Foreign Trade

Foreign Trade

Since the early 1950s, the value of imports has been close to double the value of exports. The two exhibited similar growth patterns, both growing slowly until the 1970s. Between 1951 and 1970, imports increased an average of 6.2 percent and exports 5.6 percent a year, and the trade balance slowly worsened. In the 1970s, the value of imports and exports increased much more rapidly. For example, the average rate of growth of imports increased 28 percent a year and exports increased 23 percent a year. In the 1980s, the trade imbalance widened further. Syria instituted austerity budgets to reduce imports drastically and to conserve foreign exchange. As a result, by the mid-1980s the trade deficit had declined from LS11.6 billion in 1981 to LS10.3 billion in 1983 and LS8.9 billion in 1984, still large but offering the hope of continued future reductions.

Imports

Syria experienced considerable growth in imports in the 1970s, fueled by the increased flow of foreign aid, the investment and construction boom that followed the October 1973 War, and the oil-price rise stemming from Organization of Petroleum Exporting Countries (OPEC) policies of the mid-1970s. Machinery and equipment emerged as the most rapidly growing import segment. Increased construction necessitated more imported semiprocessed goods, such as cement, iron and steel rods, and other raw materials. Private consumption also increased, requiring ever greater imports of sugar, cereals, dairy products, foodstuffs, pharmaceuticals, and other products.

Public sector trading firms imported most of these commodities. In 1976 public sector enterprises accounted for 72 percent of total imports. In 1984 public sector enterprises retained the lion's share of imports, accounting for about 79 percent of the total, excluding military materiel. In the 1980s, the government implemented a policy to curb public and private sector imports. The policy was part of the general austerity pervading economic planning and a way of maintaining rapidly depleting foreign-currency reserves. Because of the large volume of consumer goods and industrial inputs that entered Syria via the black market in the 1980s, official import statistics must be treated as rough indicators of actual import figures. Informed estimates placed the value of black market trade at about US$1 billion in 1985. Officially recorded imports fell from LS19.8 billion in 1981 to LS17.8 billion in 1983 and to LS16.2 billion in 1984. In February 1983, the government called for a partial suspension of industrial imports to ease balance of payments problems. Officially recorded private sector imports fell from LS2.1 billion in 1983 to LS1.3 billion in 1984, reflecting industry's increased resort to the black market, the impact of government austerity programs, and long waiting periods for import permits and letters of credit. In 1986 the government reformed letter- of-credit regulations to ease bureaucratic delays for private sector imports.

In the 1970s, Syria diversified its sources of imports. Western Europe became Syria's most important supplier, accounting for 49 percent of total imports in 1975 and 56 percent in 1976. By the 1980s, the direction of Syria's imports had changed drastically. Between 1980 and 1984, the European Economic Community's (EEC) share of exports to Syria fell sharply, ranging between only 25 to 32 percent of the total. Since 1982, Syria has experienced a tremendous increase in imports from Iran and Libya, largely in the form of oil shipments. The percentage of Syria's imports from Iran in 1983 was 26.1, but the figure fell to 22.7 percent in 1984 as a result of decreased shipments of Iranian oil. Imports from Libya climbed from LS37.6 million in 1983 to LS1.24 billion in 1984, or 75 percent of Syria's total imports from Arab states that year. The Federal Republic of Germany (West Germany), France, Italy, Japan, the German Democratic Republic (East Germany), and the Soviet Union were Syria's most important suppliers in 1984. Oil, machinery, transportation equipment, iron and steel, cereals, sugar, and produce were the main imports.

Exports

Syria's growing exports of crude oil and the sharp rise of world oil prices in 1973-1974 produced a steep increase in the value of exports in the 1970s. The value of petroleum exports rose from LS129 million in 1970 to LS2.7 billion in 1976, with crude oil exports alone increasing from LS291 million to LS1.6 billion from 1973 to 1974. In the 1980s, however, Syria experienced a steep decline in the value of exports because of falling world oil prices and reduced oil exports. Syrian statistics claim that the value of oil exports shrank from LS6.5 billion in 1980 to LS4.6 billion in 1984; other sources state that the drop was from LS5.2 billion to LS3.6 billion. Crude oil and oil products exported fell to 7.8 million tons in 1980, peaked at 8.1 million tons in 1982, and nosedived to 6.8 million tons in 1984. In 1980 exports totaled LS8.3 billion and fell to LS7.35 billion in 1984. The overall index in the volume of exports fell from 100 to 95 in 1983.

The value of cotton exports totaled LS310 million in 1970, LS664 million in 1980, and over LS1 billion in 1984, the record harvest year. The value of cotton exports in 1984 equaled 14.8 percent of Syria's total exports and 29.3 percent of nonpetroleum exports. In 1984, petroleum and cotton exports together accounted for 64 percent of the country's total exports. In 1985 the figures for cotton exports fell by nearly 30 percent, and the price of cotton on the world market dropped from US$1,800 a ton in 1984 to about US$1,400 a ton in 1985. Major buyers in the 1980s included the Soviet Union, Algeria, Italy, and Spain.

In addition to cotton and petroleum, Syria exported phosphates and small quantities of diverse goods. Phosphates generated LS106.3 million of export revenues in 1983. The 1981 to 1985 Five-Year Plan envisioned an increase in phosphate production to 5 million tons by 1985, generating LS580 million in export earnings. Targets fell far short of the goal but preliminary 1986 figures reflected a record increase in production. Export of textiles, chemicals, glassware, and a variety of agricultural products also earned small amounts of foreign exchange.

In the 1960s, Syria's major trading partners were East European states, but in the 1970s the direction of trade shifted to Western Europe, as the government pursued limited economic liberalization policies. In 1976 Western Europe (primarily the EEC) provided the main markets for Syrian exports, accounting for 57 percent. East European and Arab countries accounted for 25 and 11 percent of total exports, respectively.

In the 1980s, Syria experienced another shift in the direction of trade. Exports to Western Europe had risen to 61.6 percent by 1980 but fell to 35.7 percent in 1984. In 1980 the East European share of Syrian exports totaled only 16.1 percent but rose to 43.8 percent in 1984, clearly indicating the return to those markets. However, in contrast to the 1960s, when East European states served as the main export market for Syrian goods on a cash basis, in the 1980s much of Syria's East European trade occurred as countertrade or barter deals as a result of Syria's severe shortage of foreign exchange. In 1985 Syria concluded barter deals with Czechoslovakia and Yugoslavia, exporting phospates in exchange for engineering and construction equipment and industrial raw materials.

To boost trade, Syria also signed important treaties of friendship and cooperation with East European states in the 1980s. Syria renewed its 1980 treaty of friendship and cooperation with the Soviet Union in 1985 and signed a similar agreement with Bulgaria in May 1985. In 1984 the most important export markets were Romania (LS2 billion), Italy (LS1.4 billion), Soviet Union (LS838 million), France (LS877 million), Spain (LS240 million), Algeria (LS164 million) and Iran (LS164 million).

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