Posted by Joshua on Monday, June 2nd, 2008
IAEA inspectors to visit Syria this month: "It has now been agreed that an (IAEA) team will visit Syria during the period June 22-24," El-Baradei told the agency's 35-member board of governors here. "I look forward to Syria's full cooperation in this matter."
He did not say whether Syria would allow inspectors to examine the al-Kibar site bombed by Israel in the country's remote northeast desert.
A Western diplomat said the Vienna-based U.N. watchdog, which also has a long-running investigation into Iran's shadowy nuclear programme, wanted to inspect not just al-Kibar but two other sites with possible nuclear links.
ElBaradei had said on May 7 that he hoped to be able to shed light "in the next few weeks" on whether the Syrian facility was a nuclear reactor that should have been declared to the IAEA under Damascus's nuclear Non-Proliferation Treaty obligations.
Livni, who unlike her parents supports a Palestinian state, would be no soft touch as prime minister. “While Tzipi is willing to give up the West Bank to the Palestinians, she is a hawk when it comes to Syria and Iran,” said a leading political commentator. “She is against withdrawal from the Golan [Heights], and once prime minister she will want to bomb Iran’s nuclear facilities.”
The battle for Lebanon
By Elie al-Hajj
May 29, 2008
The battle for Lebanon is a battle between a relatively rich minority; numerically that is, among Lebanon’s four million people and a poor majority. The minority controls the political and economic fortunes of the country. On the other hand, the majority refuses to be dominated. The Lebanese divide is political and economic, not religious or sectarian; though, Lebanon is home to 18 different religious sects, all recognized in the Lebanese constitution. ….
Nuclear Syria, why not?
By Ahmad Mustafa, Special to Gulf News
June 1, 2008
Landis Comment: The following WSJ article seems to indicate that some right wingers are coming around to the need to negotiate with Hizbullah. Hizbullah's success in Lebanon, although being spun as "weakness," has convinced many that Hizbullah has shown considerable restraint in dealing with Lebanon's confessional mosaic. Far from being an unreasonable organization, it is interested in power sharing, can be reasoned with, and is not much different from the IRA. Although, Hizbullah's restraint perplexes Daniel Freedman, who believes that the Shiites should have tried to "conquer" Lebanon. His sneering tone is not attractive or helpful, but more important is his analysis, which is that the West must come to terms with Lebanon's Shiite leaders rather than kill them.
The US very intelligently refused to treat the IRA as a terrorist organization despite British insistence that it be proscribed as an evil criminal gang. Fortunately, the the US insisted on viewing the Irish Catholic struggle as political and not criminal. The result was successful diplomacy that helped resolve the dispute and transformed Ireland into one of the happier countries in the world with one of its zippiest economies. There is no reason Lebanon can not follow suit. Rashid's insistence that Lebanon's Shiites just want to "humiliate the Sunni enemy" is silly. Freedman's insistence that "the political process will gradually change [Hizbullah's] stated ideological aims" is smart.
Anyway, what other choice does Washington and Tel Aviv have but to negotiate with Hizbullah? War didn't work to destroy it. The build up of the Lebanese army as an instrument to disarm it failed. Only diplomacy is left.
The Axis of Weakness
By DANIEL FREEDMAN
FROM TODAY'S WALL STREET JOURNAL EUROPE
June 2, 2008
In a Middle East full of dissenters and conspiracy theorists, there are usually at least ten interpretations of any noteworthy event. So perhaps most remarkable about Hezbollah's recent power play in Beirut is how uniform commentary has been. The conventional wisdom is that the deal to give Shiites more control in the central government is a victory for the Iran-Syria-Hezbollah axis and a defeat for Saudi Arabia, France and the United States, who support the Cedar Revolution.
But why, at the moment of Hezbollah's big military victory — when it had taken parts of Beirut and proved the army would not stand in its way — did it not finish its coup? The Lebanese government's attempt to shut down Hezbollah's telecoms network and remove a Hezbollah-friendly army commander from Beirut airport miserably failed. Why did Hezbollah only demand a new political settlement? Why wave the white flag when your opponents have laid down their arms? This doesn't add up.
Perhaps then Hezbollah's temporary seizure of Beirut wasn't so much a sign of the strength of the Iran-Syria-Hezbollah axis as of its weakness. The "Party of God" may realize the axis with Tehran and particularly Damascus is not quite as strong as it appears. Seen in this light, the decision to secure tangible political gains while it still has military strength makes sense.
Syria's ongoing negotiations with Israel must worry Hezbollah. Any peace agreement that nets Damascus the Golan Heights would have to include a promise to abandon Hezbollah. If these talks don't bring a deal immediately, the fact that Damascus entertains the idea of cutting ties with Hezbollah must concentrate minds in South Lebanon.
Another sore point is the February assassination of Imad Mughniyah in Damascus, a key Hezbollah leader. Most fingers pointed at Israel. But there is another theory that the Syrians may have killed Mughniyah as a sign to Jerusalem of their sincere intentions.
