A situation not seen since World War 2 – Syria’s Refugee Crisis

A situation not seen since World War 2 – Syria’s Refugee Crisis
by: Wishvaas Balakrishnan

Beginning from the middle of the last century, the Middle East and North Africa (MENA) region has been embroiled in large-scale conflicts more severe and devastating than any other part of the world. These conflicts have exacted an enormous human toll, and is likely to continue doing so going forward. However, the sheer magnitude of the economic impact ongoing conflicts have on the region will surely be felt for decades to come.  As the dire situation in the region intensifies and spreads, more challenges are brought to the forefront, one such challenge is a refugee crisis bigger than any since World War 2. MENA’s refugee crisis has also adversely affected European countries, straining their economies and social systems.

 

According to the UN’s Refugee Agency, more than half of the world’s refugees originated from three countries consumed by violent conflicts – Syria, Afghanistan, and Somalia. [1] Figures released by the United Nations High Commissioner for Refugees (UNHCR) show that, as of early December 2017, the number of Syrian refugees seeking asylum in neighboring countries has exceeded 5 million[2], the highest number since the Syrian Civil War began six years ago.

 

Source: UNHCR

 

The Syrian Perspective
According to the latest World Bank report, as of early 2017, the conflict in Syria has destroyed about a third of housing stock and about half of medical and educational facilities3. The loss in GDP from 2011 to 2016 has been estimated at $226 billion, about 4 times the Syrian GDP in 2010. [3]  

 

Within the Syrian Arab Republic, cities like Aleppo have become a battlefield for the opposing factions causing widespread damage to physical infrastructure like schools, roads and hospitals. Furthermore, economically significant assets like bridges, grain silos and water resources have become strategic targets, thereby leading to a breakdown of economic activity within many areas.  The Syrian housing sector has also been hit quite hard, an estimated 316,649 housing units have been either damaged or destroyed, with Aleppo bearing 64 per cent of the housing damage followed by Homs at 16 per cent.[3]

 

Although Syria’s Power sector was already fragile and in need of reform before the start of the conflict, the resulting physical damage to electricity infrastructure has only served to make matters worse. Power generation declined to 16,208 gigawatt-hours (GWh) in 2015 from 43,164 GWh in 2010, a drop of 62.5 percent. [3]

 

The ongoing conflict has also led to lasting and significant damage to Syria’s transport infrastructure. The damage has taken two forms; damage due to exploding bombs causing craters and surface depression and collateral damage due to falling debris from buildings, road cuts etc.[3] As expected, Aleppo which is Syria’s largest city-turned-battlefield has been hit hardest with regards to damage to transport infrastructure.

Source: World Bank Group

 

Hence, all these factors caused by the conflict led to the displacement of human lives. Syria’s population in 2010, before the start of the conflict has been estimated at 20.7 million.[3] According to the World Bank, the International Organization for Migration (IOM) has estimated Syria’s population, as of November 2016, to be 18.8 million [3]. Though this figure is likely to have overestimated Syria’s population at present. According to the UNHCR, the number of Syrian refugees outside the country is estimated at 4.9 million. Additionally, more than 800,000 Syrian Nationals have sought asylum in Europe in 2015 and 2016. [3]

 

This exodus of the Syrian populace, as one can imagine, has led to quite a serious depletion of Syria’s human capital. Moreover, this shortage of labour has no doubt caused a contraction in the output of Syrian industries, for example, Syria’s agricultural industry has incurred significant losses which are a direct result of the ongoing conflict. Syria’s wheat production is estimated to be 55 percent lower than what it had been in the years prior to the start of the conflict.[3] Syria is also being subject to high inflation pressure with consumer prices having risen more than 300 percent between March 2011 and May 2015.[4]

 

Can economic policies serve to mitigate the Damages?
Even though this question might give the impression that the answer is a simple yes or no, the complex reality of the situation will most certainly require a solution that takes into consideration every aspect of the problem. Hence, the only available answer that can be provided at present is, it depends. An answer given by any economist in order to save face and to give the impression that he/she knows what they’re talking about.

 

Based on the nature of the damages, any economic policy put into effect would need to first and foremost ensure that economic institutions are protected. Government budgets would need to be reorganized such that providing basic public needs and restoration of infrastructure are the main priorities. Accomplishing these three aspects alone will be quite a challenge. However, if it can be pulled off, it will surely give some semblance of stability, and perhaps attract some of the refugees back to their home country.

 

After the foundations of the economy are restored, the next step would need to involve adequate monetary and exchange rate policies to boost investor confidence. Once economic institutions have absorbed the capital inflows the proceeds can be directed towards strengthening the country’s infrastructure. Following that, the whole process would need to be continuously repeated.

 

At the same time domestic industries will need to be prepared to receive the influx of labour such that the population can be smoothly reintegrated back into the gears of the economy. Whether these policies can be executed or whether they can be successful, only time can provide an answer to those questions.

 

 

Bibliography
1. Refugees, U. (2017). Figures at a Glance. [online] UNHCR. Available at: http://www.unhcr.org/figures-at-a-glance.html [Accessed 4 Dec. 2017].

2. United Nations High Commissioner for Refugees (UNHCR), U. (2017). UNHCR Syria Regional Refugee Response. [online] UNHCR Syria Regional Refugee Response. Available at: http://data.unhcr.org/syrianrefugees/regional.php [Accessed 4 Dec. 2017].
3. The Toll of War – The Economic and Social Consequences of the Conflict in Syria. (2017). [ebook] World Bank Group, pp.21-57. Available at: http://www.worldbank.org/en/country/syria/publication/the-toll-of-war-the-economic-and-social-consequences-of-the-conflict-in-syria [Accessed 4 Dec. 2017].
4. The Economic Impact of Conflicts and the Refugee Crisis in the Middle East and North Africa. (2017). [ebook] International Monetary Fund, p.9. Available at: https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/The-Economic-Impact-of-Conflicts-and-the-Refugee-Crisis-in-the-Middle-East-and-North-Africa-44228 [Accessed 4 Dec. 2017].
5. Syrian Refugee Crisis Image (http://www.beliefnet.com/columnists/muslimyouthusa/files/2016/11/o-YARMOUK-facebook.jpg)