Posted by Joshua on Sunday, April 4th, 2010
Haaretz: Sarkozy’s advisers: Renewed talks between Israel and Syria unlikely
By Barak Ravid, Haaretz, 2010-04-03
A report submitted a few weeks ago to French President Nicolas Sarkozy by two of his top diplomats concludes that there is no chance to renew substantial negotiations between Israel and Syria in the near future, Haaretz has learned. The officials had visited the Middle East recently to investigate the possibility of French mediation between the two countries.
Israeli diplomats and senior Jerusalem officials told Haaretz that the authors of the report were Patrice Paoli, director of the North Africa and Middle East desk at the French Foreign Ministry, and Nicolas Gallas, a special adviser to Sarkozy on Middle East affairs.
The two senior French diplomats visited Israel during the second week of March, which coincided with U.S. Vice President Joe Biden’s visit. They met with Intelligence and Atomic Energy Minister Dan Meridor, National Security Adviser Uzi Arad, and individuals who had been involved in the indirect negotiations with Syria conducted by the Olmert government through Turkish mediation.
In their report, the French diplomats told Sarkozy that they believe meaningful negotiations between Israel and Syria are not possible in the near future due to the two country’s considerable mutual suspicion and lack of readiness to make any kind of compromise. In their opinion, Israel is not ready to fully withdraw from the Golan Heights, while Syria is not prepared to cut ties with Iran and Hezbollah.
The meeting held with Arad, who holds the Syrian portfolio in the Prime Minister’s Office, seemed to have the strongest impact on the diplomats. A senior Israeli official told Haaretz that Arad stressed to them that Israel will not fully withdraw from the Golan, and even discussed ideas for land exchanges between Syria, Jordan, Lebanon and Israel – at the conclusion of which Israel would retain the Golan.
“After listening to Arad, they realized they were wasting their time and there was no genuine desire in Israel at that stage to progress on the Syrian track,” the official said.
The diplomats, however, do not put all of the blame on Israel. They also met with Syrian President Bashar Assad and other Syrian officials, who made it clear to them that Syria had no intention of cutting off its close relationship with Iran. They also denied that Syria was delivering munitions to Hezbollah. The Syrians implied that they would prefer Turkey, rather than France, to mediate.
Now, more than a week after Netanyahu’s return to Israel and with still no apparent break in the impasse between the two close allies, one administration official tells The Cable that the U.S. side is open to Netanyahu coming back to the administration with his own alternative ideas about how to satisfy U.S. concerns about Israel’s commitment to the peace process. ……The official was quick to point out that the U.S. is still putting pressure on Netanyahu to take specific actions to “improve the atmosphere” and demonstrate Israel’s willingness to repair what is perceived in Washington as a breach of trust.
Regardless, the Obama team is now in waiting mode. “The ball is more or less in their court at the moment,” the official said of the Israelis.
Syria Welcomes Progress, Highlights Necessity of Structural Reforms – IMF Article IV
By Alyssa Rallis
2 April 2010, IHS Global Insight Daily Analysis
The International Monetary Fund (IMF) found that Syria’s economy made it through the worst of the global economic slowdown with only minor reverberations transmitted through its ample trade ties with Europe and Gulf economies with growth estimated at around 4% in 2009.
While the global economic slowdown only had a limited impact on Syria’s economy, authorities there will face significant challenges over the medium term in enacting economic reforms and attracting investment to boost economic growth and diversify the economy in light of dwindling oil reserves and revenue.
Syrian authorities are expected to take advantage of the opportunity afforded by rebounding growth this year to renew economic reform initiatives—IHS Global Insight expects growth to rebound to near 6% this year.
Syria Survives the Worst
The IMF estimates that Syria’s economy held up relatively well during the global economic slowdown, with growth estimated to have decelerated just one percentage point last year to around 4%. Mainly through its trade relationships with Europe and the Gulf, the global financial crisis did result in a slowdown of manufacturing, construction, and service-sector activity. All three sectors avoided a contraction of economic activity, however. While tourism receipts remained buoyant, the IMF estimates that Syria’s current-account deficit widened to around 4.5% of GDP. The fiscal deficit also widened to about 2.5% of GDP as the government increased investment and public sector wages to combat the downturn. Nonetheless, non-oil revenue managed a slight increase last year on the back of one-off tax evasion repayment incentives.
