Go-slow reforms, repression keep lid on potential turmoil in Syria
Damascus, Syria David Rosenberg – Syria sits on the same economic and social tinderbox as Egypt and other Arab countries, but the government’s go-slow approach to reform and tight control over information puts it in a better position to avoid the kind of turmoil that has enveloped much of the Middle East, according to economists.
Officially, the Syrian government is portraying the mass protests around the region as a rebellion against U.S. hegemony and Israel. After an on-line call for a “day of Rage” in Damascus on Feb. 4 and 5 fell flat, the government announced it was ending a 3-year-old ban of the Facebook and YouTube social networking sites. But analysts said Damascus shouldn’t think it is immune from unrest.
“The Syrian regime has to be worried about turmoil,” Lahcen Achy, an economist with the Carnegie Middle East Center in Beirut, told The Media Line. “They are trying to implement fixes to quell potential anger. The social situation in Syria is similar to Egypt and Tunisia.”
Even as Syria’s gross domestic product has grown a fairly brisk 5 percent annually on average over the past five years, that hasn’t been fast enough to keep up with population growth. Syria’s unemployment rate is probably about 10 percent and among the country’s large young population it may three times that level. Some 36 percent of all Syrians are under age 14, which means the pressure on the government to create jobs will only grow.
Corruption is pervasive, with Transparency International ranking it among the world’s worst. And, if only about 12 percent of the population is below the country’s official poverty line, Syria is on the whole a poor country, with GDP per capita of $4,800, less than its neighbors Jordan and Turkey. The Ba’ath Party has ruled Syria uninterrupted since 1963.
Syria’s all important agricultural sector, which is a critical source of employment, has been hit by drought in the east and by mismanaged water resources. That causes a flood of immigrants into Syria’s cities over the last few years, creating an unprecedented level of urban poor. Syria’s limited reserves of oil are rapidly depleting.
Syrian President Bashar Assad said in a Jan. 31 interview with The Wall Street Journal that he was confident his government faced no threat of popular unrest. But he also promised to implement reforms, and the government has restored some subsidies. Right after Tunisia’s leader Zine El Abidine Ben Ali went into exile, Damascus announced it was increasing the heating oil allowance for public workers by 72 percent to the equivalent of $33 a month. This week it reduced tariffs on many imported food items.
That marked an about-face for the government, which like its peers elsewhere around the region, had been slashing subsidies.
The Syrian government was late in taking up economic reforms and has implemented it slowly. Change only got underway a decade ago after Bashar Assad succeeded his father to the top office in 2000 and only picked up momentum in the last three or four years, economists said.
Most of those reforms have focused on the financial sector – allowing private banks, easing rules on foreign investment and allowing a small stock exchange to open in Damascus, Said Hirsh, Middle East economist for Capital Economics in London, told The Media Line what reform hasn’t included is widespread privatization.
That has left Syria’s industry inefficient and uncompetitive globally and largely in state hands. But, it also means that a class of wealthy, connected businesspeople, like the Egyptian entrepreneur Ahmed Ezz, who enriched himself through close ties to the family of President Husni Mubarak and became the target of popular wrath, doesn’t exist in Syria for now, said Achy.
Officials in the government, army and the ruling Ba’ath Party have grown rich in the state-dominated economy – and analysts said they constitute a major obstacle to the economic reforms Syria needs — but the average Syrian probably isn’t aware of it. The government’s pervasive control of information and an elaborate domestic intelligence operation ensures that.
“The regime in Syria is very close, so there is some opacity about who is benefiting,” Achy said.
Thus, Syria’s first casino in nearly four decades on the highway between Damascus and the airport is shrouded in mystery. When it opened last December, the event received almost no local coverage. Reportedly owned by Khaled Houboubati, it apparently was never awarded a license even though it could not have been opened without official permission. Admission is mostly limited to foreign tourists and Syrian expatriates. Visitors report that Assad’s portrait, ubiquitous everywhere in the country, is not to be found.
Syria has the financial resources to buy time for its economy by increasing subsidies and by preserving jobs and entitlement with an inefficient state sector because the government holds a large $18 billion in foreign currency reserves and has relatively little debt on its books, said Hirsh. The reforms that have been implemented should encourage more foreign investment from the large Syrian expatriate community, he said.
“With economic reforms, workers’ remittances have been increasing and that has been an important source of investment,” Hirsh said. “The economic reforms are important to give some confidence for Syrian expatriates to start putting money back into the country.”
Tourism is a growth industry. The number of arrivals, including one-day visitors, jumped 42 percent to 9.5 million last year as visa restrictions have been eased with Turkey. Although regional unrest may put a damper on foreigners visiting the Middle East, Syria was listed among Lonely Planet’s top 10 countries for 2011.
Growing trade with Turkey, which wants to form a free-trade area with Syria, Jordan and Lebanon, may also help the Syria economy, Hirsh said.
View full post on All Stories
stock market day trading | admin | February 19, 2011 | 
Comments (0)
Ahmed Ezz, Beirut, Ben Ali, Damascus, damascus syria, david rosenberg, Egypt, gdp per capita, Goslow, government, Hirsh, Israel, Jordan, keep, Line, London, mass protests, Middle East, percent, Potential, reforms, repression, social networking sites, SYRIA, syrian regime, Tunisia, Turkey, Turmoil, U.S., Wall Street
