Posted by Joshua on Monday, July 5th, 2010
Economic Growth: Syria’s Central Bank has announced that Syria’s real GDP grew at 5.9% last year. This is much higher than the previously estimated 3.6%, we are told by the Economist Intelligence Unit. A note of caution: these figures cannot be verified by independent observers. If the numbers are correct, Syria’s growth will be the highest in over a decade and suggest that economic reform is paying off and on the right track.
New Laws Effect Reform Process: Two new laws have been enacted that, I am told, will have great significance for Syria’s reform process.
One is a real-estate law that will open up a large amount of government land for development, especially in urban centers and their outskirts.
The other is Law 18/2010 which reorganizes the Telecommunications Industry. This law is important for two reasons:
- The Syrian Telecommunications Establishment is one of the most profitable state-owned companies. It is the second largest contributor to the State’s treasury after the Syrian Petroleum Company. It generated revenues of SYP 73.1 billion in 2009, posting an annual increase of 18 percent. Since the middle of 2009, STE collects the equivalent of 50 percent of the total revenues of the two mobile operators, Syriatel and MTN, according to the terms of their 15-year BOT contracts. Revenues from internet services grew 27 percent to SYP 858 million.
- The new law, I was told but cannot verify, is to be a model for limiting government participation in significant industrial sectors. It is supposed to be an indication of the increased role of the private sector in industries previously controlled entirely by the state. The government will remain a majority owner, but actual management will pass into the hands of a privately owned corporation. That is how it was described to me, but the article on the new law in “Syria Report,” written by Jihad Yazigi, contradicts this information. He suggests that the government will remain 100% owner of the sector. (If anyone can clear this up for me, I would be grateful.)
Evidently, President Assad took personal interest in these two laws and sees them as forming an important stimulus to economic growth and private investment.
News Follows on the Economy, Turkey and Fadlallah’s death
STE’s income (SYP, billion)
Syria economy: Outperforming?
Economist Intelligence Unit – 2010-07-02
The Central Bank of Syria’s latest Monetary and Banking Statistics report includes the first officially published estimate for real GDP growth for last year. The report states that the Syrian economy grew by 5.9% in 2009. This is significantly higher than the Economist Intelligence Unit’s previous estimate of 3.6%, but is broadly consistent with recent public statements by senior officials-Abdullah al-Dardari, the deputy prime minister, said in mid-June that real GDP growth last year was about 5.5%.
The Central Bank did not provide any supporting data to explain the remarkably strong growth rate last year. One factor may have been the improved cereals harvest after a particularly poor year in 2008. (The wheat harvest is expected to fall in 2010 owing to an outbreak of yellow rust infestation.) Syria’s natural gas production also increased by 6.2% year on year to 5.8bn cu metres, according to BP Statistical Review of World Energy, which was published in June, although BP’s figures point to a 5.5% year-on-year decline in oil production, which would have had a much more significant impact on overall GDP growth. The abolition of the ration system for diesel subsidies in early 2009 is likely to have reduced the value of fuel imports last year, which would have counteracted the impact on GDP growth of falling oil export income. Preliminary fiscal data also indicated that government expenditure was significantly higher than expected in 2009, particularly capital expenditure, which would have provided a boost to government consumption and could be a further reason for the higher than expected growth figure.
Developments in Iraq have had an important impact on Syrian growth since the US-led invasion in 2003. The arrival of hundreds of thousands of Iraqi refugees has pushed up the rate of population growth, which reached 3.6% in 2007 at the height of the Iraqi insurgency, which has in turn boosted private consumption in Syria. As security conditions have improved (relative to 2006-07), Iraq has become an increasingly important market for Syrian goods, accounting for 30% of total exports in
2008, according to the most recent figures that are available. Assuming that Syria’s exports to Iraq grew in line with those of other leading suppliers that have published 2009 trade data (notably Turkey and the UAE), this could be another factor in the high real GDP growth figure cited by the Central Bank.
Gross domestic product and population growth (% annual change)
2003 2004 2005 2006 2007 2008 2009
Real GDP 0.6 6.9 6.2 5.0 5.7 4.3 5.9
Population 2.5 2.1 1.9 2.5 3.6 2.5 2.4
Source: Central Bank of Syria.