Furthermore, the authorities took a number of direct steps to limit the impact of the global financial crisis and a severe regional drought on Syria’s economy. In addition to tax incentives for companies who invest in remote or underdeveloped regions in Syria, authorities gave the newly created Agricultural Support Fund an initial budget of S£10 billion (US$212.8 million) in 2009 to support farmers. The support fund initiative aims to replace some input subsidies with direct cash transfers. On the monetary policy side, the Central Bank of Syria lowered reserve requirements for banks that boosted investment project lending in key areas and required public-sector banks to cancel penalties on overdue loans and reschedule amortizations. In addition, the bank lowered the indicative deposit interest rate to an average 7% from 8%.
IMF Staff Make Key Recommendations to Improve Macroeconomic Outlook
While authorities took prudent counter-cyclical measures to mute the impact of the global financial crisis, the IMF recommends quickly consolidating expenditures to bring down the fiscal deficit. To that end IMF staff are encouraging the Syrian authorities to continue replacing its diesel coupons with direct cash transfers to the poor and continue to move forward with administrative changes necessary to implement VAT by the end of 2011. Although implementation of the VAT has been delayed from its planned start-up in 2008, authorities have modernized customs regulations and drafted the VAT procedures code. Furthermore, the IMF urges authorities to align increases in state-sector wages to performance and public-sector reform.
In the financial sector, central bank authorities continue to move forward with plans to issue treasury bills as an alternative monetary policy tool, but in the IMF’s view broader monetary policy independence will remain limited in the near term. The IMF also noted concern that differentiated reserve requirements implemented in response to the global financial crisis could encourage banks financing less profitable projects and increase banking-sector vulnerabilities, and recommended phasing out preferential lending schemes. With credit growth averaging above 20% through the middle of 2009, the IMF encourages the central bank to further improve bank supervision. While public banks have begun to regularly report key financial-sector indicators to the central bank, the IMF notes that these data may not reflect their true condition since they employ outdated accounting practices in many cases. The sector’s limited global exposure helped limit the impact of the global financial crisis, but the IMF noted that the non-performing loan ratio of state-owned banks is likely to be significantly higher than the 6% reported, since many loans in arrears are not classified by the banks as bad loans since they are implicitly guaranteed by the government. The IMF recommends that Syrian authorities continue to modernize the financial sector and encouraged authorities to fully liberalize lending rates.
The Syrian pound is currently pegged to a basket of currencies contained in the IMF’s special drawing rights (SDR). However, the IMF feels that the pound’s peg to the SDR is currently done with a U.S. dollar weighting that is higher than its weight in the SDR. IMF staff recommended aligning the pound to the SDR by reducing the dollar’s weight in its currency basket in order to more adequately reflect Syria’s direction of trade. The IMF also recommends allowing greater exchange-rate flexibility over the medium term to ensure external stability.
Syrian authorities have made notable progress pushing through economic reforms to accelerate growth and boost employment. Authorities have broadly reduced import tariffs, reformed fuel and agricultural subsidies, and minimised the time necessary to approve foreign investment. While these achievements are notable the IMF also highlighted some backpedalling witnessed during the global economic slowdown. Authorities enacted variable customs duties in order to protect domestic manufacturing, a move which the IMF recommends be swiftly reversed. In order to enhance domestic competitiveness the IMF also suggested further reducing the number of goods subject to administrative pricing and enhancing the regulatory environment to boost foreign investment.
