Aleppo out of work

It took almost a full year before Aleppo, Syria’s second largest city by population, became an active part of the popular uprising that began engulfing the country in March 2011; but when it did, events very quickly took a violent turn. This summer has seen thousands killed in armed clashes and bombings, more than 200,000 inhabitants are estimated to have fled the city and several districts are being levelled under daily bombardment. ‘Normal life’ is at an almost total standstill throughout the metropolis.

Aleppo is also Syria’s manufacturing hub, and according to the head of the Aleppo Chamber of Industry, Fares Shihabi, by mid-August all the plants located in the industrial area of Sheikh Najjar, a large complex located outside the city’s boundaries, had stopped production because of the rising insecurity. Factories could not be protected and employees feared going to their workplace, while the supply of inputs and the distribution of finished products became almost impossible — that equals more than 600 factories and 40,000 workers in the industrial city that are estimated to be out of work. Should the violence last it is likely that shortages of all kinds of products will occur across the country. Already, medical supplies are threatened and the World Health Organization has warned of drugs shortages — with some 20 companies producing a wide range of medicines, Aleppo is a major center for pharmaceutical production in Syria.

Until the recent rise in violence, Aleppo had managed to escape some of the worst economic consequences of the uprising. Its manufacturers, in particular, benefitted from a number of favorable circumstances. The suspension of the free trade area with Turkey, which was decided after Syria’s northern neighbor imposed sanctions last December, and the increase in customs tariffs decided by the government earlier this year, helped reduce competition in the local market. Likewise, depreciation of the Syrian pound, which has lost some 50 percent of its value compared to the United States dollar in the last year and a half, temporarily spurred increased exports to neighboring Iraq.

Though it has fallen well behind Damascus in terms of overall wealth, Aleppo had long been Syria’s economic capital. Its gradual decline began in the early 1920s when the demarcation of the country’s borders cut its links with its Turkish hinterland, followed by the nationalizations of the late 1950s and early 1960s that stripped the Syrian bourgeoisie, then mainly based in Aleppo, of its land and other assets.

However, it was only in the early 1970s that the balance tipped clearly in favor of Damascus with the increasing centralization of the Syrian state and the growing state capitalism imposed by then President Hafez al-Assad. From then on, the closer investors were to the center of power in Damascus, the luckier they were in winning large government contracts, which represented a large source of revenues and profits for both them and the middlemen/bureaucrats that helped them conclude the deals.

It is therefore no surprise that in the late 1970s, when protests demanding more political freedoms and democratic change began across the country, Aleppo rose — only to see its protest movement and that of neighboring Hama ferociously crushed by the government — while Damascus watched. Only when two decades later Bashar al-Assad reached power and began a policy of economic and trade liberalization, did the city regain some of its lost wealth. The improvement of ties with neighboring Turkey, in particular, helped boost trade, tourism and investment. After decades of marginalization, Aleppo saw its businesses thrive again and sought stability, calm and order. This was not, however, to last, and the city, as most other parts of the country, is now engulfed in an uprising that is unlikely to end anytime soon.

The profound economic, social and political changes likely to emerge from the revolution will force a redefinition of the country’s economic model and the role of the state, of the links between the center and the periphery and of the balance between trade and production. Whether Aleppo will lose again from these changes, as it has with most other dramatic turns of the last century, or whether it will adapt successfully to the situation as it evolves, remains to be seen.

Note: This article appeared first in the September 2012 edition of Executive Magazine