Posted by Joshua on Thursday, April 30th, 2009
The release of four Lebanese generals imprisoned as suspects in the killing of Rafiq Hariri in 2005 is good news for Syria. It suggests that the investigation has turned up little or no evidence of Syrian responsibility for the assassination of Lebanon’s leader. The hope of anti-Syrian politicians that the Tribunal would act as a sword of Damocles hanging over Assad’s head is diminished. Neocons, in particular, believed that the ongoing investigation would confound attempts by the Obama administration to engage just as it would prevent Syria from successfully pressuring Israel to return the Golan Heights, which Israel snatched in its surprise offensive in 1967 and is obliged by UN resolution 242 to return to Syria in exchange for peace. [see more Landis comment below]
UN Court Releases Lebanese Generals in Hariri Case
By Massoud A. Derhally
April 29 (Bloomberg) — A United Nations tribunal investigating the 2005 assassination of former Lebanese Prime Minister Rafiq Hariri ordered the release of four Lebanese generals held in connection with the killing.
Judge Daniel Fransen of the Special Tribunal for Lebanon said the four generals held in Lebanon since 2005 are to be freed because there isn’t sufficient evidence to continue their detention, given that some witnesses have modified or retracted their statements. Proceedings were aired live from The Hague by Arab and Lebanese broadcasters and on the Internet.
There were “inconsistencies in the statements of key witnesses” and a “lack of corroborative evidence to support these statements,” Fransen said.
Former Canadian Deputy Attorney General Daniel Bellemare, who took over the investigation last year and became the court’s chief prosecutor on March 1, said he wouldn’t appeal the ruling.
The judge ordered the immediate release of Mustafa Hamdan, former head of the Presidential Guard; Jameel al-Sayyed, the former general security chief; Ali al-Hajj, the former internal security head; and Raymond Azar, the former army intelligence director. All four were arrested in 2005….
Saad Hariri, the second-eldest son of Rafiq Hariri and the leader of the ruling March 14 coalition, said “we accept and respect” the decision. Hariri said in a televised news conference from Beirut that he expects the tribunal to uncover the person or group responsible for the assassination.
“We do not want revenge,” he said. “All we want is justice.” He urged his supporters to accept the ruling and said today’s decision affirms the court’s credibility.
In December 2005, Lebanon’s government asked the UN to set up a tribunal to try those responsible for the Feb. 14, 2005, killing of Hariri and 22 others by a roadside bomb.
Al-Sayyed arrived at his home in the Lebanese capital today, and was greeted by Hezbollah lawmakers and dozens of supporters who threw rose petals in the air and cheered as he walked by, live video footage aired by al-Jazeera showed….
“This verdict underlines how politicized the investigation was,” Lebanese American University Professor Amal Saad-Ghorayeb said in a telephone interview from Beirut. “It also discredits the Lebanese judiciary and the politicians who accused these generals.” The ruling has “far-reaching political implications,” she said. “It may weaken the pro-Western coalition in the upcoming elections and strengthen Hezbollah and its allies.” Lebanon holds parliamentary elections on June 7.
The first prosecutor in the case, Detlev Mehlis, released a report in 2005 that said that the assassination had been planned by high-level Syrian and Lebanese officials, including some in the inner circle of the Syrian president, Bashar al-Assad.
[Landis Comment] Technically, it is not correct to write that the UN released a report that sadi that the assassination had been planned by high-level Syrian and Lebanese Officials.” Mehlis sent his report to the UN headquarters where it was released after redaction. The released copy did not name any Syrians, although the report argued that Syria had the means and motive. Journalists discovered that if they clicked on the “uncorrect” button on Microsoft Word, the eliminated names of Syrians appeared in an earlier unredacted version. I remember this because in 2005 Nick Blanford, the Christian Science Monitor reporter in Beirut, called me in Damascus in excitement to explain to me how to get the Syrian names. The UN mistake caused major excitement among reporters who could claim to be true investigative sleuths by doing little more than pressing a key on their computers. It was sensational and seemed to nail Syria – something the Bush-Cheney team in the White House was eager to do.