Outlook and Implications
Fiscal Policy: Gradually resume fiscal consolidation and restrain current expenditures.Tax Policy: Complete preparations necessary to fully implement a value-added tax (VAT) by 2011.Financial-Sector Reform: Reform public-sector financial institutions and eliminate differentiated reserve requirements.Exchange Rate: Allow for greater exchange-rate flexibility over the medium term.Reforms: Accelerate structural reforms including modernizing regulations, streamlining extensive subsidies, and further liberalising trade.Syria’s economy faces a number of challenges as President Bashar al-Asad pushes forward with his promise to transform the Syrian economy into a socialist market economy. Faced with limited opportunity to expand oil production significantly over the medium term, Syrian authorities have enacted a number of fiscal austerity measures over the last several years, including lowering fuel subsidies to bring expenditures down, liberalising exchange-rate controls, and opening the country’s financial sector to international investment and private-sector participation. While reforms have moved forward at a measured pace, authorities remain committed to improving the domestic regulatory environment to invite foreign investment and foster non-hydrocarbon economic growth. In this respect, Syria looks to attract significant investment to develop and promote high-growth industries, such as tourism, finance and insurance, and retail. Structural rigidities remain, though, and after decades of paternalistic fiscal and monetary policies that cushioned domestic industry with generous subsidies and trade barriers, traditionally strong industries such as textiles have so far found it difficult to compete as Syria has moved to eliminate trade barriers. While the investment climate remains hindered by the government’s overriding control of the economy, partially instituted reforms, and corruption, Syria’s warming diplomatic relations with the West should foster further reform and international investment over the medium term. With the economy surviving the global economic slowdown relatively unscathed Syria is well positioned to boost exports and attract greater investment inflows as regional economies recover this year. IHS Global Insight expects growth to rebound to near 6% this year.
Commentary: Iraq a catalyst for U.S.-Syria rapprochement?
Thursday, April 1, 2010
By Marwan Kabalan | Common Ground News Service
DAMASCUS, Syria — Following five years of tense relations between the United States and Syria, the Obama administration has appointed a new ambassador to Damascus — the current deputy ambassador to Iraq, Robert Ford. The nomination shows the central importance of Iraq to U.S.-Syrian relations. The U.S. war in Iraq drove a deep wedge between the two, but common interests over Iraq now seem to have become the latent force behind rapprochement.
When the Bush administration decided to invade Iraq in 2003, Syria openly opposed the plan. Syria felt that the United States was targeting it as well, as Washington’s political conservatives advocated regime change in Damascus, and so it supported the resistance to the U.S. occupation. The United States also accused Syria of allowing foreign fighters to cross the borders into Iraq and hosting senior members of the former Iraqi regime.
In the summer of 2004, however, Syria started to reconsider its policy. Increasing violence in Iraq and the growing influence of extremist groups, such as al-Qaeda, led Syria to place greater emphasis on stabilizing Iraq in order to reduce its effect on Syria…..
….Ahead of the latest general elections, Syria and the United States seemed to have been endorsing more or less the same policies on Iraq: encouraging the inclusion of all political parties in the electoral process, working to provide a reasonable level of stability and security and preventing sectarian violence or partition along ethnic lines. Syria also hopes to see the smooth withdrawal of all American troops according to the timetable set out in the U.S.-Iraq Status of Forces Agreement.
Indeed, there are a number of differences between the United States and Syria, such as disagreements over the pace of U.S. withdrawal from Iraq and Syria’s strong ties with elements of the former Iraqi regime. Yet, these differences could be overcome, particularly after the positive developments resulting from the March 7 general elections in Iraq, including strong performances by secular and nationalist forces.
Indeed, the two countries will have to agree on an overall strategy to cooperate to stabilize Iraq, an opportunity for the new U.S. ambassador to Damascus to bring five years of cold relations to an end.
U.S. Ex-Officials Engage With Hamas
By CHARLES LEVINSON
Several high-profile former U.S. officials, some with close ties to the Obama administration, met with Hamas in recent months, raising hope inside the group that its views are being heard at the White House.
White House officials and participants in the talks emphasize the meetings weren’t sanctioned by Washington. U.S. officials say there has been no change to Washington’s insistence that Hamas take a number of steps before official dialogue can begin.
