Webcast Recap

The economies of Syria and Lebanon have been characterized by trans-border dynamics that have shaped relations for centuries. The history of this complex relationship must be analyzed in order to understand the most recent political and economic developments, according to Elizabeth Picard, a Director of Research at the Institute for Research and Study on the Arab and Muslim World (IREMAM), Aix-en-Provence, France and a Woodrow Wilson Center Public Policy Scholar.

Since their creation as independent states, she argued, it has been clear that Syrian and Lebanese interdependence based on geographic continuity and complementary economies would continue. From the 1920's to the 1950's the relationship was characterized by independent economic relations with some cooperation predominantly through informal networks. This period was followed by strong Syrian economic intervention. After the withdrawal of Syrian troops in April of 2005, the Lebanese ruling elite sought to put an end to the authoritarian and corrupt system formerly imposed upon Lebanon, restructure Lebanese-Syrian relations and demand full respect of Lebanese sovereignty. Many propose that Syria and Lebanon ought to return to pre-1975 relations, while others call for full Lebanese sovereignty and economic independence, suggestions Picard challenges. In an age of globalization, where bilateral cooperation takes place among numerous international agreements and frameworks, the relationship is reinforced.

The informal Syrian-Lebanese networks were organized by and for the benefit of the ruling elite in Beirut and Damascus, which were inter-related by family links and social networks, Picard explains. Although at first Syria sought to seek an independent economic path based on agriculture and light industry, protectionist policies, and state investment, it moved away from this strategy over time. The Syrian market opened its doors to Lebanese entrepreneurs and capitalists, while Syria benefited from the Lebanese banking system.

Today the economic relationship has been institutionalized and strengthened through international frameworks including economic agreements with the European Union and bilateral treaties. Labor flows have become an important aspect of the relationship that has benefited Lebanon by producing a cheap workforce, while providing remittances to Syria. In light of the complexity of these networks, she argued, it is correct to say that severance at the national level would not be a solution to restoring Lebanese sovereignty. These networks are extremely resilient and have resisted previous attempts to separate the Syrian and Lebanese economies, contends Picard.

She contended that, the future of Syrian-Lebanese economic relations will continue to converge into the transformation of informal networks into an established framework that will govern economic activity in the region. Lebanon continues to be seen as the arena to employ Syrian capital, while the economic edge rapidly expands in Syria's favor. In the long term, Syrian tampering with national economic policy must cease in order to allow for free market competition, economic growth, and ultimately democracy.

Steven Heydemann, Director, Center for Democracy and Civil Society, and Research Associate Professor at Georgetown University, noted that there should be a greater focus on the economic and social dimensions of the Syrian-Lebanese relationships in the political debate. It is important to understand the economic tensions between the two countries and the obstacles impeding further economic integration.

He contended that, these informal arrangements are organized around large scale forms of criminality that are anchored in cross border networks that tend to compete with one another. But many reflect forms of economic interdependence and complementarity between the two countries that are much deeper. Heydemann explained that this economic activity has created a regional economy involving the movement of goods and services, including labor and capital, from Syria to Lebanon, and remittances and consumer goods from Lebanon to Syria. The question is how the political crisis will affect economic relations between Lebanon and Syria, and if Lebanese economic nationalism will lead to an economic rupture between the two countries, or if they will follow the path towards cooperation.

These changes show Syria and Lebanon moving into a higher degree of integration, where the gap between the formal and informal economies is becoming less meaningful than in the past, Heydemann said. However, he noted that the influence of globalization and international arrangements have on patterns of economic governance should not be overestimated. International forces will not lead to further economic integration; the relationship will continue to be governed by informal networks that benefit actors on both side of the border. In the context of the border between Syria and Lebanon that has become increasingly militarized, in the presence of international observers, and increased sensitivity to cross border activity, it is more likely that economic flows will diminish in the short term and that cross border activity will remain at the informal level and will not provide a deepening of an integrative economic zone.

Mona Yacoubian, Consultant and special adviser to the Muslim World Initiative at the United States Institute of Peace, offered her insights on the Lebanese-Syrian relationship from the Syrian perspective. Lebanon and Syria have maintained a close relationship because of their historical legacy, since Lebanon was part of greater Syria, noted Yacoubian. There has been no real demarcation of the border, which is proven by the fact that there has not been an exchange of embassies. There is a vast socio-economic network that crosses the border, from the perspective of the Syrian regime, maintaining this network is important to regime survival, explained Yacoubian. She describes these informal ties as a type of crony capitalism or informal power system, which derives benefits from bribery and smuggling. These networks have perpetuated the weakening of state institutions on both sides of the border, encourage the status quo, and perpetuate rent-seeking behavior.

Furthermore, Lebanon serves as an important outlet for surplus Syrian labor. Currently there are 300,000 permanent Syrian workers in Lebanon, and an estimated 700,000 seasonal laborers. Trade is also an important factor: the Syrian market is the destination of at least 35% of Lebanese exports. The two economies are interdependent on one another, the informal sector, and the vested interests of groups on both sides of the border will ensure that these networks persevere, Yacoubian noted. The challenge is to find a way to transform these opaque networks to transparent free market enterprises that respond to market signals and are accountable to the rule of law, she concluded.

Drafted by Azucena Rodriguez,
Middle East Program