The UN did not meant to “release a report in 2005 that said that the assassination had been planned by high-level Syrian and Lebanese officials.” Instead cautious leaders took out the names, presumably because they did not believe the evidence was strong enough or because they did believed it unwise to release names. As it turned out the UN leaders that redacted the report were correct in their caution. The evidence implicating Syria gathered by Mehlis was based on the testimony of witnesses that later recanted and explained that they were paid by Hariri operatives to give false testimony. One was Husam Husam [see this article about how he recanted] and another was Sadiq [see this article on his recant by Alex] claimed to have been pressured to testify or offered money give false testimony. Nevertheless, reporters have continued to write that the UN named the Syrians, when this is only partly true and largely misleading based on what we subsequently learned. Brammertz, the UN investigator who came after Mehlis, dropped Mehlis’ more sensational accusations and seriously toned down the report. Most reporters at the time suggested that this was due to tactical caution in order to lure the Syrians into cooperating and entrapping themselves. But Fransen stated: “There were “inconsistencies in the statements of key witnesses” and a “lack of corroborative evidence to support these statements.”
The Brammertz report, however, made it clear that a new avenue of investigation was being pursued that would not necessarily end at Syria’s door. A “criminal network” was being blamed for executing the car bomb. This was a vague term, but by reading the report carefully, one could determine that Islamists, many based in Tripoli, had planned and carried out the attack. Brammertz did not drop the possibility that Syria would be connected to the Islamist criminal network, but equally he suggested that there was nothing more than circumstantial evidence to implicate Syria; this was means and motive.
Anyone wanting to get a sense of the impact of the Mehlis report on Syria and US relations with Syria need only scan through the October 2005 entries to Syria Comment. I was living in Damascus at the time.
Here is a quote from Damascus on the eve of the release of the first Mehlis report
Thursday, October 20, 2005
“Waiting for Mehlis” by Joshua Landis
The media Tsunami has hit. Journalists of every color have been flooding into Damascus these last few days to study the grimaces of the regime as it must submit to the delicate tortures of the Mehlis report, international condemnation, and very likely, UN resolutions.
A journalist just called to ask me if I could be standing by at 12:00 midnight when the first inklings of the Mehlis report begin to filter out. The main office suggests it will be bad for Syria and it wants immediate reactions. The political class has been bracing itself in Damascus and trying to manage the reporters as best they can, but everything is done in a ham-fisted way here. At such times of crisis, one realizes just how much of a third world country Syria is. Like a dear in the headlights, it has little clue what sort of terrifying machine is bearing down on it.
Ironically, the ordinary people are largely oblivious that their fate is being decided in the halls of distant capitals. Many don’t even know that a major clash is brewing between the US and Damascus. One taxi driver I spoke to yesterday had never heard of the Mehlis report and seemed surprised to be told that America and Syria were at loggerheads. He asked, “Is America going to invade?” When I reassured him that was not in the cards, he waved his hand in relief and said, “Oh, well, then it isn’t important.”
But even those who have some idea of what is transpiring believe it is a tempest in a tea pot. They have no influence over events anyway and seem oddly detached from “high politics,” as they call it. The streets are packed with Ramadan revelers looking for amusement and walking off their iftar…..
Here is the kind of spin “unnamed US Diplomats” were giving the New York Times reporters at the time of the issuance of the Mehlis report:
“There is evidence in abundance,” the diplomat said. “But to get every piece of the puzzle they need more time.” He spoke on condition of anonymity because of what he described as the extreme sensitivity of the matter.
Mr. Shawkat is considered the second most powerful man in Syria and has been seen as a likely candidate to take over the country if the embattled Mr. Assad were removed from office.
The diplomat, describing Syria as a “country run by a little family clique,” said the involvement of any one in Mr. Assad’s inner circle would be a severe blow to the government.
“There is absolutely no doubt, it goes right to the top,” he said. “This is Murder Inc.”
Here is more Robert Worth summing up the political stakes well:
The tribunal has always been controversial in Lebanon. Many supporters have seen it as a way to punish Syria and its proxies here, which they tend to blame for all the assassinations since 2005. By contrast, those in the political opposition, including Hezbollah, see it more as a political weapon aimed at their Syrian ally. They also ask why such a tribunal is warranted for the death of a billionaire politician, Mr. Hariri, and not for the deaths in the many massacres and other assassinations that have taken place here in recent decades.
“This is the moment of truth,” Hassan Fadlallah, a Hezbollah member of parliament, told reporters on Lebanese television. “This is the day of the fall of the [March 14] group, which based its judgment on falsification.”
