Syria to subsidise heating oil for one million

After heating fuel cost rise fourfold in two years, households with an annual income of less than $8,700 will qualify for payment of $215.

Bread is put out to cool in a working class neighbourhood in Damascus. Economic reforms have begun to hit the country's poor.

DAMASCUS // The Syrian government will begin handing out cash subsidies for winter heating oil this week to an estimated one million people, a recognition of the increasing struggle many ordinary families now face in trying to make ends meet.

Under the plan, households with an annual income of less than US$8,700 (Dh32,000) can qualify for a payment of $215, designed to help offset rising fuel prices. Heating oil costs have soared by almost 300 per cent in two years. The increase has been a heavy blow to Syria's poor, even those who have government jobs, in a country where temperatures can drop to below 0° Celsius during winter.

Abu Ibrahim has been on the ministry of education's payroll as a school janitor for 13 years and now earns a monthly salary of 10,000 Syrian pounds, equivalent to $215. That used to be enough to live on, he said, but was no longer sufficient. A father of five, he welcomed the benefits programme but warned that it fell short of what was necessary. "If we get this money it will be enough to pay for two months' worth of heating, not including hot water for washing," he said. "It's helpful of course, but it's not enough.

"I still won't be able to pay all of my bills, and I will not sit and watch my family be cold. My wife has just given birth and they must be warm." It is not uncommon in poorer, and even in middle-class Syrian neighbourhoods, for families to bypass electricity meters, stealing power from the national grid with dangerous jury-rigged cables. Abu Ibrahim said he had so far resisted doing so but that this year he would have no other choice. "I don't want to be a thief but if I have to steal electricity to keep my family warm, of course I will do that."

One of the interesting aspects of the cash payout is the decision to set the eligibility threshold at $8,700, a figure above the basic subsistence level in Syria. Economists here see that as an acknowledgement that it is not just the poor or unemployed who are now having serious financial difficulties, but even those with two or even three incomes per family. When Abu Ibrahim, 52, the school janitor, works a second job, his total monthly income is $370. At that level, even if his wife earned the same basic salary as his, the family would be below the subsidy threshold.

"Unfortunately, the fact is that I no longer earn enough to cover the full costs of living," he said. "If nothing goes wrong, we just about get by, but if one of the children needs to go to the hospital, it unbalances my financial situation. It was Eid recently and I'm supposed to buy new clothes for the children, but where am I to get the money for that from? We have nothing spare." Fuel costs have risen as a result of economic reforms, with the authorities shifting Syria away from a centrally planned Soviet-style system to a much more capitalistic set-up. That has required reductions in blanket subsidies on fuel with a view to them phasing out. Such large subsidies used to ensure that even wealthy Syrians benefited from market prices well below the international market rate.

While popular, those subsidies had become too expensive for the government to maintain in the face of falling income from oil exports and a budget deficit that rose above $5 billion in 2009. Syria's team of economists entrusted with modernisation has long warned that development will involve hardships and any doubts they were right have now disappeared. "It's difficult to evaluate the real changes to economy, but I would estimate that the poor are now 20 per cent worse off than a year ago," said Abed Fadilah, the vice dean of Damascus University's economics faculty.

"That is not to say that poverty has increased by 20 per cent but those who were a little above the poverty line have now been pushed closer to the edge, and those who were right on the poverty line have now been pushed over the edge. Those who were already impoverished, those at the very bottom, have just sunk further down." While dented by the international debt crisis, Syria's economy is expected to grow this year at a projected three per cent. Some leading economists, however, warn that expansion - one of the benefits of the ongoing reforms - is far from even. Tourism and banking sectors have been enjoying a boom while agriculture, the main source of income for the majority of Syrians, has been hit by drought. Hundreds of thousands of smallholders have fled their parched land and moved to overcrowded cities, swelling an urban underclass.

Manufacturing is also an area of concern and fears that uncompetitive Syrian industries would be damaged by a free trade deal with Europe are a major reason for Damascus putting on hold its anticipated association agreement with Brussels. "Economic growth has not yet benefited the general population," Mr Fadilah said. "Those in the top sectors of society are seeing the benefits; property owners, real estate, finance, tourism - they are where the growth is concentrated.

"Other parts of the economy are stagnant or contracting. In the manufacturing sector, there is zero growth. So the added value in the Syrian economy is reaching those who own, it's reaching the bankers and the brokers. The benefits of growth have gone to the top 10 per cent of society, the other 90 per cent have not seen any benefit." Syria's state planning commission, in conjunction with the United Nations World Food Programme, has undertaken initiatives to monitor and tackle the worst poverty, typically found in the rural north- eastern Jazeera region, where emergency food aid packages are being distributed. By contrast, Damascus, where Syria's wealth is concentrated, was this year ranked as having the eighth most expensive office space in the world, more costly per square metre than New York City.

While the rich enjoy the fruits of economic reform, there are concerns that despite a call by the president, Bashar Assad, to narrow the wealth gap, the divide is growing. "The wealthy are reaping the benefits of the economic growth and, at the same time, they are the ones who avoid the taxes," said Mr Fadilah, the economist. "It's a risky situation for Syria. The government's role in the economy is shrinking, the private sector is expanding, but it has not bothered to take over the sense of social responsibility."

Most, or all, of the $5bn national budget deficit can be rectified if Syrians paid the taxes according to the law. Tax evasion is rife, and experts say the rich steal the most from the state's coffers. Tahsin Shedadeh is a Syrian businessman and an official at Hafed al Namea'a, an Islamic charity that assists some to 20,000 people who cannot meet their basic living expenses. Much of the organisation's resources are gifts from wealthy Syrians and the economic crisis has this year seen donations drop by 20 per cent.

"The government does help the poor but it's not enough to cover all the needs of all the people," he said. "Charities are here to support the authorities but I would say, definitely, the rich do not do enough to support the poor. "Our religion and culture is such that they should. But we are going more towards the western way of doing things, which means it's all about more money, getting richer and I don't know why that is but it seems to be a fact of life."