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Economy and business in Syria

Syria belongs to the less resourceful Arab states and has limited deposits of oil and other minerals. Agriculture, therefore, plays a relatively greater role than in most countries in the Middle East, and employs about one-third of the working population. Trade has a central place in Syrian culture and economy, which in recent times is strongly characterized by the fact that the country is an Arab frontline state in the Arab struggle against Israel, as well as the neighboring Gulf region through Iraq.

Business of Syria

As a participant in several wars, and with part of its territory (Golan) annexed by Israel, Syria has for decades spent significant portions of its budgets for military purposes. Especially in the wars of 1967 and 1973, Syria suffered significant economic losses, including destruction of infrastructure. In pursuit of its regional ambitions, Syria has also spent considerable funds on its military involvement in Lebanon, until 2005. Indirectly, the political conflict with Iraq, partly during the first Gulf War (1980-88) and partly after others (1990-91) also Syria suffered major losses in the form of lost transit revenues from the oil pipeline to shipping ports in the Mediterranean. As part of the UN program for Iraq, some trade with Iraq and through Syria was carried out. The same is true of the situation following the 2003 US invasion of Iraq, and the unrest that has prevented full normalization of economic activity, which would naturally include oil exports from northern Iraq via Syria. Since 2003, Syria has also suffered a financial strain by welcoming over 1.5 million refugees from Iraq. The large number of refugees has among other things helped to push up property and rental prices, with increased pressure on the economy and greater struggle for jobs. Increasing unemployment is a major political and social challenge that demands increased economic growth.

According to COUNTRYAAH, Syria received considerable financial and military assistance from the Soviet Union, and suffered its dissolution, both in the form of less aid and reduced trade. During the Second Gulf War, Syria joined the Allied forces and, in return, received financial assistance from the United States. Syria has traditionally also received significant assistance from other Arab countries (as compensation for Syrian costs in the pan-Arab war against Israel). However, this support has varied with political as well as economic cycles.

Among other things, to compensate for the loss of Soviet support, Syria, in which the state has controlled significant parts of the business sector, launched economic reforms in the 1990s that would, among other things, encourage foreign investment. Around 2000, political reforms were implemented to promote local private business, including easier opportunities for private investment and ownership, including the legalization of private banking (2001) and the establishment of a stock exchange (2007). In 1997, Syria began negotiations with the EU with a view to an association agreement, and in 2008, the country joined a newly established Mediterranean Union, initiated by France.

Syria's oil exports are an important factor in the country's economy, as its main export commodity and currency earner. With limited oil reserves and rising consumption, it is expected that Syria will become a net importer of oil by 2012, and the revenue loss will have to be compensated. Energy is also a critical factor in the development of the economy, and natural gas is gradually gaining a more important role in power generation. It also produces hydropower, which depends on regional cooperation for joint management of water resources. This is ensured by guarantees from Turkey, which controls the Euphrates upper race, as well as with Jordan regarding the utilization of water from the Yarmouk River, both for irrigation and power generation. In 1978, the large Buhayrat al Asad (also called Tabaqah Dam) opened in Euphrates. The dam provided increased power supply and enabled a significant increase in agricultural land in the area.

Next to oil, the leading export products are cotton and phosphate. All three are products that are exposed to partly large price fluctuations in the international market, with financial uncertainty for exports as a result.

Syria has a number of historical monuments, and tourism is a potential growth industry. The sector experienced an upswing in the 1990s, but was subsequently weakened due to political unrest in the region.

Mining, energy

Syria has significant deposits of oil and gas, and is the largest energy producer in the Levant. The country also has other mineral deposits, several of which are extracted, substantially for domestic consumption. Among other things, it is extracted bitumen, basalt, gypsum, salt, phosphate and limestone; iron ore and other minerals have also been detected.

Oil took over the position as the country's most important export item (from cotton) in 1974, and remained the country's main source of income into the 2000s, although declining production and increased domestic consumption have reduced the surplus for exports. The deposits were first found on the Karatchuk field in the northeast, 1959, then on the Suwayda and Rumelan fields, and the extraction started at Suwayda 1968; four years earlier, all oil operations had been nationalized. However, oil recovery was no greater than Syria becoming a net oil importer in the 1980s, until new large deposits were found at Deir ez-Zour, and production rose to a peak of 590,000 barrels per day in 1996. Since then, production has declined somewhat, and fell below 400,000 barrels in 2007 - not least as a result of lower recovery at Jebisseh, al-Thayyamm and Omar fields - and is expected to decline further.in 2007, petroleum was 184,000 barrels per day. Proven reserves were per. 2008 of approx. 2500 million barrels. Syria has gas reserves of about 8.5 trillion cubic feet, substantially in the northeast, with Palmyra, al-Furat and Suwayda as the largest fields. Gas production increased strongly in the 1990s, and it is an ambition to utilize the gas for domestic purposes - both to meet increased energy needs and to release as much oil as possible for export. Equally, there is a need for gas imports, and supply agreements have been signed with Egypt, at the same time as there are plans to expand the extraction of its own gas deposits. Syria has signed an agreement on importing gas from Iran. Plans for gas exports to Lebanon were fueled by political turmoil in 2005 and Israel's invasion in 2006.