Speaking from their respective homes after their release, the generals said they had been vindicated by the court and insisted they had nothing to do with Hariri’s 2005 murder in a massive car-bombing that also killed 22 others.
“Four generals were freed today but the only remaining inmate is Rafik Hariri and his jailer is Lebanon’s justice system,” security services director Jamil Sayyed told a crowd of cheering supporters outside his home that included several MPs from Hizbullah.
Saad Hariri agreed to “exchange his father for the sake of politics. He embraced people who do not want the truth to be uncovered,” he said, referring to al-Mustaqbal Movement leader.
“I thank everyone who stood by us, and above all Hassan Nasrallah,” he said, referring to the head of Hizbullah. “Never in the history of Lebanon have people been jailed for four years with no charge or evidence.”
US Plans New Talks With Syria, Wall Street Journal
The Obama administration is dispatching two high-level envoys to Syria in coming weeks for a second round of talks focused on securing the Iraqi border and supporting the Arab-Israeli peace process, said officials briefed on the trip.
Jimmy Carter on Tuesday said that the United States and Syria are close to restoring full diplomatic ties. “I wouldn’t be surprised if it happens this year,” Carter said
Secretary of State Hillary Clinton completed a three-day Middle East trip intended to reassure Arab allies of U.S. support as the Obama administration begins to pull forces out of Iraq and engage with Iran and Syria. Clinton’s message in Lebanon, Iraq and Kuwait was consistent.
Ben-Eliezer: Netanyahu will surprise us with ‘serious’ Syria talks
By Yossi Verter, Haaretz Correspondent, 30/04/2009
Prime Minister Benjamin Netanyahu intends to conduct “serious negotiations” with the Palestinians and the Syrians, Minister Benjamin Ben-Eliezer (Labor) told Haaretz. The full interview will appear Friday in Week’s End.
“Netanyahu is going to surprise us all,” said Ben-Eliezer, who is industry, trade and employment minister, after several tete-a-tetes with the prime minister over the past month.
He said Netanyahu had assured him, both before and after he set up the government, that he would continue negotiating with the Syrians.
Regarding the Palestinians, Netanyahu’s plan will be based on a two-state solution, said Ben-Eliezer.
“It’s not the same Bibi,” Ben-Eliezer said. “He’s much more open, patient and relaxed. He’s not alarmed or dogmatic. Something happened to him. He realizes that he cannot afford another crash like the one in his previous term.
“He understands that there’s a new administration in the United States, which is neither the Clinton Administration nor the Bush administration, and that if we don’t come up with a peace plan, someone else will call the shots for us.”
“If we find that Bibi lied to us, we’ll quit [the coalition],” said Ben-Eliezer, who is a member of the security cabinet.
He said that he and Netanyahu believe the Iranian issue should be solved diplomatically, not militarily.
Ben-Eliezer said the Labor Knesset members who objected to party chairman Ehud Barak’s decision to enter the coalition were “terrorizing” the party, and called their conduct over Barak’s dismissal of party secretary general Eitan Cabel “insanity.”
Syria’s Credit Rating Sees Unique Boost
Written by The Media Line Staff, April 28, 2009
Syria’s international credit rating has been raised by the Organization for Economic Co-operation and Development (OECD) for the first time in over a decade. The report, issued earlier this month, raised Syria’s risk rating by one level from 7 to 6.
The OECD regularly rates credit risk – the likelihood that a country will service its external debt – on a scale of 7 to 0. Among the 181 economies surveyed by the organization, Syria was the only country to see an improvement in its credit rating, a positive sign of the country’s historically protracted path towards fuller integration into the global economy.
“Syria’s rating is still low and this does not mean Syria has become a country whose business environment has improved tremendously,” Jihad Al-Yaziji, publisher of the business newsletter Syria Report, told The Media Line.
“But it shows an overall improvement in the Syrian business environment after several years of changes to the investment, commercial and consumer legal and regulatory environments.”
The OECD also reported a significant increase in the ease of starting a business in Syria, bumping up the Arab republic to 124th place from last year’s 171 among the 181 economies surveyed.
The organization boosted Syria’s overall “Ease of Doing Business” rank by eight and reported noticeable improvements in the ease of cross-border trade, employing workers and registering property in Syria.
