In Medhat Pasha souq, a bustling market in central Damascus, Fahed is deeply troubled by the “disastrous” price hikes and collapse of the local currency that are choking ordinary Syrians.
Western and Arab countries, outraged by the deadly government crackdown on an 11-month uprising, have imposed economic sanctions on the regime of President Bashar al-Assad but the heaviest toll is on the Syrian people.
“Since the start of the crisis, there has been a huge rise in prices. This is a disaster that touches everyone all over the country. The poor are getting hit, and even the rich are facing difficulties,” says the 32-year-old clothes vendor.
“It is really unbelievable. The price of one kilo of locally manufactured cotton has gone from 400 to 550 Syrian pounds ($5.70 to $7.80), a kilo of sugar, which was worth 50 pounds (70 cents), today sells for nearly 73 pounds ($1), and vegetable oil has gone up 50 percent.”
“We are spared nothing. The price of a gas cylinder has jumped by 60 percent. The poor really cannot cope,” he adds.
Syria’s banking system and oil exports have been hit by rounds of sanctions, dealing a heavy blow to foreign exchange earnings and stoking inflation.
Nidal, a 29-year-old taxi driver, waits patiently in a long queue at a petrol station in Damascus’s Tahrir Square.
“Twenty litres of petrol today costs 1,000 pounds ($14.30), compared with 800 pounds ($11.40) before the crisis,” he says.
The slide in the value of the pound has crippled purchasing power. The dollar, which traded at 46.50 pounds a year ago, today buying 74 pounds, representing a fall of 62 percent for the pound.
“Inflation has shot up. The official rate rose from five percent in November to 11 percent in December. It is partly the result of the strong dollar, but also of supply problems, because many products come from the flashpoint regions of Homs and Hama,” says Jihad Yazigi, editor-in-chief of The Syria Report.
To prevent the pound from plunging still further, the government has raised customs duties on several consumer goods, risking a further inflationary shock.
Under a decree issued last month, import tax rose from 40 to 80 percent, the government daily Tishrin said on Wednesday. This applies to 39 food items, as well as electrical appliances, beauty and hygiene products, kitchen utensils, water tanks and paint.
The paper warned, citing economists, that the measure would “encourage the smuggling of goods from neighbouring countries, causing losses for the state and a rise in prices on the Syrian market.”
The government is also pursuing other options to overcome the barrage of sanctions, including barter agreements with “friendly” countries such as Russia, China and Venezuela.
Syria could exchange its crude oil for sugar, a key commodity in the local market, other agricultural products and manufactured goods, which usually require hard currency.
“But the countries with which such trade is possible are limited, as they have to accept this type of exchange and have something to sell that Syria needs,” Yazigi notes.
“There is no doubt that the sanctions imposed on Syria touch the population first of all. Are they having an impact on the regime? It’s an open question,” he adds.
“The Syrian people are suffering a political crisis, a very difficult security situation, and economic conditions which were already deteriorating before sanctions struck. But today those sanctions are lumbering them with an additional burden.”