New Law Reorganises Syria’s Telecoms Sector
Syria Report, 05 July 2010
A new law regulating the telecoms sector, the most profitable industry in Syria, has been approved. Law 18/2010 was enacted by a Presidential Decree on June 9 and published in the Official Gazette on June 23.
The Law reorganizes the whole sector by assigning to a newly-established institution, the Telecoms Supervisory Authority (TSA), the power to regulate the telecoms sector. Previously, this power was in the hands of the Syrian Telecommunications Establishment, which also operated the country’s land line network.
In practice, one of the objectives of the Law is to divide the tasks of STE, which acted both as an actor in the market and as the regulator of that same market. The TSA is taking over, from January 1, 2011, the regulatory tasks.
Meanwhile, as an operator, STE is being replaced by a new institution, the Syrian Telecommunications Company (STC), which will continue to operate the fixed-line network. STC will abide by the Company Law with the Government, represented by the Treasury, being its 100% shareholder.
However, the importance of the new law derives from its impact not only on STE, the second largest contributor to the State’s treasury after the Syrian Petroleum Company, but also on the country’s two largest private sector companies, Syriatel and MTN-Syria, which operate the two GSM network licenses. Syriatel and MTN-Syria had total income of SYP 48 billion and SYP 39 billion respectively in 2009.
Currently, the two companies work under 15-year BOT contracts assigned by STE in 2000. The BOT format has created some problems including, for instance, the fact that the operating companies are reluctant to invest in infrastructure that is going to be handed back to the Government in a few years time as well as making complicated their listing in the Damascus Securities Exchange because of the difficult to value properly their assets.
The new text of law does not provide any clear reference to the fate of these two contracts. However, it empowers the TSA with the full authority to grant new licenses in the telecommunications sector, in addition to the authority to decide what means will be used to select the operators (tender or other) of the various sub-sectors (radio waves, mobile and landline networks, etc.) as well as the amount it will charge these companies for their services (license fees, revenue sharing scheme, etc.).
In other words, the law does not specify how new operators in the industry will be selected and what rules will be applied to generate revenues from them. Rather, this task is left for the TSA, whose members will all be appointed by the Ministry of Communication and Information Technology. The decisions of the TSA will need, however, the approval of the Government.
One additional rule, not published in the text of the law per se but in the law’s implementation rules, issued on June 13, says that when the TSA awards its licenses “it must take into account the fact that the applying company already has in Syria the infrastructure and employees needed to carry out the works required.”
The TSA is also empowered with the task of guaranteeing fair competition and the protection of the rights of the consumers.
Total CEO calls Iran oil embargo an ‘error’
The CEO of French energy giant Total yesterday criticised sanctions against Iran, saying an embargo on petrol products was an “error” that would harm ordinary people…. Total had suspended its deliveries to Iran in line with sanctions adopted by the UN, US and European Union in response to Tehran’s refusal to halt its uranium enrichment programme. “I maintain this is a mistake. The embargo affects the population, too many things are politicised these days,” he told media.
Turning East, Turkey Asserts New Economic Power
By LANDON THOMAS Jr., NY Times, July 5, 2010
ISTANBUL — For decades, Turkey has been told it was not ready to join the European Union — that it was too backward economically to qualify for membership in the now 27-nation club.
That argument may no longer hold.
Today, Turkey is a fast-rising economic power, with a core of internationally competitive companies that are turning the youthful nation into an entrepreneurial hub, tapping cash-rich export markets in Russia and the Middle East while attracting billions of investment dollars in return.
For many in aging and debt-weary Europe, which will be lucky to eke out a little more than 1 percent growth this year, Turkey’s economic renaissance — last week it reported a stunning 11.4 percent expansion for the first quarter, second only to China — poses a completely new question: who needs the other one more — Europe or Turkey?….
In June, Turkish exports grew by 13 percent compared with the previous year, with much of the demand coming from countries on Turkey’s border or close to it, like Iraq, Iran and Russia. With their immature manufacturing bases, they are eager buyers of Turkish cookies, automobiles and flat-screen televisions.
