What does an emphasis on human and sustainable development in the new Five-Year Plan mean for Syria’s future?
Charts by Dana Kassab
Mohammad Fathi, a young father who works for an industrial company, says that since Syria started its transition to a social-market economy in 2005, the prices he pays for food and fuel have skyrocketed.
While the 11th Five-Year Plan continues to emphasise a free-market focus – by removing subsidies and increasing the private sector’s role – Abdullah al-Dardari, deputy prime minister for economic affairs, says the plan will improve life for people like Fathi. It will do so by improving the services and opportunities open to them by emphasising the broadly-defined category of human development – the creation of jobs and improvement of services such as education.
The plan will also promote sustainable development by seeking to reduce population growth, develop people’s skills, realise equitable income distribution, provide social protection and reduce poverty. Despite significant changes since 2005, Syria’s economy remains characterised by a large public sector and a small private sphere. A population that is increasing at a rate of 2.5 percent annually is pushing up the costs of subsidies on necessary items such as bread and oil, straining Syria’s natural resources and placing pressure on the demand for new jobs.
The former socialist economy did many good things but it cannot generate the revenues needed for the next stages of development, Joshua Landis, a US professor and the author of Syria Comment blog, said. “Syria is having to reorient itself.”
The 11th plan reorients Syria by further reducing energy subsidies and allowing prices to rise to market levels, and by upgrading infrastructure and investing in core industries with the intention of creating jobs that lead to sustainable sources of income. Additionally, the plan aims to reduce disparities in social services and infrastructure among Syria’s governorates and to distribute economic investment projects more evenly.
The plan shifts away from industry subsidies, using the funds saved by this measure to introduce more comprehensive social-welfare programs. Many fuel subsidies were removed in 2008 under the 10th plan but by 2015 the government plans to remove the remaining energy subsidies – which cost 5 percent of GDP in 2009, according to the IMF – and phase out some blanket subsidies in other areas, such as in agriculture and water.
“The energy deficit [the amount lost by the government through energy subsidies, which totalled some SYP 1.3trn (USD 27.8bn) during the previous five years] is greater than the total amount spent on investment during the 10th Five-Year Plan,” Dardari said. “If we raise prices to market levels, we can use the saved money for development and social services.”
A public unemployment insurance fund is in the works. It will provide unemployment benefits and training as well as monthly benefits for Syrians living below the poverty line. In the health sector, Syria is aiming to increase expenditures on health care to about SYP 4,678 (USD 100) per capita by 2015.
Additionally: “We will expand free education both in terms of quality and quantity, and do the same in health care,” Dardari said. He said that Syria will spend 30 percent of its public-investment expenditures – a total of SYP 2trn (USD 43bn) – to achieve its human-development goals.
The new plan also seeks to decrease the population growth rate from 2.45 percent annually to 2.1 percent by 2015. The plan said it will raise the legal marriage age – but did not specify to what age – to help achieve this goal. The Syrian Commission for Family Affairs is dedicating SYP 2.1m (USD 46,000) towards “population development”.
Having a balanced population is considered key to a higher standard of life for all, Amer Hosni Lutfi, head of the State Planning Commission, said.
Simultaneously, the plan aims to create new jobs to employ the growing population.
“We mean to create not just any job, but decent work opportunities,” Lutfi told Syria Today. “This will lead to high income and more spending, which will stimulate the economy.”
The plan aims to create new jobs within targeted industries, such as irrigation. The Ministry of Irrigation will invest SYP 202bn (USD 4.4bn) in projects, including building new dams and rehabilitating old dams and state irrigation networks. As oil revenues decline, Syria will also focus on industries that it considers more sustainable in the long-term, including agriculture, manufacturing, electricity and tourism.
Saadallah Agha al-Qala, minister of tourism, said tourist figures had almost doubled between 2009 and 2010, rising last year to some 8m. This, he said, provided SYP 330bn (USD 7bn) – or 12 percent of GDP – and employed 800,000 people by the end of 2010.
“Syria has amazing things to see, comparable to Turkey,” Landis said. “But it must do much more to attract people as its total visitor figures are still significantly lower than elsewhere.”
In the current plan, Syria aims to increase the number of tourists at an annual average of 12.5 percent to reach 12m tourists by 2015. To achieve that, it is investing SYP 33bn (USD 717m) in tourism. This investment will provide jobs for 360,000 more Syrians, the plan projects.
Rough road ahead
Some analysts argue that the plan does not go far enough and continues to focus on unsustainable areas of the economy. The public sector will still remain larger than many economists say is viable, costing the government money that could be invested elsewhere. In addition, some traditional areas that are not sustainable – such as agriculture – will still be encouraged.
“The 11th FYP does not propose to cut jobs in the public sector, which is a huge cost to the state,” Landis said. “It should also be careful not to focus on unproductive and water-intensive areas such as agriculture and industry when the money could be better spent on retraining people to work in more productive areas.”
However, the plan allocates more than seven times the amount of money to human development such as health care and education (SYP 2trn) than to agriculture (SYP 275.5bn). Such a statistic gives hope that minimising poverty and boosting living standards may be achievable.
Ensuring that Syria’s poor benefit from development is key to the country’s future, according to Maamoun Fahham, a local economist who has advised the government on sustainable development. Anecdotal evidence suggests poverty has increased since a 2004 study by the United Nations found 11 percent of Syrians lived in extreme poverty.
“This is the main concern because sustainable development cannot be achieved without this group,” he said.
I wrote this article together with British journalist Sarah Birke for Syria Today magazine.