On the mend
Private banks, cheaper cars and higher salaries are some recent measures pushing Syria towards a brighter economic future. Iason Athanasiadis in Aleppo asks what went right
With starbursts and other fireworks cascading over Aleppo's brooding citadel last Saturday evening, it was a good moment to stand back and take stock of Syria's economy three years after President Bashar Al- Assad assumed power. The impressive array of sparklers lighting up the low-slung suqs -- ancient marketplaces dating to pre- Islamic days -- were the culmination of the Aleppo leg of a three-stage festival commemorating the Silk Road. Away from the centre, in Aleppo's medieval Jdaideh Quarter, the proud mansions of Armenian merchants grown rich from trade in the Ottoman era stood only half-lit. Their owners and families were down at the Citadel, attending the festivities with the rest of the city's political and business elite.
A week later, fireworks of a different type were lighting up Syrian skies. On the same night as a suicide bombing in Haifa killed 19 people, Israeli jets attacked what they called an Islamic Jihad training camp in Syria, ending 30 years of cross-border "cold peace". These 30 years have seen an unprecedented period of stability in the country as well as an attendant political and economic stasis. Today, Syria is emerging from a state-run socialist system run along Soviet lines to embrace a more open economy. Syrian President Bashar Al-Assad has made some decisive moves within the limits imposed on him by the coterie of powerful septuagenarian advisers he inherited from his father. He has formed two new governments since assuming power, is set to sign a wide- ranging trade agreement with the European Union (EU) late this year, and has paved the way for the introduction of private banks.
"Much remains to be done but at least it's clear that there won't be any return to the past," says Paris-based Syria specialist Jihad Yazigi, the editor of The Syria Report, a monthly analysis digest.
Saddled with a $22 billion of Cold War debt and suffering from a weak economy and a hostile political climate in its neighbourhood, Syria is scrambling to turn back from the brink of economic oblivion. The country's bloated public sector -- a monument to inefficiency that now occupies around 40 per cent of the national economy -- stands testament to the state's commitment to being the main employer and sole provider of all key services. Syria does not publish unemployment statistics but according to private estimates, unemployment stands at up to 20 per cent of a workforce of six million. In 2000 -- the year Assad assumed the presidency from his father -- a UN report estimated unemployment among workers aged 15-24 at 29 per cent.
Another report, issued by the Arab Economic Unity Council (AEUC), put the number of unemployed in Syria at a conservative 432,000 in the late 1990s, up from 88,000 in 1970.
In a region already plagued by unemployment, that spells more than a fivefold increase in jobless workers. If the paltry average state worker salary of $100- 200 and the government's decision to rule out layoffs or privatisations is added to this mix, the result is an intriguing conundrum: how to completely reform a failed economy even while maintaining some basic elements of the malfunctioning whole unchanged?
It is this puzzle that has engaged Syrian economists in a lively debate over the past three years. Some, such as US-trained economist Nabil Sukkar argue that the "moribund" public sector should be allowed "to die a natural death. It cannot be saved." Others insist that a softer approach might bring less wealth into the country, but is also bound to avoid the kind of negative social effects that post-Soviet Russia still finds itself struggling with -- mass impoverishment, homelessness, unemployment, drug-use and prostitution.
After almost a decade of dithering, Syria has indicated it is ready to sign an association agreement with the EU aimed at creating a zone of shared prosperity throughout the Mediterranean basin. It is a deeply political strategic decision that is being compared to the one taken by Damascus in the 1960s when it sided with the Soviet Union. Today, the massive edifice of the Russian Embassy towers over a whole quarter of the Syrian capital. Then, as now, the purpose of the alliance was intended to keep pro-Israeli Washington at arm's length.
"It will be much more difficult for the US to attack and pressure a country which is a 'partner' of the EU," says Yazigi. "And that partly explains why negotiations have gone much faster in the last few months." The downside of the political covering fire that belonging to the grouping might offer Syria are the paltry economic benefits to the country in the short and medium term.
"Syria is the last country in the region to sign the agreement and therefore has a very reduced negotiation margin," Yazigi opines. "Its peasants and industrialists are going to suffer from European competition as other countries throughout the Mediterranean have suffered. However, Syria simply doesn't have the option to remain out of it."
Still, Syria was the only Mediterranean partner of the EU to have recorded a trade surplus in recent years. In 2000, the EU accounted for 34 per cent of Syrian imports and 66 per cent of its exports. In the country's markets, it is easier to get hold of foreign currency, and the formerly fluctuating dollar exchange rate has settled for the past three years at just over LE50 to the dollar. With prospects for the Syrian economy appearing rosier, those living beyond the country's borders are starting to explore business opportunities, with Syrian expatriates leading the way. A recent article penned by one of the few foreign journalists living in Syria, Brook Anderson, noted that this influx of returnees should lead to the return of some of the valuable foreign capital held by Syrian émigrés in banks outside Syria, estimated at between $60-100 billion. Waddah Al- Khatib, head of the international relations department at the University of Damascus who returned to Syria after living abroad for a decade, is quoted as saying: "There is more meaning in coming back to Syria and serving my country than staying abroad."
Al-Ahram Weekly Online : 30 October - 5 November 2003 (Issue No. 662)
Located at: http://weekly.ahram.org.eg/2003/662/re5.htm