This year, for example, the country’s flagship carrier, Turkish Airlines, will fly to as many cities in Iraq (three) as it does to France. Some of its fastest growing routes are to Libya, Syria and Russia, Turkey’s largest trading partner, where it flies to seven cities. That is second only to Germany, which has a large population of immigrant Turks.
In Iran, Turkish companies are building fertilizer plants, making diapers and female sanitary products. In Iraq, the Acarsan Group, based in the southeastern town of Gaziantep, just won a bid to build five hospitals. And Turkish construction companies have a collective order book of over $30 billion, second only to China.
On the flip side, the Azerbaijani government owns Turkey’s major petrochemicals company and Saudi Arabia has been a big investor in the country’s growing Islamic finance sector.
No one here disputes that these trends give Mr. Erdogan the legitimacy — both at home and abroad — to lash out at Israel and to cut deals with Iran over its nuclear energy, moves that have strained ties with its chief ally and longtime supporter, the United States. (Turkey has exported $1.6 billion worth of goods to Iran and Syria this year, $200 million more than to the United States.)…
Risk-tolerant China investing heavily in Iraq as U.S. companies hold back
By Leila Fadel and Ernesto Londoño
Washington Post, Friday, July 2, 2010
….As the U.S. military draws down and Iraq opens up to foreign investment, China and a handful of other countries that weren’t part of the “coalition of the willing” are poised to cash in. These countries are expanding their foothold beyond Iraq’s oil reserves — the world’s third largest — to areas such as construction, government services and even tourism, while American companies show little interest in investing here.
“The U.S. really doesn’t know what to do in Iraq,” said Fawzi Hariri, Iraq’s industry minister. “I have been personally, as the minister of industry, trying to woo U.S. companies into Iraq. There is nothing yet. Nothing tangible.”
In the past two years, Chinese companies have walked away with stakes in three of the 11 contracts the Iraqi Oil Ministry has signed in its bid to increase crude output by about 450 percent over the next seven years. They also renegotiated a $3 billion deal that dates to when Saddam Hussein was in power.
Only two American firms won stakes in oil deals, an underwhelming showing that industry analysts and U.S. officials say reflects deep concerns about doing business in a country besieged by insecurity, corruption and political turmoil.
“They made a mistake and overestimated the risk,” said Ruba Husari, an oil analyst in Baghdad who runs the Iraq Oil Forum, a trade Web site. “I think they did not realize on the spot that it was the biggest window of opportunity, and they missed out.”…
How Will Turkey’s New Position Affect Its Relations with the US, Syria and Israel?
Serpil ACIKALIN, a researcher at Ankara based – International Strategic Research Organization (USAK), writes the following analysis:
After the increased tensions and many problems we have had with Israel following the 2009 Gaza attacks, we find ourselves today at the nadir of the relationship between Israel and Turkey. Although Turkey has criticized Israel’s regional policies from time to time since the mid-1960s, it has never been this strong rhetorically. This was also the first time that Turks were killed by the Israelis….
Since the 2000s Turkey has not been opposed to Syria. The US and the international community didn’t like Turkey’s position towards Syria for a long time. Yet, in the last decade the US and the international community have began to soften their language towards Syria. Today, Turkey thinks that Iran’s position is also not very different from Syria’s past position. Turkey thinks that it helped to change the international community’s perception towards Syria. Thus, Turkey thought that Syria might be seen as an example, and that Turkey might play an important role to similarly engage and transform Iran. Yet, the point is that Iran and Syria have different characteristics in the eyes of Western countries and other countries in the region, and Turkey could not understand this at first. Also the most recent swap deal was perceived as a great success by the Turkish government and media, though the result was a disappointment for Turkey. Indeed, Turkey’s vote against the sanctions for Iran was also an obligation for Turkey after her efforts for the swap deal. And in terms of Washington, the genie was out of the bottle and the other countries in the UN Security Council had already been persuaded so it was not possible for the U.S. to change its plans. So, due to the past and most recent experiences, from the United States’ point of view, Turkey is a country whose vote is difficult to predict. For this reason, the US is aware that when it needs Turkey in any matter it must consider each issue one by one.