“What’s important is that the efforts of the government are starting to pay off,” Al-Yaziji explained. “Over the past few years a big chunk of Syria’s foreign debt was wiped out and GDP has grown steadily. Private banks and insurance firms have been allowed into the country and you can now import almost anything into Syria. None of this was the case 10 years ago.”
Al-Yaziji added that, “It’s still not very easy to launch a business in Syria, but the process has improved tremendously. One of the new incentives, for example, is that a business in Syria can now be owned entirely by foreigners. This is not the case in many other Middle East countries.”
The OECD puts the current cost of launching a business in Syria at 18.5 percent of the country’s per capita gross national income (GNI), about $1,760 at current levels.
Jerusalem (dpa) – Palestinian President Mahmoud Abbas submitted a far-reaching, written peace proposal to the former Israeli government during the final days of the Bush administration, a top aide said Monday. Chief Palestinian negotiator Saeb Erekat said he presented the document to former US president George W Bush during a previously secret trip to Washington on December 18. Abbas had asked then outgoing Israeli premier Ehud Olmert to reply to the proposal in writing, but Olmert had failed to do so, Erekat told foreign correspondents in Jerusalem. Instead, Olmert chose to use his final weeks before leaving office and before Israel’s February 10 elections to launch the offensive in Gaza just days later, he charged……
Damascus Securities Exchange Volume Reaches Record $55,770
2009-04-27 11:17:51.461 GMT
Damascus Securities Exchange Volume Reaches Record $55,770, 2009-04-27
Damascus Exchange Sees Trading Volume Drop Ahead of Dividends: 2009-04-30
By Nadim Issa: April 30 (Bloomberg) — Trading volume on the Damascus Securities Exchange tumbled 61 percent compared with the last trading day as investors await their cash dividends. “Four companies out of the total of eight listed approved a cash-dividend distribution and this process will be completed in the coming two to three weeks,” said Sufiyan Haikal, operation manager at Damascus-based Cham Capital LLC. The total volume of traded shares reached 1.01 million Syrian pounds ($21,500) from 2.59 million pounds on April 27. The bourse opens two days per week. Shares of seven companies advanced, reaching the 2 percent fluctuation limit.
Economic reforms to continue, but speed unclear
Oxford Analytica, Friday, April 24 2009
SUBJECT: The outlook for economic reform in Syria.
SIGNIFICANCE: The recent opening of the Damascus stock exchange is the latest milestone in Syria’s reform programme and underlines the government’s commitment to the liberalisation of the economy. While the speed of reform will depend upon external factors, it will be sufficient to boost growth over the medium term.Go to conclusion
ANALYSIS: Several factors have historically undermined the economy’s growth:
· short-term macroeconomic policies, such as government expenditure, inflation and the current account deficit; and
· structural factors, including the financial system and trade policy.
Syria has put forward a reform programme to tackle these issues However, some argue that financial liberalisation and increasing openness to trade and investment will not achieve growth unless accompanied by cuts in government expenditure. While this view is exaggerated, there is no doubt that the global slowdown will have a negative impact both on the timing of the reform programme’s implementation and the country’s economic outlook.
Government spending. The immediacy of Syria’s difficulties has been underlined by the 2009 budget deficit of 9.25% of GDP (). While according to the government, the budget (including public spending) is in line with the tenth five-year development plan, the size of the deficit inevitably sets off warning bells about state finances:
· Government spending has been increased recently by the large numbers of Iraqi refugees in Syria and, over the longer term, by the commitment to a larger than average sized (by developing country standards) public sector.
· As a result, instead of job cuts, privatisation and the sale of public enterprises, the government will continue on the path of gradual liberalisation with the emphasis on facilitating private investments in sectors such as construction and tourism.
Inflation. Syria’s emphasis on achieving social harmony means that some scheduled reforms will be postponed. According to the IMF in October, inflation was just below 5%. However, Syria’s three-year drought and the removal of some subsidies have pushed up prices:
· This means that, although the introduction of a value-added tax (VAT) has been approved in principle, its implementation has been delayed until 2010.
· Exchange rate liberalisation will also be delayed.
