Arab League Enters Syria as Violence Rises. Syria’s Deficit Spending Explodes but Government Hangs On
Posted by Joshua on Thursday, December 29th, 2011
Arab League monitors are visiting a number of restive Syrian towns and cities, including Hama, Idleb, and Deraa.
Though Syria has made some concessions to the monitors since they began work Tuesday, government forces have at the same time been pressing ahead with attempts to put down peaceful protests in Hama, Homs and other parts of the country. Activists said at least 39 people have been killed by security forces in the two days since the observers arrived.
The government released 755 prisoners following a report by Human Rights Watch accusing authorities of hiding hundreds of detainees from the observers. It was the second concession in two days to the Arab League.
On Monday, the army pulled some of its troops back from the city of Homs after bombarding it for days and killing scores of people. It allowed the monitors to visit and as they came, tens of thousands of protesters poured into the streets, chanting calls for the execution of President Bashar Assad.
The crisis in Syria was officially internationalized when members of the Arab League’s observer force arrived in Syria last Thursday. The following day, two car bombs exploded in front of state security offices in Kfar Sousa, Damascus, killing 44 and injuring another 100. The issue of who was responsible for the attack remains in dispute. Three days later, a second group of Arab League monitors arrived in Syria as violence in the central city of Homs intensified. Charged with monitoring the Syrian government’s implementation of the Arab League’s peace plan, the monitors have thus far been met with mixed emotions and varying levels of violence and disorder.
20% Deficit next year? Economy – EHSANI writes:
I think this Syria Steps article is extremely important coming from an economics expert at Damascus University. Usually, a budget deficit of nearing 10% of GDP starts to become a problem. This note claims the following:
1- Tax revenues next year will be less than half of what they were (50% drop).
2- Income from oil sale and the public sector will also drop.
3- The budget deficit as a result will be syp 529 billion out of a total budget of syp 1326 billion. In other words, 40% of expenditures will be unpaid for by revenue.
4- The resulting deficit of syp 529 billion is nearly $9 billion or 18% of GDP and this is assuming a GDP of $50 billion. The actual deficit/gdp ratio could top 20%.
5- The government has no access to credit markets. It never developed a local bond market and it can never access the international credit markets.
6- And here is the shocking solution: Force powerful companies, banks and even large car dealers to lend to the government especially that many made “enormous profits during the economic reform and liberalization process”. The way to do this would be through “tashreei” or passing laws that specifies the amounts, rates and tenor of these loans per company and even “individual”.
7- let me summarize it in simple terms: The state is only able to collect 60% of every syp it spends. It cannot borrow to bridge the gap. The only way to bridge the gap is to go to those companies, banks , car dealers, etc. that are thought to have benefited in the past and force them to lend to the state at rates and amounts that the government itself specifies.
The value of the Syrian Pound to the US Dollar has stabilized in the last few days on the back of the decision of the Central Bank to bring the national currency’s official rate closer to its black market value. The US Dollar now trades at around 59 Pounds per US Dollar from above 60 Pounds at the end of last week. (From Syria Report)
Government to Cut Overhead Expenses by 25 Percent – by Jihad Yaziji at Syria Report, 26-12-2011
The Syrian Prime Minister has issued instructions to all State administrations requiring them to reduce all their overhead expenses by 25 percent, excluding salaries.
The letter, which was issued by Adel Safar on December 18, says that the cuts must be made in various accounts including transport, stationery, office equipment, subscription to publications, staff bonuses, advertising, public relations and maintenance of equipment.
Both investment and current expenses are targeted by the measure.
The 2011 budget approved at the end of last year projected a budget deficit of 5.8 percent of GDP. However, a range of expenditure measures has been approved since last March by the Government in a bid to appease the protesters that have been taking to the streets across the country, leading to a significant hike in expenses. There is no estimate on how much these measures are going to increase the fiscal deficit.
The Syrian President also enacted last week the 2012 budget that forecasts a 58 percent increase in expenses to SYP 1,326 billion. This large increase is mainly due to the fact that expenses previously not accounted for in the state’s budget, namely energy subsidies, are now taken into account. The actual year-on-year difference in expenses with this year is ‘only’ 15 percent, according to the Minister of Finance.
The deficit should rise to SYP 335 billion in 2012. On the basis of this year’s Gross Domestic Product, the deficit would represent some 12 percent of GDP. It is not clear whether the 25 percent reduction in expenses required by the Government enters into account in this budget.
Current expenses are inceasing to SYP 951 billion and investment allocations standing at SYP 375 billion.
Many analysts had predicted the Syrian economy would collapse on the back of the political unrest, the economic downturn and the significant hikes in Government expenses. However, to this date the Syrian authorities have managed to keep a lid on inflation and to limit the decline of the Syrian Pound
Because of the absence of any data and the overall lack of transparency it is difficult to explain the performance of the Government. The decline in investment and spending has reduced imports and therefore reduced pressure on the national currency, while the good raining season has led to good crops, which in turn helped limit price increases.
Other analysts argue that the Government has been receiving outside help in the form of capital transfers from Iran or Iraq but there is no tangible evidence to confirm these assertions.
However, the closing weeks of 2011 have been difficult with the first large scale shortages of heating oil and domestic gas affecting Damascus. The Syrian capital is also facing daily power cuts of up to 3 hours, while until mid-November it was still largely void of any cut.
