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Profits of War- cash, construction , medicine, and petrol black markets

Reuters, March 25, 2012

Syria‘s economy might be broken but illegal construction has boomed – the authorities are too busy crushing the revolution – and cash, medicine, and petrol black markets have mushroomed all over

BEIRUT:  While ’s economy as a whole has been crippled by violent unrest, there are some people for whom the uprising has created business opportunities. Take building contractor Ahmed, who asked to be identified only by his first name for fear of arrest. He has been artfully building unlicensed , small-scale housing while the authorities are distracted with the more pressing task of quelling a revolt. “Yes , yes, I exploit the revolution. The government is preoccupied,” the 48-year-old said from his home in Aleppo, Syria’s northern, sprawling merchant city of 2.5 million people. “I used to do some covert building before, but now I’m fairly public about it,” the entrepreneur added. President Bashar al-Assad‘s forces have killed more than 8,000 people in his drive to crush the year-long uprising, according to the United Nations , with his troops fanning out around the country to try to stamp out the opposition.

Opportunistic builders, loan sharks and black market importers have all done well from the revolt, Syrians say. Urban residents say security firms, selling closed-circuit television cameras and thick steel doors to fretful Syrians who want to beef up home safety, have also seen a boom in sales. Jihad Yazigi, a Damascus-based economist and editor of the English-language Syria Report , said that in the early days of the revolt Syrians saw that inflation would become a threat – the value of the Syrian pound against the dollar has roughly halved since the unrest started. They therefore sought to buy property or build on existing land holdings as an investment.

This strategy appears to have worked, with house values remaining fairly strong in areas not directly caught up in the fighting. “We saw a lot of illegal building in the first few months of the revolution, not only because people were afraid of inflation but because many people had plans to build but they didn’t have licences,” Yazigi said over the telephone from . He said authorities had since clamped down on illegal building in the capital, while cement and steel prices have risen sharply, making construction more expensive. But in other parts of Syria, the building boom appears to have continued . For Syrian men, owning one’s own property is often a prerequisite to getting married; high demand has driven up house prices. For Syrian fathers, slyly adding a floor or two to the family home is often cheaper than buying apartments for sons.

Cash from chaos

Other entrepreneurs have taken advantage of the chaos in the country’s banking sector, which is reeling from economic sanctions and falling foreign currency reserves; Western and some Arab countries have banned imports of Syrian oil and cut financial ties with Syrian banks, among other steps. Syria’s bank deposits have shrunk almost a third since the unrest began. Few banks are willing to sell scarce foreign currency, for which demand grows as the weakens, and bazaar-based currency traders selling dollars in the central markets of Damascus have profited from panic buying. Bank loans appear nearly impossible to acquire , creating opportunities for unlicensed loan sharks.

Ali, 34, works for his father, a struggling farmer who has been trying to keep the family business alive but has been refused loans from both state-owned and private banks. “My father ended up borrowing money from a loan shark,” Ali said, adding that the loan was a three-month advance at 50 percent interest, with a 25 percent surcharge for late payment. “I was so surprised at how organised it was, and how he had official papers. Everyone is having to take out these loans now and the lenders are working openly while the police are distracted .”

In an effort to preserve foreign currency reserves , the government has increased customs tariffs on some imports to prevent currency from leaving the country. Syrians who are in need of foreign-manufactured goods, such as medical drugs, have been forced to look to the black market.

Lama, a 25-year-old pharmacist in the capital , says there has been a marked increase in the trade of black market drugs. “We have been forced at the pharmacy to deal with smugglers. Medicine is not something that can be postponed. If we don’t boost our supplies using illegal means then customers, especially those with chronic diseases, will try to get smuggled medicine themselves.” And as queues to obtain heating oil and petrol lengthen and the government raises the official prices of fuel, city residents increasingly head to the flourishing black market. Issa, a mid-twenties student in Damascus, said he had noticed a change of business practice in the petrol station where he works parttime . “As fuel prices rise, my boss has hired more people to walk along the queue of cars waiting for petrol. When they see people give up waiting and drive off, they stop them and ask if they want to buy fuel at a higher price,” Issa said. Reuters | Mar 25, 2012 “The queues are so long that people are willing to pay extortionate prices.”

The worse news

However, many people in Syria believe the general economic crisis is so severe that even the most savvy entrepreneurs are probably only breaking even. The government has not provided figures for how the unrest has affected gross domestic product, but Yazigi estimated the economy may have shrunk 15 percent last year and could shrink a further 15 percent or more this year. The government has warned citizens of the possibility of wider energy rationing, blaming terrorists for the sabotage of power plants, in what economists and business leaders say is an effort to conserve scarce fuel.

The Syrian government says these “armed terrorists” have killed more than 2,000 soldiers and police during the unrest. And as the value of the Syrian pound has plummeted, the cost of living has sky-rocketed . Many Syrians are unable to buy anything but the bare essentials. The official inflation rate was 15 percent in January; some basic goods such as sugar, butter, vegetable oil and eggs have risen in price by as much as 100 percent.

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