Counting the Cost

Syria's war economy

Who has been backing President Bashar al-Assad with cash, and how it is fuelling the conflict?
Last Modified: 08 Dec 2012 08:09

Trying to understand what is going on inside Syria is difficult to say the least. There is a devastating war raging, independent journalists are not allowed in, and for our purposes on this programme there is no official economic data.

But what information we do have points to a 'war economy' - money and food supplies are being kept aside for the government, the army and its supporters.

Before the crisis, the Syrian economy was worth about $60bn. There used to be a budget deficit of between three and five per cent of gross domestic product (GDP).

But in 2013 the forecast is for a budget deficit of 745 billion Syrian pounds (around $10bn) - which is more than one-sixth of its GDP.

According to the budget unveiled by Mohammad Juleilati, the Syrian finance minister, next year's budget has been increased by four per cent to almost $20bn.

Public sector salaries will also go up by 13 per cent, in an effort to keep things afloat and people happy and there will be a 25 per cent boost in subsidies on food, energy and agriculture.

The trouble is that none of this takes into account Syria's plunging oil revenues.

What are the ins and outs of a war economy? What does it mean for the people in Syria suffering from the war, who really need the kind of money and support that the Syrian government appears to have? And who has been backing President Bashar al-Assad with cash, and how?

Counting the Cost is joined by Jihad Yazigi, the editor-in-chief of The Syria Report, which provides economic news and data on the country, to discuss the Syrian economy.

Spain: The effects of austerity
Spain's economy has been shrinking now for 15 months and there is really no end in sight, with the recession expected to last through to 2014.

Unemployment is the big problem, running at more than 25 per cent, and over 50 per cent amongst young people. As such, many are leaving in search of new opportunities in places like Brazil's Rio de Janeiro. We look at where they are ending up and the impact it is having.

And it is not just people moving to Latin America. Spanish companies made the move more than a decade ago. Last year, despite financial troubles at home, they invested $9bn in the region.

Take a company like Iberdrola, Spain's biggest power company which operates in Brazil and Mexico: It is 150 years old, and currently worth $30bn - and just like its home country, trying to slash debt - $40bn (31 billion euros) down to $34bn (26 billion euros).

And Madrid is actually still trying to plug a $31bn (24 billion euro) hole in money it owes such power companies.

So, what are the effects of austerity in Spain? And does Spain need a bailout?

Our business editor Abid Ali spoke to Ignacio Galan, the chairman and chief executive of Iberdrola, not just about his business, but about Spain's economy in general.

Watch each week at the following times GMT: Friday: 2230; Saturday: 0930; Sunday: 0330; Monday: 1630. Click here for more Counting the Cost.

Follow Kamahl Santamaria @KamahlAJE and business editor Abid Ali @abidoliverali


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