The last few weeks of the year have also seen increasing calls for strikes and boycotts. While the impact of these calls are discounted by Damascus-based analysts, in the countryside and many other cities they are relatively well enforced contributing to the general decline in business activity and government revenues.
Military repression in Homs is changing. Video of two T72s shelling Bab Amro sent by Thomas Pierret
This seems to be the first recording of tank fire or shelling of a Syrian city by a tank or heavy artillery. Earlier claims of tanks shelling Hama or ships shelling Latakia cannot be verified.
U.S. quietly preparing to support Syria opposition: report, December 29, 2011, The Daily Star
BEIRUT: White House officials are quietly preparing options to aid the Syrian opposition, Foreign Policy magazine reported.
In a blog posted Wednesday, the current affairs publication quoted two administration officials as saying the National Security Council (SNC), a body that aids the U.S. president in weighing national security policies, has commenced an informal, quiet interagency process of discussing options to assist the Syrian opposition.
Only a few select officials from the departments of State, Defense, Treasury and other agencies are engaged in the discussions headed by NSC Senior Director Steve Simon, the magazine reported.
The two officials, who were not taking part in the NSC meetings but familiar with the proceedings, said options being considered include setting up a humanitarian corridor or safe zone for civilians in Syria along the Turkish border, providing humanitarian assistance to the Syrian rebels, offering medical aid to Syrian clinics and engaging more with the external and internal opposition.
The interagency is now looking at options for Syria, but it’s still at the preliminary stage,” Foreign Policy quoted one official as saying. “There are many people in the administration that realize the status quo is unsustainable and there is an internal recognition that existing financial sanctions are not going to bring down the Syrian regime in the near future” the official said…..
Members of the Obama Administration are confirming tonight that the National Security Council has been instructed to begin seeking options for US intervention in Syria, including what they call the “unlikely” option of setting up a no-fly zone. …
….Abdo said many students in Idleb had stopped going to school and were instead on the streets calling for the downfall of the 41-year-old Assad family dictatorship.
“We are planning to close the international roads which link Aleppo with Damascus, Lattakia with Aleppo, and Idleb with Turkey in the near future,” he said. “We will do everything that hurts the Assad regime….
SNC president Dr. Burhan Ghalioun addresses the nation on Christmas and New Year -“The regime must be stopped by any means possible…”
U.S. arms sale to Iraq will proceed: Despite the recent political turmoil in Baghdad, the United States will sell nearly $11 billion worth of equipment and training to its military.
Syria’s Torture Machine – BBC 4
An investigation into the detention and torture of Syrian civilians, featuring shocking video evidence of men, women and children being subjected to beatings, whippings and more elaborate…
Des Libyens épaulent les insurgés syriens Figaro – Libyans have gone to Syria to fight.
Syria’s deep divide A group of Syrians gather in The Cafe to debate their country’s future. al-Jazeera
MA: What do the Syrian people have to do, in terms of escalation, in order to put an end to this regime, the most tyrannical in the Arab world? Put differently, when might this regime surrender?
TD: What the Syrian people need to do is continue the revolution, without violence, sectarianism, and asking for international intervention. This path, which seems long and heavy with casualties, is in fact the shortest and has the least casualties. What the Syrian opposition needs to do is to stop wasting time and jumping around from one place to another. It has to dare and put forward visions and practices right here and now in order to help dismantle the stumbling blocks of the Syrian people’s intifada. One stumbling block, for example, is the notion that the intifada is a “rural” one, meaning that it is “regional” and limited to certain classes and segments of society, that it needs to become more urban and adequately patriotic, with an acceptable platform and a clear program. The opposition also needs to stop imitating other experiences in spite of the importance of benefitting from them. A lot of people thought our trajectory was going to be similar to that of Egypt and Tunisia. However, with the exacerbation of this barbaric repression, they proceeded to pander to the Libyan model instead of standing first and foremost with the Syrian model—which has no equal…..
The Syrian Model
MA: You mentioned distinguishing the Syrian revolutionary model and how it differs from the Tunisian, Egyptian, and Libyan models. Can you elaborate on this?…..
Syrian unrest forces Hamas to plan for uprooting leadership across Mideast, Associated Press, December 28
RAMALLAH, West Bank — Alarmed by bloody unrest in Syria, the Hamas militant group has pulled out many of its lower-level cadres from its Damascus headquarters and made contingency plans to move its leadership to locations across the Middle East, senior Hamas members have told The Associated Press.
The National Coordination Body for Democratic Change in Syria [NCB] reports that a meeting was held in Cairo in the past two days between delegates of the NCB and the Syrian National Council [SNC], to continue the work of unifying the Syrian opposition. The atmosphere between the delegates was positive and co-operative during two sessions, and as a consequence they established a basic understanding about the tasks and rules for the expected transitional phase regarding multiple political and procedural aspects.
The most important agreement under discussion between the two delegations was to establish a Syrian General Congress under the auspices of the Arab League, to bring together representatives of the opposition of both of the blocks outside and inside Syria, public figures and independents, as one opposition group so that a Committee would emerge with a unified voice to officially represent the opposition in all forums…The NCB Delegation in Cairo27 December 2011