How neoliberal policies fueled the fall of Assad

TEHRAN – The abrupt collapse of the Damascus government has ignited a robust debate over the root causes of Syria’s enduring instability.

While some attribute this turmoil to external pressures, such as Western sanctions and authoritarian governance, one critical factor remains underappreciated: the neoliberal policies implemented during Bashar al-Assad’s presidency. These market-focused reforms, heralded as harbingers of growth and modernization, instead bred widespread discontent among Syrians, weakening societal structures and paving the way for extremist groups to emerge.
To understand the impact of these policies, it’s essential to examine the context in which neoliberal policies were introduced. During Hafez al-Assad’s presidency, beginning in 1971, the Ba’ath Party built a comprehensive welfare state focusing on national production and public services. Despite the authoritarian nature of the government, this approach yielded tangible benefits, such as free healthcare and education through university levels. The emphasis on agricultural production fostered self-sufficiency in strategic crops, leading to lower prices for essential goods. This stability supported social cohesion by guaranteeing millions of Syrians a baseline standard of living. Though limited in some respects, the welfare state offered a sense of security, underpinning a relatively cohesive society.
However, when Bashar al-Assad took power in 2000, Syria shifted from the state-led welfare model to neoliberal economic reforms aimed at integrating the country into the global economy. These reform strategies included opening markets to foreign trade, dramatically reducing import restrictions, and privatizing state-owned enterprises. Between 2000 and 2007, the number of goods restricted from importation dropped from 3,000 to just 100, exemplifying Syria’s new market-oriented stance designed to attract foreign investors. However, this also exposed domestic industries to international competition, revealing long-standing inefficiencies.
The reform of the banking sector further accelerated this transition. In 2001, the introduction of the Private Banks Law facilitated the emergence of new private banks with foreign investors, fundamentally altering Syria’s financial landscape. By 2018, Syria hosted 14 private banks, significantly foreign-owned. This shift, meant to invigorate the economy, largely failed to deliver on promised growth.
The liberalization of the agricultural sector was another contentious initiative. State farms, which had been collectively owned since Hafez’s era, were privatized, resulting in a sharp concentration of land ownership. By 2008, a mere 28% of farmers controlled 75% of irrigated land, while nearly half of the farmers held a scant 10%. This privatization decimated the agricultural workforce, which fell by 40% between 2002 and 2008. Employment in agriculture dropped from 32.9% in 2000 to a mere 14% by 2011, undermining rural economies and displacing countless workers.
The health sector also succumbed to neoliberal reform under Bashar al-Assad, marked by a shift toward commercialization driven by the EU-endorsed Health Sector Modernization Program ratified in 2003. Public health service quality and availability declined, pushing many Syrians toward privatized healthcare options. From an international standpoint, Syrian healthcare spending plummeted to a dismal 0.4% of GDP before 2010, contrasting sharply with the global norm of 5-12.5%.
A second wave of neoliberal reforms commenced in 2005 following extensive consultations with the IMF and World Bank. These included drastic subsidy cuts which, in 2008, led to diesel prices skyrocketing by 257%. Resulting production cost hikes forced many farmers to migrate to urban areas in search of employment, while industrial sectors were similarly crippled by increased expenses. Consequently, essential goods became unaffordable for many, contributing to inflation and exacerbating widespread financial strain.
The neoliberal agenda yielded uneven rewards, benefitting the elite and foreign investors, particularly from Persian Gulf monarchies, while burdening the wider population. Tax rate reductions for corporate and individual profits in the business sector exacerbated inequality, compounded by chronic tax evasion.
The neoliberal shift intensified inequalities in housing and urban development, with luxury housing proliferating for the wealthy amid a backdrop of sprawling informal settlements. The economic policies of Bashar al-Assad fostered unprecedented societal impoverishment, even as GDP grew by 4.3% annually from 2000 to 2010. These economic gains, however, benefitted only a small elite, with the GDP more than doubling from $28.8 billion in 2005 to approximately $60 billion by 2010. By 2007, 33% of Syrians lived below the poverty line, with another 30% hovering just above it.
The shift in public sector roles to the private sector starkly demonstrated the inability of market-driven reforms to achieve social equity. Neoliberal policies dismantled much of the welfare state, benefiting foreign investors and local elites while destabilizing society.
These reforms, intended to modernize Syria and integrate it into the global economy, ironically undermined stability. The reduced subsidies, privatization, and market-driven policies eroded public services, concentrating wealth while widening social divides. This widespread disenfranchisement paved the way for extremist ideologies and contributed to Assad’s downfall. For Syria’s future to stabilize, a reassessment of neoliberal frameworks is crucial.