Syrian business dries up after Assad’s crackdown on dissent (Guardian UK)
Apart from the tinkle of water from the fountain, all is silent in the courtyard of a boutique hotel in the old city of Damascus. “We’re almost empty,” says one employee. “Usually we’d be full, but tourists have stopped coming.”
It’s a view that is reinforced by travel agents serving Syria, who are reporting a dramatic slump in business, following record numbers last year.
As the protest movement against President Bashar al-Assad has accelerated, intensified and then reeled in the face of a brutal crackdown, tourist numbers have dried up – and the country has lost a vital source of income and foreign currency.
The impact on an already weakened economy is palpable. “I have made nothing this week,” says one seller on the old city’s Straight Street, adding that the situation was even worse in other cities.
Some business owners have laid off workers, shortened working hours or reduced employees’ pay. Small-scale traders say business is down while manufacturers report difficulties in getting their goods to market.
“I have to fly my goods out as I cannot rely on the road to be open or passable,” says one clothing manufacturer. “It costs me so much more but I can’t raise my prices.”
Big businesses are also feeling the pain. Before the recent unrest, Syria’s economy – based primarily on agriculture and manufacturing – was already struggling. Liberalisation since 2005 caused inflation to soar to 15% in 2008 and cheaper goods coming in from Turkey and China have forced many manufacturers out of business, especially textiles factories in Aleppo. Drought has also caused thousands to migrate to the cities from rural areas.
In recent years, Syria’s government started to encourage foreign investment, with French supermarket Carrefour and the cafe chain Costa opening branches in the country.
But many foreign investors are starting to consider pulling out and the trend is likely to be accelerated by the imposition of international sanctions on Assad and other senior officials.
Qatar Electricity and Water has cancelled a $900m (£558m) project to build power plants. British companies are reported to be considering pulling out.
“Capital is flying out the country and the brain drain is increasing as some professionals look to relocate to Dubai and Paris,” says the analyst. Dollars are scarce in Damascus and the Syrian pound has fallen on the black market. Shortages have not yet been reported, although rumours of a run on bread led to long queues at bakeries.
Economic woes, and the economic dominance of friends and relatives of the president, have been one of the sparks of the protests.
Much of the anger has focused on Rami Makhlouf, Assad’s cousin whose interests in telecommunications, transport, banking, tourism, real estate and construction dominate the economy. Foreign and local investors are often forced to partner with Makhlouf, earning him the nickname Mr Ten Percent.
With protests failing to gain momentum, some opposition activists are looking to the Sunni merchants of Damascus and Aleppo for signs they might join the fray.
But business leaders remain wary and even the most disaffected are more likely to leave the country than protest, according to the analyst: “It is easier to go to Dubai than try to turn against the regime – they have too much to lose.”
But Assad may only be putting off the inevitable. As the government seeks to appease protesters, it has reversed economic policy, stemming plans to cut subsidies and pledged pay rises and extra jobs in an already burgeoning public sector. This has found favour with some ordinary families but is unaffordable in the long term.
Inflation is almost certain to rise as the government signs up a company to print more money. Investor confidence has dropped and EU sanctions on Makhlouf, who is already under US sanctions, will make people wary of dealing with him.
“I want stability,” says one shopkeeper in the new area of the city. “But if none of us can make money, maybe I will consider protesting.”
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