|GDP real growth rate (%)||-4.4||0||2.0|
|Total Exports (US$bn)||3.09||4.5||3.2|
|Total Imports (US$bn)||3.26||4.7||3.2|
June 10, 2000 marked the end of an era in Syria. After almost 30 years in power, President Hafez al-Asad (70) passed away in Damascus from a heart attack. There are now many doubts regarding the future prospects of this country, which enjoyed relative domestic stability, though achieved with an iron grip and sometimes in brutal ways to suppress any opposition.
It appears as though the late President Asad’s eldest son, Dr. Bashar, is poised to succeed his father. Soon after his dad’s death, Bashar was appointed head of the Ba’ath Party and commander of Syria’s armed forces. On June 27, Syria's parliament unanimously approved the nomination of Bashar as the country's next president and set July 10 for a public referendum to endorse his accession.
A 34-year old ophthalmologist, Bashar has been groomed since 1994 for the country’s leadership. In order to prepare for his succession, Bashar experienced a short military career, and began dealing with issues that were popular with the public (e.g., anti-corruption drive, Internet introduction). President al-Asad had devoted himself to the task of paving the way for his son in order for his succession to unfold smoothly. In doing so, he neutralized potential rivals who were capable of threatening Bashar’s future rule over the nation. However, the Syrian hard-liner did not have enough time to arrange the entire complex for his son. Some of the veteran leadership, who in recent months were carefully scrutinized by the late president, still maintain substantial influence within the military and security apparatus. Their presence creates a major opposition force against the young heir.
The demise of al-Asad puts strong question marks on the possibility of resuming peace negotiations with Israel. It was widely agreed that if Hafez al-Asad were to have signed a peace pact with Israel, the Syrian people would have deemed it acceptable. Now, the consensus of experts on the subject is that a new leader, in his first years in office, will not have the resources nor the persona to bring his people towards a comprehensive peace with Israel, that may involve some Syrian concessions.
The path for Bashar’s accession was cleared in early March with the formation of a new cabinet. Former Prime Minister Mahmoud al-Zu'bi (who later committed suicide after corruption allegations) was replaced by a relatively unknown figure in Syrian politics - the governor of Aleppo province, Mustafa Miro (59). During his five-year reign over the second most important region of the country, Miro earned a reputation of honesty and a determination to combat corruption. The character of Syria’s new cabinet should serve to strengthen Bashar's power base in his homeland.
Bashar must begin his term in power by focusing on rectifying domestic affairs, the economic predicament being first on his list. Syria’s economic performance in recent years under president al-Asad has been uninspiring at best. Growth rates are sluggish and national resources are becoming considerably scarce. The country faces the hardship of creating enough jobs for the younger generation and attempts to diversify and modernize the economy have failed. According to official sources, the local unemployment rate reached 9.5 percent in 1999. Nonetheless, this official figure does not accurately depict the Syrian labor market; in practice, the unemployment level is close to 20 percent. Accordingly, many Syrian job seekers cross the border to Lebanon to earn a living. The country's nearly 17 million citizens will reach 25 million by 2025, thus necessitating the allocation of $4 billion this decade for job creation alone. The foreign trade situation is also bleak. The total value of exports in 1999 amounted to less than $3 billion (consisting mainly of crude petroleum and cotton), while imports hit nearly $3.8 billion.
A major barrier to Syria’s economic development has been the seclusion policy that the regime first adopted decades ago. This caused potential investors to shun this promising market. Altogether, incoming foreign investment into Syria was set at $100 million last year, most of which came from Syrian expatriates and Arab entrepreneurs. The newly established government has been trying to address this issue and it recently decided to encourage investment from abroad by relaxing restrictions on land ownership.
Local businessmen saw this move as a step in the right direction, in spite of the fact that many other measures must be taken in order to revive the fragile economy. An absolute makeover is required by the banking sector, which is still owned and operated by the government. Early indications demonstrate that Bashar plans to overhaul this sector. One of the new leader’s first moves has been to allow foreign banks into the country to operate in free zones. According to this measure, banks with a minimum capitalization of $11 million in foreign exchange will be permitted to transfer and receive foreign currency without restriction and will not be obliged to pay taxes. By permitting foreign banks to operate freely, Bashar seems determined to create a parallel banking system that will circumvent the country’s present financial apparatus – controlled by his late father’s loyalists – without directly challenging their entrenched interests.
Since 1970, President al-Asad has forcefully positioned Syria on the Middle East political map. It became obvious that a comprehensive peace could not be achieved without finding a settlement to the Syrian – Israeli dispute. Nevertheless, in a 30-year retrospective it appears as though al-Asad sacrificed most of Syria’s national interests on the altar of the confrontation with the Jewish State. Hence, today Syria is one of the most isolated nations in the world. Terms such as globalization, liberalization, privatization, and even the Internet and cellphones are anomalies in daily Syrian life. The economy and related infrastructure desperately require profound modifications in order to bring prosperity to the average Syrian, who earns an annual average income of approximately $1,200. Syria's business community hopes that Bashar will succeed in consolidating a peace agreement with Israel, thus allowing the country to reap lucrative economic rewards, similar to what Jordan and Egypt previously experienced.
© 2000 Mena Report (www.menareport.com)
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