Still, the talks have been interpreted by some officials inside Hamas, Israel and the Palestinian Authority, which is run by the Palestinian
…Ms. Schneller said she alerted the State Department to the invitation, and Washington approved it. “They gave me permission to go, which I found interesting,” she said. After the debate, she met one-on-one with Mr. Hamdan over tea, Ms. Schneller said.
“He was really genuinely interested in how to make a breakthrough in negotiations and how to engage constructively with the United States,” she said.
“… These contacts, which included the State Department’s approval of a debate between a senior U.S. diplomat and a Hamas representative, have been interpreted by Hamas — and Fatah, its rival — as a softening of the U.S. stance against the party.
Among those leading the charge is Rob Malley, who, along with other former U.S. officials, met with Hamas Foreign Minister Mahmud Zahar in Zurich last summer. A little history: Malley, Middle East and North Africa program director for the International Crisis Group, was forced to abandon his advisory role to the Obama campaign in summer 2008, due to his contacts with Hamas….”
JERUSALEM—Several high-profile former U.S. officials, some with close ties to the Obama administration, met with leaders of the Palestinian militant group Hamas in recent months, raising hope inside the group that its views are being heard at the White House.
White House officials and participants in the talks emphasize the meetings weren’t sanctioned by Washington. U.S. officials say there
has been no change to Washington’s insistence that Hamas take a number of steps before official dialogue can begin………
What has Gaza gained since Hamas won four years ago?
Michael Young, March 11. 2010 in the National
Handing Hamas a lifeline now is a terrible idea. It would only increase Syrian and Iranian control over the Palestinians at a time when Mr Fayyad is strengthening autonomous state institutions. It would also indicate that Hamas has succeeded, when the movement has, in fact, systematically undercut Palestinian interests. Hamas may eventually have to be brought into peace talks, assuming that Israel ever makes serious territorial concessions. But that should happen only when the movement’s power is greatly diminished, not a moment sooner…..
Hamas, the argument goes, is capable of obstructing progress in negotiations, so that only by engaging the group can the United States and the international community avoid such an outcome. The rationale is naive.
It is naive, above all, because it overlooks the extent to which Hamas has undermined the core principle guiding the regional strategy of the Palestinians until the death of Yasser Arafat. Under its late leader, the Palestinian Liberation Organisation defended what was known as the “independent Palestinian decision”, which meant ensuring the Palestinian cause would not fall under the control of individual Arab regimes. Among Mr Arafat’s bitterest rivals was Syria’s President Hafez al Assad, who repeatedly sought, and failed, to bring the PLO under Syrian authority.
Hamas has been far less successful than Mr Arafat in exploiting Arab contradictions….. Hamas reinforced its ties with Syria and Iran, …
Today the movement is highly dependent on Syria and Iran, whose calculations (along with Israeli intransigence) can only inhibit the emergence of an independent Palestinian state; …
Today the movement is highly dependent on Syria and Iran, whose calculations (along with Israeli intransigence) can only inhibit the emergence of an independent Palestinian state; ….
Islamist parties have lost momentum throughout the Middle East in recent years. Despite their many differences, all have one problem in common: they offer no persuasive vision for nation-building. In Iraq’s elections last weekend, religious parties lost ground to broad-based “nationalist” lists. In Egypt, the Muslim Brotherhood is divided over how to deal with the state. Hamas has failed in its bid at governing, and its crushing of Fatah in Gaza in 2007 created many enemies. Even Hizbollah, arguably the most successful of the Islamist groups, has dangerously antagonised Lebanon’s Sunnis in recent years, while all it offers to the Lebanese is a prospect of incessant conflict with Israel.
Michael Young in “Hizbollah, Hamas and the false promise of resistance,” notices that Arabs are failures at resistance and have been on a losing streak for …. well, a long time. Worse than being simple failures, he proposes, Hamas and Hizbullah are, in effect, traitors. They fight not so much against Israel but against their own “national authorities,” undermining their own cause and people. He concludes, “nothing has damaged the Arabs more than resorting to wanton violence that leads nowhere. Such behaviour betrays only vanity, with little chance of reversing injustices.” (The National, 2010-04-0)