News Round Up (18 Aug. 2008)

Egypt and Saudi promise better relations with Syria: Alex writes:

Amr Moussa says he is expecting some promising developments that might lead to improved relations between Egypt/Saudi Arabia and Syria.

Mubarak and King Abdullah met and they claim that now that Syria is willing to have an ambassador in Lebanon, they might feel a bit more generous with Syria.

How sweet, and honest, of them.

وكان لإعلان بيروت ودمشق الاتفاق على تبادل التمثيل الديبلوماسي الكامل بينهما صدى في لقاءات الإسكندرية. ووصف السنيورة هذا الاعلان بالخطوة «المهمة (وتأتي) على المسار الصحيح»، ونقل عن مبارك «تأييده وتأييد مصر لكل عمل يؤدي إلى دعم العلاقات العربية – العربية وهذه خطوة على الطريق الصحيح». وتوقع موسى «تطورات إيجابية ستؤدي إلى نتائج إيجابية»، حين سئل عن ما إذا كان هناك تحسن في الأجواء بين القاهرة والرياض من جهة ودمشق من جهة أخرى.

Iran and Syria, in the role of Russia
Itamar Rabinovitch / Haaretz

Now that the fighting in Georgia has died down, policy shapers and pundits in the West are free to analyze the maneuvers and results, and draw lessons. The picture that emerges is a dismal one. Vladimir Putin's Russia exercised brutal force with the object of bringing a rebellious neighbor to its knees. The United States, which encouraged Georgian President Mikheil Saakashvili to defy Moscow, did not give him any real support. Former Soviet republics and satellites will now think twice before confronting Russia, or will be tempted to seek shelter beneath the cover of the U.S., NATO or the European Union. Oil is now much less likely to reach the Caspian Sea without Russia's involvement.

The Georgian crisis will have specific repercussions on the Middle East. There is less of a chance that the United States and Russia will be cooperating to stop Iran's nuclear program. There is a greater chance that Russia will wage a more ambitious and aggressive policy, including selling advanced weapons systems to Iran and Syria. There will also be a host of indirect repercussions. In this context, there is a striking similarity between the Russian move in the Caucasus, and Iran and Syria's move in Lebanon.

On May 7, an armed struggle broke out between Hezbollah and the so-called March 14 coalition, led by Lebanese Prime Minister Fouad Siniora. The crisis was prompted by Siniora's refusal to put up with Hezbollah having its own nationwide communication network, another blatant blow to the Lebanese government's sovereignty. Hezbollah beat its rivals in the violent conflict, but refrained from extracting a military achievement, opting instead for political gains.

On May 23 a political compromise was reached in Doha, Qatar, enabling a new government led by Siniora, and letting the elected president, General Michel Suleiman, enter his post. In addition, Syria agreed, with French mediation, to establish diplomatic relations with Lebanon, thereby obliquely recognizing it neighbor's independence and sovereignty. That understanding paved the way for Bashar Assad's invitation to the July 13 conference of the new Union for the Mediterranean, as an honored guest of France. …..

In early 2009, Israel will have to choose between a political response (from an Israeli standpoint, an agreement with Syria; from an American standpoint, dialogue with Syria and possibly Iran), and preparing to meet more serious challenges than the ones we faced in the summer of 2006.

The writer served as Israeli ambassador to the United States.

A third Syrian airline, The Damascus Pearl, is being established under the ownership of the Makhlouf family, the family of Assad's mother


تأسيس ثالث شركة طيران خاصة حملت اسم (لؤلؤة الشام) مملوكة من آل مخلوف

Syria: Maybe This Time for DSE
Oxford Business Group
The long delayed opening of the Damascus Stock Exchange (DSE) is again back on the table, though Syrian market watchers may be taking the news that trading will start within a few months with a pinch of salt. On August 11, Abdallah Dardari, Syria's deputy prime minister for economic affairs, said the Damascus bourse would be launched before the end of the year, whether or not all of the technical requirements had been put in place.

"Before the end of this year, even if it means trading on a chalk board, I told them they have to start dealing," Dardari said in an interview with Business International Middle East.