The pressure on Syria to abandon Hezbollah is rising and coming not just from the West. The March Arab League summit in Damascus was boycotted by half of the leaders. This snub was not only a blow to Syrian prestige. It also showed how isolated Damascus is in the Arab world — a world it once hoped to lead. It was a signal that its gambit of creating a new regional alliance with Iran comes with a heavy price tag.
While Iran has no plans of making peace with Israel or abandoning Hezbollah, it would be difficult for Tehran to keep Hezbollah alive without Syrian help. If Damascus closed its border to Lebanon, it would cut off a key route for Iranian arms smuggling to Hezbollah. And Iran's financial support for the Shiite group is in the end no match for the kind of money Saudi Arabia can pour into Lebanon to counter Tehran's influence. Riyadh has indicated that it will increase its support for its Sunni allies in Lebanon.
Hezbollah may have also learned a lesson from recent events in Iraq, where the Iranian-backed militia headed by Muqtada al-Sadr has at least for now abandoned its fight and started negotiations with the government. Apparently, Iranian support was not enough to keep up al-Sadr's war.
Why should it be different in Lebanon? Although Hezbollah portrayed its recent war with Israel as a victory, it wasn't. The fight did serious damage to Hezbollah's military capabilities. And the Shiite group lost legitimacy among the Lebanese people for the way it acted, both in disregarding Lebanese lives and starting an unnecessary war.
The once dominant sentiment among all Lebanese that "everyone can get along because we are all Lebanese," is waning. Sunni citizens are increasingly wary of Hezbollah. The Shiite group therefore faces the prospect of a hostile Israel on one side, a Syria that is no longer its ally on another, and a third column of opponents within: Lebanon's Sunnis together with Druze and Christian populations who have their own problems with the Shiites.
Sensing the tide in Lebanon might be turning against it, it used the government's attempted crackdown as an excuse to take parts of Beirut to scare its opponents into accepting a new political reality. This new reality gives Shiites, and therefore Hezbollah, more power in the central government.
So perhaps what we are seeing is the beginning of the gradual transformation of Hezbollah into a predominately political actor. It won't be easy and it will take time. Just like Northern Ireland, where it took the IRA 10 years to decommission their arms.
Some people argue that given Hezbollah's ideological commitment to an Islamic Lebanon such a transformation could never happen. Well, in the Middle East, everyone promises never to negotiate with their enemies, but everyone has their price. The PLO promised to never recognize Israel. Israel promised never to recognize the PLO. And so on. While the PLO certainly didn't start off negotiating in good faith, the political process helped gradually changing their stated ideological aims. The same could potentially be true for Hezbollah.
If Hezbollah really is on the brink of what could turn out to be a seismic change, the U.S. should do everything to encourage this process. It should accept a greater role for Shiites in the Lebanese government as long as Hezbollah agrees to start, however gradually, decommissioning. Israel should also be allowed to negotiate seriously with Syria.
Much more is at stake than easing frictions at the Israeli-Lebanese and Israeli-Syrian borders. Iran is on the verge of becoming a nuclear power. Separating Tehran from Damascus and Hezbollah would isolate and weaken the Islamic Republic at this crucial time. If we fail to do this, the conventional wisdom — that the recent Lebanese developments were a victory for the Iran-Syria-Hezbollah-axis — may unfortunately turn out to be right.
Mr. Freedman was the foreign policy analyst for Rudy Giuliani's Presidential Committee.
Liberalised Syria banks "on sound track" – report
By Khaled Yacoub Oweis
DAMASCUS, May 26 (Reuters) – Liberalisation is spurring rapid growth in Syrian banking but state banks still dominate the sector since it opened to private investment four years ago, a report by the Syria Report online newsletter said on Monday.
Syria, which has taken limited steps to open its economy after decades of nationalisation, now has nine private banks compared with six banks owned by the state. Another nine private banks are setting up in the country, the report said.
"The arrival of new players seems only to encourage an ever expanding market. Although a lot remains to be done, the liberalisation of Syria's banking sector is now on a sound track," said Syria Report, a Paris-based independent newsletter covering Syrian economics and finance.
The Baath Party government revamped investment laws last year but kept a 49 percent ceiling on foreign ownership of banks. The central bank is working on issuing treasury bills for the first time and Syrian businesses are now allowed to receive loans from foreign banks.
State banks held 82 percent of assets at the end of 2007 compared with 87 percent a year before. The government and a huge array of companies it owns still do business "almost exclusively" with state banks, although nothing in the law forced them to do so, the report said.
Total assets rose 12 percent last year to $34 billion, still 40 percent that of neighbouring Lebanon, which has a solid banking tradition and a financial secrecy code. Private Syrian bank assets rose 59 percent in 2007 compared with 5 percent growth in the balance sheet of state banks.
