Posted by Joshua on Sunday, June 1st, 2008
An Economic Plan for Syria's Future
For Syria Comment: June 1, 2008
Jay Solomon of the WSJ quotes Ambassador Imad Mustapha today as saying: "Peace between Syria and Israel can be achieved, but it requires the full commitment of the U.S. Syria is genuine in its desire to have the best relationship with Washington".
U.S. Strategists think that Syria's openness to talks is driven by its need to reduce diplomatic and financial pressures from the Bush administration — not a real commitment to a settlement. Washington charges Syria with covertly developing nuclear technologies and undermining pro-Western governments in Lebanon and Iraq.
One noteworthy paragraph in the Solomon article states that:
"Private American representatives who have met with Syrian President Bashar Assad in recent months said he is intent on lifting U.S. financial sanctions as part of a broader peace agreement with Israel. They also said the Syrian leader would like to see his nation's economy more directly integrated into the global economy".
Over the past two years, I have maintained that Syria's economic performance has been largely disappointing. The fiscal situation has steadily deteriorated thanks to an expanding population, a generous subsidy program, and an inadequate tax base. Economic growth has not kept pace with growth in the labor force. Syria's dwindling oil production and export earnings have finally forced the Government to lift some of the subsidies that are draining the state treasury, but this is not enough.
When the U.S. decided to punish Syria's leadership with economic sanctions, many dismissed the tactic as ineffective. In reality, these measures have been having a devastating effect on key sectors of the economy. Just this past week, the Syrian civil aviation system has come to a virtual halt as Syria's national airline had to idle its fleet due to a lack of spare parts for its Boeing planes. Syria is hemmed in. Buying Europe's Airbus has not been possible thanks to economic sanctions. The Russian planes have suffered from safety problems and a lack of spare parts.
The country's energy industry has suffered a similar fate. In order to keep up with massive demand, the country needs billions of dollars in investments in new power generating plans. The sanctions have made this very difficult in spite of the Government's effort to tap investors from the Gulf region. Late this week, Mr. Rami Makhlouf decided that he would not sell his 69% stake in Syriatel "for now". It would seem that President Assad's cousin is making a virtue of necessity. Turkcel decided to halt the negotiations to acquire Syriatel following the application of intense pressure from the U.S. Treasury.
That the Syrian President is intent on lifting the economic sanctions on his country is an implicit admission that the sanctions are having an effect on the
country's economic outlook.
The truth of the matter is that even without the sanctions, the pace of economic reform in Syria has been painfully slow. After repeated promises to launch a securities exchange, the project is yet to see the light of day. The team in charge of the project has failed to deliver. One must either question the competency of those in charge or question the leadership's commitment to this project.
Syria will not be able to turn the corner economically unless it fully embraces the concept of privatization. The government must get out of the business of running failing businesses. The red ink and constant bleeding at these state owned enterprises must stop. The socialist dreamers perched at the apex of the ruling party must admit the failures of their 45-year experiment.
The government has placed hiring freeze on new employment as it attempts to staunch further bleeding of its coffers. At least 250,000 jobs have to be created every year to absorb the swelling ranks of Syria's population. Only the private sector can provide these jobs, but so far, the government refuses to unleash the full capabilities of the market. Consequently, it hobbles along, tethered by bad management, foreign sanctions, and the lack of decisive leadership at the top.
Syria must privatize and start its stock market at the same time. The newly privatized companies will be the first candidates to list on the exchange and
will add much needed liquidity to the market. Money that is now pouring into largely unproductive real estate deals should be directed toward industry. If private capital is allowed to take over state industries, employment will rise and not fall. Profitability and accountability will be restored. Businesses that cannot compete will disappear; those that can will thrive. Resources will be more efficiently employed through the free working of the market place, rather than mis-allocated by the whims of clueless government planners.
Syria's leadership must embrace a new economic course with urgency. The economic sanctions have not helped but neither have the government's own policies.
The President himself must take ownership of this critical issue. He must explain to the nation his own economic vision and how he plans to execute it.