While this might sound like a firm commitment from one of the most senior ministers in the Syrian government, similar declarations of intent have been made annually since 2005, when the parliament ratified a series of regulations clearing the way for a stock market to be set up.

First scheduled for early 2006, the opening of the exchange was again announced for early and then late 2007, and again for the first half of this year. While few reasons have been given for the repeated postponements, Syria has struggled to gain access to the necessary technology to operate a modern stock market. This has mainly been due to the US embargo on Syria, first imposed in 2004. This has limited Syria's access to high tech computer equipment, including that needed to serve as the backbone for the stock exchange.

An example of this was the refusal by the Scandinavian exchange Nordic OMX, which was taken over by the investment arm of the government of Dubai in 2007, to provide the required technical assistance.

Today, with the apparent dawn of a new era of rapprochement following Damascus' opening of peace talks with Israel, improving ties with a number of Arab neighbors, its support for the forming of a national unity government in Lebanon and the warm welcome President Bashar Al Assad received from European leaders when he attended the Mediterranean Union summit in Paris in mid-July, this could change.

According to Faud Lahham, a management consultant who has advised on the stock exchange project, the Syria's market regulatory body – the Syrian Commission on Financial Markets and Securities – was in talks with both Jordan and Dubai about using their technology for the DSE.

Perhaps less optimistic than Dardari, Lahham told the Financial Times on July 7 that the stock market was on course to open at the beginning of 2009, with around 30 companies set to be listed……

One company that may be listed on the Damascus exchange is national flag carrier Syrian Air. Announcing plans for the airline to buy 50 aircraft from Airbus on August 13, Dardari said the restructuring and re-equipping of the company could be a preliminary to an initial public offering on the Damascus stock market.

Syria lures investment as Gulf countries ignore US sanctions
Massoud Derhally for Bloomberg
Monday, 18 August, 2008,

Foreign investment into Syria from the Gulf was about $750mn last year and may have exceeded $2bn annually over the past five years, said Abdallah Dardari, the country's Deputy Prime Minister for Economic Affairs

DAMASCUS: Abdallah Dardari, Syria’s Deputy Prime Minister for Economic Affairs, has said his country is luring record foreign investment, mostly from oil-rich Arabian Gulf states, and that US sanctions have had a limited impact.

“I don’t think the US has managed to damp foreign direct investment,” Dardari said in an interview in Damascus last week. “Sanctions have failed, especially when they are unilateral.”….

Dardari said that funds from wealthy Arab states are compensating for a drop in oil production, helping push economic growth to about 6% this year, he said…..

Dardari’s growth forecast may prove optimistic, with the Economist Intelligence Unit estimating that growth will slow to 2.4% this year, from 4.3%, because of falling oil production and a poor harvest.

Oil output has declined to 385,000 bpd from a peak of 590,000 bpd in 1996.

Revenue from oil dropped to less than 4% of gross domestic product last year from 17% in 2004, Dardari said. Non-oil exports exceeded $12.5bn, compared with less than $1bn in 2000, spurred by regional demand for items such as textiles, pharmaceuticals, cotton and agricultural produce.

Rising inflation is also a challenge, forecast to accelerate to 16.8% in 2008 from 12.2% last year because of reductions in fuel subsidies and a 25% increase in government salaries and pensions, according to the EIU.

Reducing some of the fuel subsidies “has cooled an overheating economy in the first half of 2008 which helped reduce inflation rates contrary to what everyone thought,” Dardari said. “Raising the price of diesel reduced inflationary expectations and everyone realized the market will stabilise.”

To boost investment, in January of last year, Syria introduced a law allowing foreign investors to own or rent land and take profits out of the country in any currency…..

The government is also in the process of formulating a thorough value added tax regime that will be ready by the end of the year, Dardari said. The VAT will increase the government’s revenue with a limited impact on production and investment, according to the International Monetary Fund…..

Syria Receiving $3 Billion in Remittances, Central Banker Says
By Massoud A. Derhally

Aug. 13 (Bloomberg) — Syria is receiving at least $3 billion a year from citizens living abroad and is considering its first sale of treasury bills to drain funds from the banking system, the central bank governor said.

