Formality, Informality, and Resilience of Syrian Political Economy

About

The Geneva Center for Security Policy (GCSP)'s Syria Transition Challenges Project aims to build common ground between the European, Russian, Turkish and US views on the issues of Reform, Refugees Return, and Reconstruction in Syria. It commissioned expert Omar Abdulaziz Hallaj of LUGARIT to develop a research project report titled “Formality, Informality, and the Resilience of the Syrian Political Economy”, exploring the country's economic resilience.

This publication is a pre-LUGARIT work by our experts.

Summary

The Research Project Report "Formality, Informality, and the Resilience of the Syrian Political Economy" delves into the complexities of Syria's political and economic structures, highlighting several critical aspects:

Resistance to External Political Transition: an externally induced political transition is unlikely to change the entrenched patterns of Syria's political economy or its patron-client based social contract.
Sanctions and Elite Power: Contrary to their intended purpose, sanctions have reinforced the power of Syria's top elites by shifting the economic burden onto society, particularly weakening the middle classes and their potential for resistance.
Elite Dynamics and Economic Control: The periodic replacement of powerful elites has led to the development of new mechanisms for financial extraction, solidifying the existing political order and suppressing challengers.
State and Regime Stability: The summary highlights that state collapse wouldn't necessarily lead to regime collapse but might create violent, transactional political marketplaces without formal structures.
Risks of State Failure: state failure could precipitate a broader social collapse, an unfavorable outcome for all stakeholders. This becomes a more tangible risk if the elite fail to balance formal and informal economic and political mechanisms.
Preventing State Collapse: averting state collapse is feasible if the Syrian conflict's intractability is addressed, thereby reducing regional repercussions.
Local Funding and Empowerment: Investing in local, bottom-up funding is emphasized as crucial to counterbalance the state's extractive powers and to decentralize economic control.
Aid Mechanisms and Local Governance: reorienting aid towards formalizing local governance and enhancing local economic structures, moving away from informal systems controlled by elites.
UN's Role in Sustainable Development: a shift is needed in the UN's focus from humanitarian aid to sustainable approaches that bolster stability and local resilience.
Reducing NGO Dependency: Aid should aim to diminish NGOs' reliance on external resources, fostering local economic networks and value chains.
Nuanced Approach to Sanctions and Decentralization: a nuanced understanding of the impacts of sanctions and advocates for fiscal decentralization, emphasizing the need for local communities to generate and retain economic value.
Challenges of Top-Down Peace-Building: Lastly, the report cautions against exclusively relying on top-down peace-building methods, stressing the need for changes in both the political economy and the political process for lasting peace and reform.