The oil deposits at Karatchuk are piped to the port of Tartus. Syria has also had revenues from oil pipelines crossing the country, even though several have been completely or partially closed down; Tapline from Saudi Arabia and Kirkuk wiresin Iraq. In the 2000s, several new pipelines were planned, involving Syria, including for gas exports from Egypt to Turkey, from Iraq to Jordan and from Syria to Lebanon. The conflict with Iraq has led to huge revenue losses as Iraqis have for two periods shut down the oil pipeline that runs through Syria to the Mediterranean coast and on which Syrians lost revenue. During UN sanctions against Iraq, oil was exported via Syria. Iran has supplied Syria oil at a subsidized price from the early 1980s. The Baniya oil pipeline (50 km north of Tartus) went out of business in 1982. There is also a domestic pipeline for gas distribution. In 2005, Syria had an installed capacity for electricity generation of approx. 6.5 GW, of which approx. 1.5 GW from hydropower, substantially from the Euphrates and Yarmuk watercourses. The largest production comes from oil-powered power stations.

Increased power generation is considered a prerequisite for further economic growth, but there is a shortage of water in the region and therefore limited opportunity for increased hydroelectric production. The focus is therefore mainly on the use of gas, as well as on the development of renewable energy sources, especially wind. Utilization of water resources is also a political issue; both Euphrates and Yarmouk must be managed in consultation with other countries in the area. In the 1970s, there was conflict with both Turkey and Iraq over the utilization of Euphrates water; with Iraq when Syria built the Asad Dam, and with Turkey when the Turks built the Atatürk Dam. Later, agreements were made with Turkey and with Jordan, with the latter regarding water from Jarmuk. In 2003, a new water reservoir was constructed in Latakia.

Agriculture and fishing

Despite that a large part of Syria consisting of desert and semi-desert, agriculture is an important industry, both for employment and value creation. The sector employs almost 40% of the working population and contributes approx. a quarter of GNI. Of the total land, 30% is used for fields and 45% is steppe or pasture. The most important agricultural areas are along the Mediterranean coast, along Nahr al-Asi (Orontes) and in the northeast, where the Euphrates and its bees are used for artificial irrigation. Further east, in the extension of the Lebanese mountains, the valley along Nahr al-Asi is cultivated as Syria's most fertile area. Cotton is the most important agricultural product, and is grown not least in the Jezireh area, with irrigation from the Euphrates; over 80% of production is exported. Cotton was Syria's most important export item to 1974, but production volume and value have declined since the mid-1970s, when oil took over as the main export commodity. Wheat, barley, sugar beets, maize, cotton, olives, tobacco, lentils, grapes, watermelons, citrus fruits and tomatoes are especially grown. Cereals are produced substantially in the central parts of the country. The majority of agricultural crops are produced for domestic consumption; wheat is exported in good years, and increased production of fruit and vegetables is being exported. Artificial watering is not widespread, and the crops vary greatly. Animal husbandry is important and there is a large production of dairy products. Much of the animal husbandry is still run by nomadic people according to traditional methods. Cattle and camels are kept, as well as lots of sheep and chickens. The majority of agricultural crops are produced for domestic consumption; wheat is exported in good years, and increased production of fruit and vegetables is being exported. Artificial watering is not widespread, and the crops vary greatly. Animal husbandry is important and there is a large production of dairy products. Much of the animal husbandry is still run by nomadic people according to traditional methods. Cattle and camels are kept, as well as lots of sheep and chickens. The majority of agricultural crops are produced for domestic consumption; wheat is exported in good years, and increased production of fruit and vegetables is being exported. Artificial watering is not widespread, and the crops vary greatly. Animal husbandry is important and there is a large production of dairy products. Much of the animal husbandry is still run by nomadic people according to traditional methods. Cattle and camels are kept, as well as lots of sheep and chickens.

Fishing is conducted in the Mediterranean and in the rivers, with catch for domestic consumption.

Industry

Syrian industry was quickly built after independence, and was dominated by textile production, not least with Lebanon as the market. In the 1970s, the development was continued with the assistance of the Soviet Union, and the Soviet market was significant until 1991. The sector includes in particular textile factories and companies manufacturing consumer goods for the domestic market, including electrical goods; further iron and steel industry at Hama, cement production and mineral fertilizer production based on the country's phosphate deposits. Syria has two state-owned oil refineries, at Baniyas and Homs, with a total capacity of about 240,000 barrels per day. Plans to build three new refineries have been announced to increase the capacity to approximately 3800 barrels in 2010-2011. The country has five gas processing plants.

Industry passed agriculture as the most important value creation in 1971, contributing close to 1/3 of GNI. The industry consists of both state-owned heavy industry and private small industry enterprises. Syria has a large number of historical monuments, from several eras, including Roman times and the Ottoman period, including Roman ruins, crusader castles and mosques. Tourism has become an important trade route, as much is also invested in developing. Most tourists come from the region, but the number of visitors from the West is increasing.

Foreign Trade

Syria normally has a negative balance of trade with foreign countries, but the deficit is partly covered by fees from transit oil pipelines, as well as transfers from Syrians abroad, and has been sought to reduce through strict import restrictions. Petroleum and petroleum products are the most important export goods, followed by cotton and textiles, as well as fruits and vegetables. The Soviet Union was an important trading partner until 1991, later most of trade with Europe (especially France, Italy and Germany) - as well as neighboring countries Lebanon, Turkey and Iraq; further China and Korea.

Transport and Communications

Syria has a relatively well-developed road network of approx. 47,000 km, as well as an extensive railway network of approx. 2460 km. There are rail links in several parts of the country, as well as to Turkey and Jordan (the Hejaz line from Damascus to Amman); formerly also to Lebanon.

The main ports are Latakia, Baniyas and Tartus, which have been overcapacitated in the absence of transit trade, especially from Iraq. Damascus, Aleppo and Latakia have international airports.

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