such habits will be difficult to break among elites and the general population alike. The one positive economic impact of the war may be its delegating management of economic life to the local level in the absence of the state, through groups like the Local Coordination Committees. Perhaps the strengthening of grassroots economic initiative signals the emergence of new habits, conducive to a kind of dynamism and growth that could bode well for Syria’s long run prosperity. But, like Lebanon, Syria will face a delicate postwar period in which groups’ access to state patronage may have to take precedence over more sound long-term growth models, at least until security is reestablished.
One could argue that Lebanon’s experience offers lessons in how not to rebuild postwar economies. Corruption is rampant there, and close ties between militiamen-turned-businessmen and the political elite have led the state to neglect vast sectors of the economy outside of finance, tourism, and real estate. The formal institutionalization of sectarianism in Lebanon also meant that state patronage would flow through sectarian leaders to their coreligionists—hardly a recipe for a dynamic, competitive, and efficient market economy. Yet it is also difficult to imagine how else militias, and the populations and areas they control, could have been pacified and reintegrated into the postwar economy. Were a peaceful solution somehow imposed on them, militias would probably have gone underground and reemerged as organized criminal groups, posing a continuing threat to postwar development.
There are no easy solutions for the international development community, and the many actors that will have an interest and role in Syria’s postwar economic development. Deals may need to be struck with unsavory groups and characters, old and new. Much attention will be paid to infrastructure, investment, and trade, but perhaps the greatest challenge will be reconciling sound development economics with the political and economic realities of a traumatized, militarized, and fractured country.
Faysal Itani is a fellow with the Rafik Hariri Center for the Middle East at the Atlantic Council.