“People are banking more, remittances are coming back and so financial institutions are looking for ways to use this liquidity,'' Adib Mayaleh said in an interview in Damascus today. Treasury bill sales would be “a way for us to control liquidity.''….

Clouds over Lebanon and Syria
The establishment of normal diplomatic relations between Syria and Lebanon is seen as a positive, but Syria's real intentions are still at issue.
Sunday, August 17, 2008
By Fady Noun in Spero News.

The Lebanese have received peacefully the news of an upcoming exchange of ambassadors between Lebanon and Syria, following a decision placed at the opening of the joint statement published at the end of the meeting between presidents Bashar el-Assad and Michel Sleiman (August 13-14). But no one is celebrating it. … Everyone wants to believe the good news, everyone wants to believe in the magic wand of the Doha agreement, but everyone is also asking how long these good relations will last. … Mr. Moallem has spoken of "privileged relations" between Lebanon and Syria, an expression that refers directly to an agreement of cooperation, coordination, and friendship imposed on Lebanon in 1991…

Syria continues to be a concern, notably because of its lack of transparency. This includes the country's refusal to mark the boundaries of the region of Shebaa, which is preventing Lebanon from reclaiming by diplomatic means the part of its territory occupied by Israel. Hezbollah's weapons and the organic relationship between Hezbollah and Iran, through Syria, are still a problem, in the eyes of many Lebanese….

KNAISSEH, Lebanon — For years, residents of this Lebanese village have slipped in and out of Syria over a border that was never officially marked. Even after Syria set up sand barricades in 2006 to stop smuggling, they found ways to make the journey.
Last week, after agreeing to establish diplomatic ties for the first time in their complex history, the leaders of Lebanon and Syria announced that they will resume work on officially demarcating the border.

But the residents of Knaisseh say such talk means little to them.

"They could build walls. We would still find a way to cross to the other side," said Fadlallah Khodr, a shepherd and father of 10 who lives in Knaisseh. "It is a matter of survival. Half of my family lives on the other side. I cross there on a daily basis, to see them and to shop."

The villagers say any move toward formalizing the border would disrupt their lives. Like Khodr, many here have family and friends in Syria, and marriages between Syrians and Lebanese are common. The nearest major city, Homs, is a 30-minute motorbike trip away in Syria, closer than any large village on the Lebanese side.

Response to 9/11 Offers Outline of McCain Doctrine
By DAVID D. KIRKPATRICK, August 16, 2008 , NYTimes

…. In a marathon of television and radio appearances after 9-11, Mr. McCain recited a short list of other countries said to support terrorism, invariably including Iraq, Iran and Syria.

“There is a system out there or network, and that network is going to have to be attacked,” Mr. McCain said the next morning on ABC News. “It isn’t just Afghanistan,” he added, on MSNBC. “I don’t think if you got bin Laden tomorrow that the threat has disappeared,” he said on CBS, pointing toward other countries in the Middle East….

As American troops massed in the Persian Gulf in early 2003, Mr. McCain grew impatient, his aides say, concerned that the White House was failing to act as the hot desert summer neared. Waiting, he warned in a speech in Washington, risked squandering the public and international support aroused by Sept. 11. “Does anyone really believe that the world’s will to contain Saddam won’t eventually collapse as utterly as it did in the 1990s?” Mr. McCain asked.

In retrospect, some of Mr. McCain’s critics now accuse him of looking for a pretext to justify the war. “McCain was hell-bent for leather: ‘Saddam Hussein is a bad guy, we have got to teach him, let’s send a message to the other people in the Middle East,’ ” said Senator John Kerry, Democrat of Massachusetts…..

Lamia ShakourLamia Youssef Shakour has been named the new Syrian Ambassador to France. Amb. Shakour is the daughter of Gen. Youssef Shakour who also served as Ambassador to France. Shakour has worked for the UN in New York and presently directs the United Nations Human Settlements Programme in Kuwait. Mrs. Lamia Chakkour, Chief UN-HABITAT Kuwait.

For an interesting interview with Israel's Foreign Minister on the Georgia situation and whether Israel's soft stand toward Russia will win Russian good will in not arming Syria.

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