Syria’s Plot to Siphon Small Business Aid
Mar 20, 2024 562

Syria’s Plot to Siphon Small Business Aid

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On March 9, Syrian President Bashar al-Assad chaired a cabinet meeting to discuss changing the structures of the government bodies concerned with investment, small businesses and micro-enterprises, as well as altering regulations on their oversight. 

The meeting followed the late 2023 publication by the Small and Medium Enterprises Development Authority of a guide on SMEs, as well as the creation of a national register of projects that includes a guide for such projects and a classification scheme for economic activities, matching approved by the United Nations. 

A few hours after the meeting, the Minister of Economy and Foreign Trade, Muhammad Samer Al-Khalil, said the essence of the problem facing this sector was administrative, primarily concerning policies, planning and implementation. After all, there are 20 government authorities concerned with planning, 27 concerned with organization and no fewer than 44 concerned with implementation, which gives a picture of the extent of the chaos facing this sector. Al-Khalil said this meant it was high time for a review, adding that the government plans to unify these authorities and clearly lay out their tasks within a new system. 

The SME authority’s director Ihab Ismandar had also pointed out prior to the meeting that the Syrian economy rests primarily on small and micro-projects, while medium-sized enterprises account for no more than 4% of GDP. 

Since its establishment at the end of 2015, the Authority has held numerous meetings with the United Nations Development Program (UNDP) to explore bilateral cooperation, especially given that economic recovery projects have been mentioned in Security Council resolutions on international aid to Syria. 

The March meeting also came in a wider context of faltering regime efforts to normalize ties with Arab states and the continued refusal by the European Union to lift sanctions or to engage in reconstruction projects. Investors continue to be wary of Syria given the Caesar and Captagon sanctions laws and American opposition to normalization. All this means that the regime is believes it is unlikely to receive the large influx of funds it had hoped would result from normalization with the Gulf states, and that it will not benefit from the lifting of Western sanctions. Moreover, expectations for international early recovery projects have been scaled back after Russia used its veto in the Security Council in July 2023 against extending resolutions over humanitarian aid. 

The Syrian regime is thus adapting to the nature of funds coming from abroad, rather than seeking to feed the national economy’s thirst for investment. It has created as many as 3,000 of “relief organizations” under fictitious names, or the names of public employees, in order to obtain international donations. 

The regime’s drive to regulate small projects comes amid discussions about supporting them, in order to seize the funds directed to these projects. It is likely to prepare lists of beneficiaries and supervise implementation mechanisms, allowing it to channel the funds to its own benefit or that of its supporters. The regime could thus obtain reasonable financial gains through administrative regulations for supervision and regulation of these projects, as well as through benefits to its supporters, whose names would be registered as beneficiaries of such projects.