However, from the perspective of the Turkish public, there are many uncertainties about the U.S.
First, people wonder if there is a tacit consensus between Turkey and the US on Turkey’s recent efforts or if the U.S. is concerned that Turkey’s most recent efforts have harmed its region. Those holding the former position on this issue think that the U.S. is not comfortable with Israel’s offensive behavior in the region anymore and that Turkey is taking care of/handling Israel’s maverick attitude.
In any case, as the problems of the West and Israel with Iran stem from the Iranian regime, Turkey’s assumption that the swap deal can solve the Iran problem has showed Turkey’s misreading of the region and of Western perceptions…..
The Circles of Prospective Change
Alastair Crooke, “The Shifting Sands of State Power in the Middle East” in the Washington Quarterly
Here is the conclusion:
The Struggle for the Future of Islam
Yet, standing behind this question of an absence of vision is the wider issue of the future of Islam, which represents the third circle to the changes taking place in the region. It is also likely to be the site of a coming struggle among Islamic currents to answer the popular need for a fresh vision. For the last 50 years, the West has acquiesced to the spread of the Saudi orientation of Islam in opposition to the revolutionary Islam of Shi‘a Iran and that of the Sunni Muslim Brotherhood. But there does appear to be a greater appreciation in the West today of the Saudi orientation’s proclivity to fragment and fracture, thus migrating to a more dangerous and more violent form of Islam. Western caution toward this orientation known as Salafism (a reformist strand, which seeks to emulate closely the lives led in the earliest Muslim community) seem to be coming at the moment its fortunes are ebbing, but it is too early to be sure. While its appeal is declining in some areas, it can be seen growing stronger in the socially conservative areas of Egypt, and also creeping into Gaza. If you cannot change the region, change the way you think about it.
What is more striking, however, is that much of the new thinking in Islam – whether it emanates from the Fethullah Gu¨len movement in Turkey or from Shi‘a orientations linked to Qom, such as Hezbollah, or to the Sufi revival occurring in North Africa – is taking place outside of the traditional centers of Sunni Arab strength. This fact suggests that the repression of Islamism in the Arab ‘‘center,’’ combined with Western hostility toward it, has pushed the locus for the Islamist intellectual evolution out toward the periphery. Should the northern tier assume some political ascendency in the region, it is not hard to see that the Shi‘a orientation, together with the Turkish and other forms of Sufi Islam with which the tier is closely associated and which have a certain affinity among them, are likely to gain influence at the expense of literal, dogmatic, and intolerant Islam.
The Circles of Prospective Change
Plainly these three levels – the balance of power, the need for a fresh economic vision, and the shaping of the future of Islam – are all closely interlinked. Unless there is conflict in the region, in which case all aspects of the regional dynamics will need to be re-evaluated in light of its outcome, we may expect the shift in the balance of strength toward the northern tier to continue. It will find its articulation at the level of conventional Arab politics; at the economic level, particularly if the Nabucco project comes to fruition by supplying central Europe with a substantive proportion of its energy needs; and at the level of the Islamist revival, whose locus of intellectual drive has migrated from the Arab center to the regional periphery.
But what do these various ‘‘circles’’ of prospective change suggest to U.S. and other Western policymakers? It says that the region is going to get no ‘‘less’’ hard for them, as Obama complained to Time. It also suggests that change in some areas will be unsettling for the United States. Furthermore, it suggests the adage that if you cannot change the region, then change the way you think about it.
Turkey and Israel hold talks on mending fences
Jul 1, 2010
ISTANBUL (Reuters) – Turkey told Israel at face-to-face talks in Brussels this week what it should do to mend ties damaged when Israeli commandos stormed a Gaza aid ship more than a month ago, Turkish officials said on Thursday. Confirming that Foreign Minister Ahmet Davutoglu and Israeli Trade and Industry Minister Benjamin Ben-Eliezer met on Wednesday, a Turkish official said, without giving details, that Ankara’s demands for Israel to make amends remained the same.
Once Israel’s closest Muslim ally, Turkey has said it wants Israel to apologize, pay compensation, agree to a U.N. inquiry into the incident and lift the blockade of 1.6 million Palestinians living in the Gaza Strip.