The time has come to pick a new economic czar for the country that believes in privatization and free markets. This person must be introduced to the nation during a press conference with the President making the following introduction:
"Dear fellow Syrians: The time has come for our nation to join the global market place in order to raise the living standards of our people. While we have made some strides in this direction by embracing the concept of socialist market economics, we must do more.
Governments do a lousy job of running businesses. This task must fall to the many able entrepreneurs of our nation. Socialism is an experiment that has not worked. It is time that we admit this and make a clean break from the past.
I picked Mr. X to be the top economic policy maker in the country. He will report to me directly and will carry out my vision as I outline it tonight. Our first task will be to set up a privatization committee that will oversee the sale of the state owned businesses. The working of this group will be fully transparent. Independent international advisers will be retained by the government to help ensure that the state sells its assets at the highest possible price. Every effort will be made to address the employment situation. It is my conviction that economic growth will accelerate as the state moves assets into private hands.
Higher economic growth will lead to more employment and more jobs. Dismantling a system that has been in place for the past 45 years is not going to be easy. We will not be deterred as we make this historic transition together. May God bless the Syrian Arab Republic and its people. "
Can a Syrian-Israeli Peace Agreement Be Reached?
By Joshua Landis
Interviewer: Bernard Gwertzman, Consulting Editor
Council on Foreign Relations, May 22, 2008
Joshua Landis, who writes the blog Syria Comment and is regarded as a leading Syria specialist, says a prospective Syria-Israel peace agreement is "very feasible" but is skeptical whether it can be achieved quickly. For there to be a deal, Landis says, Israel would have to return all of the Golan Heights, and Syria would have to rein in Hezbollah and stop aiding Hamas. Landis adds that it will be a "bitter pill" for Syria to stop supporting militant Palestinian groups…..
Syria is changing its legislation in order to attract its large number of expatriates back to the country, bringing their skills and capital with them.
President Bashar Assad himself lived in the UK for many years before coming to power in 2000 after the death of his father.
Measures include economic incentives and exemptions from military service. The latter was one of the main reasons expatriates would not even come back to the country to visit their families.
Baha Issa, in his 30s, lived for more than 15 years in the UK and Dubai. He has now left his job as a communications officer for Microsoft to work at the newly established Sham Holding company in Syria. …..
Dan Meridor, who was Yitzhak Shamir's confidant, told Channel 10 this week that Shamir, too, was completely serious about the possibility of an accord with Syria. He says that in 1991, Shamir asked the Americans to add Syria to the Madrid Conference. Meridor also says that Uri Saguy, who was then head of Military Intelligence, convinced Shamir that the first Gulf War had shifted the regional balance of powers and created ideal conditions for negotiations with Syria. But then Shamir had to make way for Yitzhak Rabin.
Though he hasn't been in uniform for some time, Saguy never abandoned the Syrian channel. From time to time, he gets on a plane, in his current capacity as the defense minister's adviser on Syrian affairs, and meets with the people whom Assad, Sr., and then Assad, Jr. entrusted with the Israeli portfolio.
The Syrians are very familiar with his positions. They've read the interviews he gave Haaretz in the past year. In one, Saguy said that at the Shepherdstown talks with Syria in January 2000, then prime minister Ehud Barak got cold feet and missed a historic opportunity for peace with the neighbor to the north.
In the current contacts with Damascus, Saguy persuaded the senior political echelon to forgo the hopeless demand that Syria commit from the outset to cut off its ties with Iran. He reminded them that in the negotiations in 2000, Barak and then U.S. president Bill Clinton did not make this demand of the Syrians. They were satisfied that Syria's representative at the talks, then foreign minister Farouk Shara, did not object to the Shepherdstown document containing a commitment from each of the parties "to abstain from cooperation with a third party in a hostile alliance of a military nature."
Nor did the Syrians protest the section stating each party would ensure its territory "will not serve the military forces of a third party, under circumstances that would adversely affect the other party's security." Hence, if it weren't for its stubborn insistence on a few dozen meters on the eastern bank of the Kinneret, it's quite possible that Israel would now be holding a peace contract mandating that Syria prevent the infiltration and presence of organizations that threaten Israel….