Will economic crisis precipitate military collapse of Assad regime?

Friday 19/06/2015
Increasing signs of strain

LONDON - Syria's economy has more than halved in the four years since the civil war broke out, with oil production dwindling, inflation surging and the currency near collapse, a new report said.

British think-tank Chatham House said the figures raised the question of whether economic crisis might precipitate a military collapse of the government of President Bashar al-Assad, or if further military defeats could trigger economic breakdown.

The report said the Syrian pound has lost 78 percent of its value since the conflict began in 2011, while the year-on-year rate of inflation peaked at about 120 percent in July and August 2013.

The rise in prices averaged 51 percent between January 2012 and March 2015.

The crisis that erupted in 2011 with protests against President al-Assad has descended into a civil war that has killed more than 220,000 people and displaced millions.

"During the first half of 2015 the regime has shown increasing signs of strain on both the military and the economic fronts," said David Butter, author of the report "Syria's Economy, Picking up the Pieces".

"This gives rise to the question as to whether a dramatic worsening in the economic situation may be the catalyst for the regime's military collapse or for an externally imposed political settlement against Assad's wishes, or whether further military setbacks might be the catalyst for the regime's economic collapse."

The Chatham House report said the country's mining and construction sectors had been among the hardest hit. Mining, which includes oil production, has suffered a 94 percent contraction in real terms since 2010, according to projections it cited from the Syrian Center for Policy Research.

Oil production under state control has dwindled from 387,000 barrels per day to less than 10,000, depriving the government of a key source of revenue. As a result it has reined in subsidies on fuel and food.

The think-tank made clear that some of the statistics, difficult to collate in the circumstances of war, must be approached with caution.

With so much turmoil in the country, including the presence of Islamic State fighters who are battling for control, the population has shrunk nearly 17 percent, from 21 million to about 17.5 million, due to refugees fleeing.

International medical charity Medecins Sans Frontieres said recently that disruption of fuel supplies due to fighting between rebel groups in northern Syria was threatening the closure of hospitals and paralysing the work of ambulances and rescue services.

The think-tank compiled its report with data from the Central Bank of Syria, the United Nations and other sources.

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