وزير الخارجية التركي: سننهي علاقتنا باسرائيل اذا رفضت الاعتذار
The Arabic quote is from Turkey’s Foreign Minister who says: “If Israel doesn’t apologize, Turkey will end relations.
TURKEY: Public censure for Israel amid reports of private overtures
July 1, 2010 | LA Times
If you are confused about Turkey’s current policy towards Israel, you are not alone….
Turkey has said that relations with Israel will remain strained until Israel meets all four of Turkey’s conditions: offer a formal apology, pay compensation to the families of the victims, allow an international investigation and lift its embargo on the Gaza Strip. Israel has announced that it will ease restrictions of goods flowing into the Gaza Strip, but has so far refused to allow an independent, international inquiry into the flotilla disaster.
Turkish officials deny that Turkey’s foreign policy has shifted eastward, but some observers wonder if Turkey has overplayed its hand.
“Did the AKP [ruling party] sincerely believe that it could push Washington to take a position against Israel, dump it if necessary and support the Turkish position all the way?,” read one editorial in the Hurriyet Daily News.
“Turkey now seems to be put in a doghouse in Washington for a while,” it continued. “This stonewalling attitude of the U.S. administration does not mean necessarily it wishes to alienate the Turkish administration. However, it does signal that it will not tolerate some of the harsher rhetoric that repeatedly comes from there.”
Fadlallah, Lebanon’s Shiite Marja, has died. See this obit in the LA Times. I attended a few of Fadlallah’s lectures on women given at Sayyidah Zaynab Mosque in Damascus. In his later years, he became known for his progressive views on women, inter-sectarian understanding, and representative government (He oppose the Iranian form of government and wilayat al-faqih, unlike Nasrallah).
Mideastwire: Via FLC
“….. One should consider comments by former secretary of state Colin Powell regard- ing the 1983 marine barracks bombing, which killed 241 U.S. service personnel: “What we tend to overlook in such situations,” he writes in his autobiography, “is that other people will react much as we would. When the shells started falling on the Shiites, they assumed the American ‘referee’ had taken sides against them. And since they could not reach the battleship, they found a more vulnerable target, the exposed Marines at the airport.” Recent comments by the marines’ commanding officer at the time are perhaps even more illustrative of Powell’s point that, instead of being a simple terrorist attack, the bombing was part and parcel of exactly the kind of brutal conflict that the United States had decidedly entered with its shelling of opposition areas. “It is noteworthy that the United States provided direct naval gunfire support––which I strongly opposed for a week––to the Lebanese Army at a mountain village called Suq al-Garb on 19 September and that the French conducted an air strike on 23 September in the Bekaa Valley. American support removed any lingering doubts of our neutrality, and I stated to my staff at the time that we were going to pay in blood for this decision.”
?…… “relations between Nasrallah and Fadlallah are strained, and they have met only once since al-Hariri’s assassination. On [one] issue [Nasrallah’s pre-election fatwa calling for Shiites to vote for the Shiite list] in particular, Fadlallah appeared to be seeking to curb efforts by Hizbollah to assert a hegemonic position among Shiites”—Fadlallah having vehemently criticized the fatwa as irrational and ultimately leading to corruption.
ICG adds that Fadlallah, “has also been critical of Hizbollah’s close ties to Iran, in particular its relationship to Supreme Leader Ali Khameini, considered by the movement as its marjaa taqlid. He paid a heavy price for his critique: he was harshly attacked and pressured by Hizbollah and Iran.” ?..”
See Juan Cole’s and Helena Cobban’s appreciations. Juan notes that the CIA was widely thought to have organized the 1985 bombing of Fadlallah’s residence in southern Beirut which killed 80 people, the vast majority of them civilians– but not either Fadlallah or a young bodyguard of his called Imad Mughniyeh, who went on to become one of the strategic masterminds of Hizbullah.
Helena writes: “Fadlallah’s passing will almost certainly further increase the social and political heft of Hizbullah, since the gentle “brake” that Fadlallah often applied to Hizbullah power will now be removed; and it seems unlikely that anyone from his circle will speedily (or indeed ever) replace him in that role.”