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People walk at al-Bzoria market in old Damascus, in this file picture taken April 17, 2012.


Syrians are turning to their own resources to survive the ever-tightening economic noose placed round them and President Bashar al-Assad's regime by the spreading conflict and international sanctions.

Long accustomed to austerity and international near-isolation, people and companies are trying to soften the social impact and squeeze what they can from dwindling business opportunities as they battle inflation, currency devaluation and a calamitous fall in industrial output.

Despite the catastrophic effect of the country's bloody 16-month-old crisis on the economy, both government and the public have shown a resilience that is less surprising to Syrians than to the outside world.

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"[Outsiders] don't understand the Syrian mentality," said one young Damascus-based industrial executive, recalling how people used to drive an 80km round trip to buy cigarettes smuggled over the border with Lebanon. "This is a nation that has grown up and developed so that sanctions can't affect it."

While the claim contains an exaggeration that hints at many Syrians' stoicism and sense of national pride, its gist is echoed by other citizens amid dire broader economic indicators. Government revenues have been slashed by an international oil export embargo, annual inflation topped 30 per cent in April and gross domestic product is forecast to plunge more than 8 per cent this year, but the Assad regime has for now stopped the slide in the value of the Syrian pound – and prevented persistent mass shortages of basic goods in the main cities of Damascus and Aleppo.

In central Damascus, Dr. Salwa Abdullah said there was no shortage of drug supplies, as most were sourced from domestic factories and the rest from countries not applying sanctions, such as India. "They find a way – until now we didn't have any problems," she said, although she added that it was becoming more difficult to get hold of Western-made medical devices.

Ruled repressively by the Assad family for four decades, Syria had only very limited economic contact with the wider world until the death in 2000 of Mr Assad's father and predecessor, Hafez. While the younger Assad oversaw a period of partial deregulation and internationalization, the country remained under U.S. sanctions, as it has now done for more than 25 years.

David Butter, an independent economic analyst and former chief of Middle East research at the Economist Intelligence Unit, said that although unrest and fresh sanctions imposed since the crisis had hit the economy hard, Syria had not been as critically affected as a country more integrated in global trade and finance might have been.

"It's obviously very hard for a lot of people in Syria, it's hard for the government, but its probably at the moment something that can be coped with," Mr. Butter said. "Clearly, they've managed to stabilize the situation – the exchange rate tends to tell you that – but what you don't know is how long that can be sustained."

While economic activity has fallen sharply across the board in Syria since a popular uprising began in March last year, the degree of impact of the conflict and sanctions on business has varied widely. Centres of violence, such as districts of the third city of Homs, have been hollowed out economically after government forces bombarded them and residents fled.

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The two main cities, while less severely affected, have suffered power cuts, fuel shortages and problems in sourcing raw materials and finished goods because the conflict and sanctions have cut supply routes. Businesses that sell non-essential or imported items on the domestic market appear to have been among the hardest hit: the owner of an interior lighting company in Damascus said demand for his merchandise was down 90 per cent "because it's a luxury. People now are just buying food and the basics."

One Aleppo-based textile company owner said that while his locally made goods destined mainly for export had seen sales drop 20 to 30 per cent, a friend who imported Chinese toys for the domestic market had seen revenues plunge four-fifths.

While those kinds of steep falls have triggered layoffs in some companies, many others say they are keeping on people whom they know have no chance of finding another job during the crisis. One Damascus travel agent said he had retained all five of his employees, even though the collapse of the tourism industry has left him reliant solely on ticketing for Syrians travelling overseas and domestically.

Abdul Rahman Attar, a Damascus-based businessmen involved in industries ranging from construction to pharmaceuticals, said he was giving staff ad hoc 10-day paid holidays because "if they come they can do nothing. When you impose sanctions on business people you are forcing them to kick out their employees – and when you do that you are creating a humanitarian problem for the people."

In an authoritarian country where Syrians say it was sometimes hard to buy a banana during the Hafez era, such stories – and the wider economic suffering they highlight – are neither totally unfamiliar nor something people can do much about.

As the Damascus industrial executive put it: "Syria has been under sanctions my whole life."

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Additional reporting by Abigail Fielding-Smith in Beirut

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