Current account deficit. Senior officials have said recently that the price of the Syrian pound is determined in the market, and suggested that allowing the pound to depreciate would encourage exports. However, it is unlikely the pound will float freely in the foreseeable future as the current account, which is already in deficit, is expected to widen in 2009 to 1.0-1.5 billion dollars (more than 2% of GDP):
· Oil revenues. This year sees the end of net oil revenues, with the value of imports of refined products exceeding earnings form crude exports.
· Remittances. Remittances from Syrians working in the Gulf have fallen as a result of GCC governments seeking to reduce expenditure on foreign workers in the face of the global slowdown. Of an estimated 50,000 Syrian workers currently employed overseas, most are in the Gulf, and these hold middle-management positions making their remittances more significant than those of casual manual workers in Lebanon who have not been as badly affected. Remittances by Syrian workers in the Gulf have increased steadily over the past decade, reaching an estimated 850 million dollars in 2008.
Stock exchange. The most high-profile of the recent reforms has been the opening of the Damascus Securities Exchange (DSE) on March 10, after a hiatus of 50 years and frequent delays in the past few years:
· In theory, the exchange will widen the sources of finance available to listed companies, so allowing them to expand their activities.
· This is an enormous task as Syrian companies typically fund their expansion through internal finance and, thus, do not even have a tradition of banking relationships to prepare them for the leap of opening up to the scrutiny of publicly listed ownership.
· It is difficult to tell how successful the market will be over the long term at channelling funding to listed companies, although the initial signs are promising.
The first hurdle lies with the listing of a sufficient number of companies across the different sectors of the economy:
· The DSE began trading with six listed companies, although on the first day was it confined to one company, Banque Bemo Saudi Fransi.
· Another four companies have received initial approval, and a number of Initial Public Offerings (IPO) are also planned.
· Estimates of the number of companies expected to be listed by the end of the year range between 20 and 35 companies, with the former a more realistic number.
· So far the diversity of listed companies is promising, with publishing, transport and tourism as well as the ubiquitous financial sector well-represented.
At the moment, demand is difficult to gauge. Although the DSE is open to foreign investors, falls in values in regional stock markets mean that much cross-regional investment will not immediately be forthcoming. Also, the type of legislation — such as providing tax breaks for retirement plans — that will trigger a surge in domestic investment is many years away.
Trade policy. Syria has long been criticised for being insufficiently open to foreign trade. However a major step was taken to rectify this in December, with the initialling of an updated version of the EU Association Agreement:
· The Agreement, which should encourage greater trade with, and investment by, European companies in Syria, is now awaiting approval from European member states.
· Last month, the government formed the ‘Higher Council for Syrian European Association’ with the mandate of finalising the agreement. Its membership — which includes the prime minister, deputy prime minister for economic affairs, the head of the State Planning Commission, the governor of the Central Bank and the presidents of the Chamber of Commerce and of Industry — underlines the seriousness with which Damascus is viewing it.
· It is likely that the agreement will be signed before the end of the year.
Foreign investment. With Western investments adversely affected by regional geopolitical insecurity and US sanctions, the main source of funding in Syria continues to be the Gulf:
· While the regional economic slowdown will inevitably affect current Gulf investment, the outlook will improve over the medium term.
· Gulf investment will be increasingly attracted by Syria’s common language, geographical proximity and untapped resources.
· Investment will focus on tourism, banking and construction, with Gulf Arabs taking holidays closer to home, and wealthy Syrians requiring more sophisticated banking services.
Thus, although Dubai-based Emaar Properties, whose credit rating was recently downgraded by Standard & Poor’s, has temporarily placed on hold its second project in Syria, the ‘Damascus Hills’, the 500 million dollar ‘Eighth Gate’ project remains underway. Last month, the company invited investors to a reception to assure them of the project’s progress and show them developments at the site.
Last November, the governments of Syria and Qatar signed an agreement to establish a 5 billion dollar joint holding company to invest in real estate, tourism and industry projects. The property arm of the Qatar Investment Authority has recently announced its intention to develop two real estate projects. The Al-Khurafi Group, from Kuwait, also continues to show interest in developing infrastructure projects including electricity and water management.
CONCLUSION: Syria’s longstanding problem of rising government debt has been exacerbated by the global slowdown. Reforms will continue to take place but at a pace determined by external events, such as the global slowdown and drought. Gulf and — eventually — local investment will underpin future growth.