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How Syria exemplifies Iran's nefarious economic clout in the Middle East

 

Middle East

Syria, which is ruled by the Assad, is in economic devastation after more than a decade of civil conflict. Conflict, widespread corruption, famine, and a major exodus of trained people have taken their toll, leaving the country vulnerable to exploitation.

Syria's gross domestic output decreased by at least 50% between 2010 and 2019, according to the World Bank, with more than 90% of the population living in poverty and more than half facing extreme poverty. Syria's domestic marketplaces have been inundated with inexpensive imports in this fragile situation.

Iran has increased its exports to Syria, leveraging its military and political support for Syrian President Bashar Assad's dictatorship and exploiting and worsening the country's manufacturing base by monopolizing entire markets.

Since the war began in 2011, the collapse of domestic manufacturing has created profitable possibilities for businesspeople allied to the Assad administration to import cheaply built goods from Iran, to the detriment of Syrian producers.

While few of the grandiose restoration agreements between Tehran and Damascus have yet to see the light of day, Iran has succeeded in muscling out local competitors in Syria's pharmaceutical and food businesses.

Syria had a booming pharmaceuticals industry before to the uprising that triggered the civil war; roughly 70 plants across the country met 93 percent of domestic demand and exported to about 60 nations.

However, a decade of war has destroyed these plants as well as the electricity grid that keeps them running. Thousands of skilled workers have been forced to flee their homes due to violence and persecution, while sanctions have restricted access to raw materials and machine components. As a result, Syria's overall pharmaceutical production capability would have decreased by nearly 75% by 2020.

"Importing active components for medicines is extremely complicated and expensive," Hamed, a pharmaceuticals student nearing graduation at a prestigious Syrian institution, told Arab News.

"Many industries have had to shut down manufacturing lines due to a lack of active chemicals and energy," he said.

A significant devaluation of the currency, which began in late 2019, has exacerbated the difficulties facing Syria's pharmaceuticals industry, as well as similar challenges in the domestic agricultural sector.

Because of the devaluation, which is linked to the banking crisis in neighboring Lebanon, imports of critical components such as seeds, pesticides, fertilizer, diesel, and raw ingredients for the manufacture of medications have become prohibitively expensive.

To circumvent Western sanctions, Syrian companies and industrialists have long parked their funds in Lebanese banks. As a result, as the Lebanese currency fell in value, so did Syrian deposits.

Meanwhile, as Syria's electricity grid has deteriorated due to years of fighting and neglect, production has grown even more expensive, with companies and cold-storage facilities forced to rely on expensive private generators.

All of this comes on top of widespread corruption, which has long mandated the payment of bribes to local officials, as well as the loss of key personnel due to military conscription and displacement. As the cost of Syrian-made goods increased, both foreign and domestic demand dwindled, and the market for low-cost foreign imports boomed.

Protectionist policies pursued by the regime are equally disruptive. "Limitations imposed by the Ministry of Health" on the prices and export of Syrian-produced medications, according to Hamed, have made local manufacture unprofitable, fueling the black market's rise. The devastation of Syria's economic capability, along with the depreciation of Iran's currency as a result of years of Western sanctions, has benefited Iranian exporters, allowing them to flood the Syrian market with low-cost goods.

Iran's pharmaceutical exports to Syria, Lebanon, and Iraq have been particularly successful. Despite the fact that many consumers see Iranian-made pharmaceuticals as subpar, it has arranged trade exhibitions and inked distribution partnerships biased in its favor.

Around 75% of the pharmaceuticals sold in Iraq are brought in via illegal border crossings with Iran. These medications are frequently nearing their expiration dates or lack the active components needed to benefit patients.

According to Khedr, a Syrian pharmacist who lives in the country's west, the quality of Iranian pharmaceuticals is "not excellent," and they're largely found in state hospitals rather than private pharmacies, where clients prefer higher-quality options.

Abdullah, a doctor at a Damascus hospital, is similarly doubtful about the Iranian medications' efficacy.

"Iranian drugs can be available in all Syrian hospitals, and I use them in my clinic as well," he told Arab News. "However, they are of poor quality."

However, for many individuals in Syria's impoverished communities, any medicine is preferable to no medicine. With shortages common, thanks in part to a black market trade in locally produced items, few people have any choice than to buy Iranian brands.

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