Syria: a traditionally self-sufficient economy

An analysis of GDP by economic sector shows that agriculture, and mining and manufacturing were foremost - each contributing at least 20 per cent of GDP - during the 1990s and the early 2000s (see Table 1.1). Until the discovery of significant crude oil reserves in the mid-1980s, agriculture was considered the backbone of Syria's economy.

Syria is traditionally an agrarian-based economy. Agricultural production contributed to the country's economic wealth, accounting for 20-25 per cent of GDP before the severe drought of 2006, after which the agriculture share out of GDP fell to 18 per cent in 2008 and then to 16 per cent in 2010 (see Table 1.1). Historically, Syria was economically self-sufficient, especially in basic food commodities, and exported wheat, fruit, and vegetables when favourable weather conditions enabled a surplus production. Approximately half the Syrian population is rural, the majority making a living from farming and livestock breeding. Employment figures in the agricultural sector vary from 19 to 30 or 40 per cent of the workforce.⁴ The latter figure makes more sense if we take into account informal employment, which mainly takes place in the agricultural sector, and women's participation.

During the 1960s, the Ba'athist regime supported the agricultural sector. To this end, the Syrian Agricultural Cooperative Bank (ACB) was both a dispenser of interest-free farm loans and a distributor of inputs, including locally produced or imported materials - especially fertilisers - either directly to farmers or indirectly through cooperatives. The quantity of fertilisers and other inputs was pre-determined according to a

Table 1.1 GDP decomposition by economic sectors, at constant prices 2000, 1963-2010 (%)

Source: Central Bureau of Statistics, Syrian Statistical Abstract, 2011 and other issues.

crop plan. The Syrian agricultural sector was traditionally dependent on the government's guidance and protection. Syria, among all major Arab states, invested most heavily in its agricultural sector and prevented losses of valuable agricultural land to residential and commercial construction. It improved the system of agricultural cooperatives and mobilised peasant activity in support of efficiency programmes (Owen, 1981). Cooperatives were turned over to the Peasant Union to ensure peasant participation in corporatisation and acquiescence in the agrarian plans (Hinnebusch, 1989: 41). The government closely intervened in production, pricing, import, and distribution of agricultural products and inputs. It purchased crops at prices that were above market levels and then sold them to farmers at subsidised prices to encourage production. The government established publicly owned industrial enterprises and agricultural cooperatives that promoted agro-business industrial activities and controlled agricultural marketing, thereby preventing middlemen from marketing the products of state farms (Hinnebusch, 1989: 41). Furthermore, it dealt with Syria's arid environment by developing animal husbandry and improving land irrigation and reclamation. The aim of agricultural development during this state-interventionist phase was to ensure self-sufficiency in food staples and agricultural products. This sufficiency would maintain the state's control of agricultural output and eschew any return to the post-independence ancien regime and its associated dependent development.

However, the radical agrarian policies did not remain in force after the Hafiz Assad regime promulgated counter-agrarian reforms. These reforms allowed the private sector to take part in agriculture procurement in the form of mixed-sector ventures. Joint ventures with local and foreign contractors or companies were established following the enactment of Law No. 10 of 1986 (Hopfinger and Boeckler, 1996; Polling, 1994). The latter law also allowed the initiation of mixed-sector stock corporations in agriculture and the operation of capitalist farms and complementary agribusiness. However, the mixed-sector agribusiness proved to have limited success (Hopfinger, 1990; Hopfinger and Boeckler, 1996: 187). These agri-corporations did not increase agricultural production, nor did they set new standards of production through the use of modern agricultural techniques.⁵

Counter-reforms did not stop there. Hafiz Assad initiated austerity measures on the agricultural sector starting in the 1980s (Khoury, 1999: 270; Kanaan, 2000: 115). Government expenditure was curtailed, including spending on modern equipment and farming machinery. Moreover, subsidies to the agricultural sector - on fertilisers and pesticides - were drastically decreased (Hopfinger and Boeckler, 1996: 186-7). The formerly high government spending on agriculture development during the 1960s dropped to 10 per cent of total realised investment in the 1970s and remained slightly above 10 per cent in 1980-85 (Perthes, 1995: 43). Agrarian counter-reforms also continued during the Bashar Assad regime. In 2000, Decision 83 was promulgated, which allowed the privatisation of state farms in the north that were eventually sold to the 'public,' but the main beneficiaries were the state bourgeoisie, the traditional landowners (especially those with ties to the regime), and Gulf investors (Ababsa, 2006).

Figure 1.1 shows that the share of agricultural and forestry expenditure out of total GFCF averaged 20 per cent during 1970-74. This average share then dropped sharply to 6 per cent in the late 1970s and was at 7 per cent during 1980-84, reflecting the Assad regime's austerity measures on the agriculture sector. Although fewer resources were allocated to agriculture out of total government investment, the decline in the sector was not significant so far as its contribution to GDP was concerned. Agriculture's contribution to output remained almost steady - contributing not less than 20 per cent over the prior four decades until the drought in 2006. This steadiness in agricultural production was, in part, maintained by high labour participation in the agricultural sector - fuelled by the informal sector and women's participation. Although farmers migrated from rural to urban areas following economic liberalisation, their migra-

Figure 1.1 Agriculture, forestry and fisheries' average share of total GFCF during different time periods

Source: Central Bureau of Statistics, Syrian Statistical Abstract, different issues.

tion remained seasonal; more important, their ties to their rural origins were never loosened, given that market jobs were not secure.⁶