War upends economies. In Syria it has unraveled longstanding economic networks and created new groups: a violent, power-seeking elite that now controls most sources of wealth; a new opportunistic class providing services to a third group; that is the urban poor living on the edge of survival. There are three economies now in the north of the country: the combat economy, the shadow economy and the coping economy, all of which are now closely entwined. Long after peace comes, Syria will face enormous problems untangling the new economic relationships that have developed and yet it will be critical to do so to establish an enduring peace.
Syria’s north has become dependent on the Turkish economy. The main link in northwest Syria, the Bab al-Hawa crossing, is under the control of Ahrar ash-Sham (a Syrian Salafi armed group). Controlling border crossings has been the main means by which armed groups have been able to fund their activities. It has been particularly important for them to maintain access to foreign military support, the main source of income for the combat economy. In tandem, markets in northern Syria and southern Turkey have become closely connected as hundreds of trucks cross back and forth every day. Most civilians now depend on armed groups, the shadow economy or remittances from abroad.
The coping, shadow and war economies share the same infrastructure. Destroying one harms the others. This means any effort to close down one will inevitably end up worsening the livelihoods of the poorest people and will likely be resisted not just at an elite level but by many who rely upon it. To untangle this web, a number of steps will be necessary:
- Eventual cuts to foreign military support, preferably done in a controlled manner with support for demobilization and reintegration of fighters.
- A peace process that takes into account the war economy, particularly the control of border crossings and other “bottlenecks” that allow for control of resources.
- Support for established business networks such as those previously centered on the Aleppo souk and manufacturing centers with investment and aid in order to return to a more organized economic environment.
- Prepare a new skilled workforce, particularly through expanding vocational training for refugees and others.
ISIS has managed to drag militants, war profiteers, traders and ordinary people into its well-structured war economy centered on oil resources and taxation. Even though much of the oil infrastructure has been damaged by Russian and Coalition bombing, ISIS has still managed to maintain control of energy in northern Syria, involving hundreds of thousands of people who have no choice but to work with or buy oil from them. Destroying energy supplies has a profound effect on humanitarian conditions in the country, harming the most vulnerable people. Bombing has diminished ISIS’s oil income but will never eliminate it as ISIS will rely on small-scale production and artisanal refining.
- There is an urgent need to provide an alternative source of oil for northern Syria by creating an internationally supervised oil storage depot near the Syrian-Turkish border. Prices should be subsidized by donors. This would break ISIS control over the sector without harming those now dependent on its oil.
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