But a small capital base and restrictions on lending have kept loans by private banks small at $1.5 billion at the end of 2007, although the figure is almost double that of 2006, the report added. Continued…
Syria's Assad dismisses Israel demands over Iran
By Khaled Yacoub Oweis, Wed May 28, 2008
DAMASCUS (Reuters) – President Bashar al-Assad dismissed on Tuesday Israeli demands for Syria to abandon an alliance with Iran as a requirement for a peace deal. Assad told British MPs that the Baath Party government intended to maintain its "normal relations" with Iran while it conducts indirect talks with Israel to regain the occupied Golan Heights, a source familiar with the meeting told Reuters.
IHT: U.S. could impede merger between MTN and Reliance
2008-05-26 08:56 (New York)
The South African telecommunications giant MTN Group and its Indian peer, Reliance Communications, said Monday that they were in exclusive talks for a tie-up – a deal that symbolizes the growing economic clout of emerging markets, but could still hit a wall with U.S. regulators.
Combining Reliance Communications and MTN Group would create a juggernaut with 115 million customers, more than most European mobile phone businesses have and more than every U.S. one has. Getting funding for a full-fledged deal could be complicated, though, because of economic sanctions imposed by Washington on the countries where MTN does business, including Iran.
A merger or takeover of MTN, which has a market capitalization of $38.2 billion, is expected to require any partner to raise tens of billions of dollars in cash. A problem may arise, though, because the U.S. banks that arrange and finance many of the world's largest corporate transactions may be restricted from the deal.
The obstacle, at least for regulators in Washington, lies in the fact that MTN has a sizable and fast-growing presence in Iran, Sudan and Syria.The U.S. Treasury Department's Office of Foreign Assets Control, or OFAC, which was created in 1950 to freeze Chinese and North Korean assets when the Chinese entered the Korean War, monitors bank activities in sanctioned countries closely.
MTN's business in Iran is new but growing quickly. At the end of 2007, MTN had six million subscribers in Iran and 3.1 customers million in Syria, where the United States has some financial restrictions……
Syria: Taxing Times
Oxford Business Group
May 26, 2008
Syria is to impose a flat rate value added tax (VAT) next year as part of the government's ongoing programme to open up the economy and boost state revenues, though the exact details of what the tax will cover and what goods and services will be exempt have yet to be decided.
On May 17, Mohammed Al Hussein, Syria's finance minister, announced that a 10% VAT would be introduced in 2009. Basic food items would not be included in the new scheme, he said, though it was possible that other rates could be applied to certain categories.
The move is particularly bold since the Syrian public is already struggling with rising costs and shortages in the marketplace. While a recent report by the International Monetary Fund (IMF) predicted consumer inflation would come in at 7% this year, spiralling fuel and food prices may well see this ceiling broken.
Popular or not, the Syrian government needs to increase its revenue base. With oil stocks dwindling, Hussein said that earnings from oil now represented just 20% of state income, down from around 70% at the beginning of the decade. …..
"VAT could play a catalytic role in nurturing a taxpaying culture, due to the built-in incentive to comply with it. If well designed, VAT could yield 1.8% of GDP for each five percentage points for the rate," the IMF said in its 2006 report.
However, in its 2007 report, the fund warned that an ill-prepared launch could damage the credibility of the new tax, and said a number of steps, including the adoption of a tax procedures code and an integrated information technology system, had to be completed before such a tax could be implemented successfully.
The fund also called for any VAT to be imposed on almost all goods and services, saying that instead of limiting its coverage to a few sectors to shield the poor from price increases, adopting near universal coverage and providing targeted spending programmes and progressive income taxes would be a better approach.
The decision to impose VAT will in some measure offset the reductions in private income tax announced in 2003 and amended in 2006. The cuts, which saw the highest rate of income tax lowered from 63% to 28%, were intended to serve as an incentive for private sector companies and individuals to pay taxes, as well as to stimulate economic growth and investment.
According to figures released by Hussein, the tax cuts and reductions in Customs duties on many goods have achieved the desired result. Tax revenues for 2007 amounted to $6.43bn, or 17% of gross domestic product (GDP), up from just $3.5bn in 2000, he said.
In his May 17 briefing, Hussein predicted a deficit of $3.82bn for the 2008 budget, some 9.8% of GDP, though he said the government hoped to bring this down to around 7%.
While highlighting the need for more sources of revenue, Hussein's prediction was wide of the mark projected by the IMF in a report issued earlier the same month, which had suggested the government aim for a deficit of 5%. The Syrian government may not be as optimistic as the IMF about its ability to trim expenditures and increase income, or may be anticipating a greater outlay for the year than had previously been expected.
Oil subsidies bill posts sharp increase in first quarter (From the Syria Report): Mahrukat, the state-owned company in charge of distributing oil products, posted a net deficit of SYP 104 billion in the first quarter of this year, a dramatic 3-digit percentage surge from a year earlier. Read