Syrian expert on economic possibilities and hazards
By Nabil Al-Mulhem, Albawaba-MEBG, Damascus
In an interview to Albawaba-MEBG, Nabil Marzouq, a Syrian economic expert and a top official at the ministry of planning, stated that Syria’s economic alternatives after the failure of the 1986 reform program are limited. Marzouq explained that the country could either get fully involved in globalization, regardless of its national interests; or approach globalization cautiously, without compromising these interests. The second alternative is feasible only through regional cooperation, according to Marzouq, who was commenting on the recent accelerating developments in the economic sphere in Syria.
Marzouk also believes that in the absence of basic monetary and banking laws, it is dangerous to license private banks or establish a stock market. In the second part of his interview, Marzouq criticized this decision, saying that the government has ignored the opinion of many, including parliament.
The following are excerpts from the interview:
Q: What are the alternatives for Syria’s economic future?
A: Relatively speaking, the alternatives are limited in light of different regional and international variables, which press Syria to be fully involved in globalization and abandon any national option. In fact it has already partially joined this international trend. This option is imposed upon Syria by the international capitalist centers of power ¯ the International Monetary Fund, the US and the EU ¯ although the last two have different visions for the region.
As far as the US is concerned, the best formula is a Middle East market, with Israel as a member. The US has tried, through the International Monetary Fund, to impose the restructuring necessary for such a project, while the EU proposed the Euromed partnership, by which Syria will join globalization under the European umbrella. In both cases, Syria joins the globalization trend, implying changes including market liberalization, abolishing censorship and allowing local and foreign capital to work freely to dominate the national economy.
The other option for Syria, which is the more difficult, is to fight a Syrian economic war by concentrating on national socioeconomic development and regaining the central role of the state. If the country is to adopt this option, it has to work for national solidarity and stand up to the challenges and pressures laid upon it.
Q: Are you relating here to the two extreme options Syria has?
A: There are not many options. However, the second choice does not necessarily imply total isolation. Rather, it involves approaching globalization, but at the same time taking into consideration the national interests of Syria. There country may well succeed in doing that, especially if the plan is linked to a solid national front and cooperation with other countries in the region.
Q: Where do market forces and private capital stand under the second option?
A: When I talk about state interference, I do not mean that market forces are eliminated. The state’s role is to draw strategies and facilitate development processes.
Q: Who is to make the decision? As we know, dialogue is now underway between market forces and bureaucracy.
A: Syria started an economic reform process in 1986. In its major part, the plan was drawn according to the guidelines of the International Monetary Fund, although Syria was not an indebted country.
However, it has been noted that between 1986-2000 the Syrian GNP declined, productivity became weaker, standards of living fell and economic growth in general declined. It is true that external factors, such as higher oil prices, have taken their toll. But the major factor behind the deterioration was that the state’s role retreated.
The decrease in the size of government investments led to a drop in the economic growth, which was not compensated for by the new policies of encouraging private and foreign investment, and the 1986 law that allowed joint companies to invest in agricultural projects.
At their peak, foreign investments ¯ despite the exemptions and facilities offered ¯ could not bring about the growth achieved in 1985. In 1995 investments fell sharply, reaching their lowest point in 2000.
When the state realized this in the early 1990s, it tried to restore part of its economic role and invested more money in restoring and replacing economic projects. However, revival was limited and did not pay off. Neither did it help increase productivity or reflect on growth rates.
The consequences of the 1986 program were catastrophic ¯ a drop in growth rates, decline in the per capita share in production. In the second half of the 1990s, 12-13 percent of the workforce was jobless and newcomers were difficult to absorb. In certain areas, the percentage of unemployment reached nearly 20 percent.
After the failure of the reform program, it was necessary to find other alternatives, requiring different orientations. There is dialogue held now at different levels: the media, public seminars and government institutions. The regional command of the ruling Baath party has formed ad-hoc expert committees to explore new alternatives. The ministries of industry, economy and planning have submitted working papers, elaborating their views, and the Economic Sciences Society has staged a number of lectures and seminars discussing reform programs for the country.
Q: What are the basic views on economic reform?
A: The first group believes that the 1986 plan should be implemented at a faster pace. They think that the sluggish implementation of reforms was the reason behind the negative outcome of the scheme. They say that there should be more openness in the market and downsizing in the role of the state, while some of them call for privatization.
Q: Who represents this point of view?
A: They are few. They do not represent a tendency because not all private sector components agree with these ideas, especially small businessmen who think this approach is destructive to the Syrian economy and call for preserving the state’s role in the process of development. However, those linked to foreign firms support this view, as they seek lowering of restrictions and taxes to provide them greater opportunities. The people who support this more liberal approach are not a political party or a class. The second approach is more representative, because people holding it belong to institutions that are physically there.
Q: Tell us more about the papers presented to the Baath regional command.
A: Echoing views published in the media and discussed at seminars, there is a trend calling for a comprehensive economic reform which preserves the state’s role. This approach calls for defining the framework for the activities of each economic sector while guaranteeing pluralism. This is where the government can step in. This approach is not against the private or joint sector, but it calls for defining the role and limits for each. To achieve this, all groups should participate in decision-making.
Q: Who partook in the decision to open the stock market and allow private banks to operate?
A: What happened in fact was that the government submitted to parliament two draft laws ¯ one covering the stock market, and the other private banks. Deputies rejected both unanimously, warning of the risks connected with such bills in the absence of a basic monetary law, a monetary council and an effective role for the central bank. The government had completely ignored the opposing viewpoints, including that of the People’s Assembly.
Q: Where are things headed to presently?
A: The present government seems to be following in the footsteps of the previous one ¯ it will disregard all other opinions. Although it has provided greater freedom for people to express their opinions in the media and through dialogue, it has not taken these opinions seriously.
Q: So what’s the point then of a national dialogue?
A: Participation does not mean only to express your opinion. Rather, it is participation in the decision-making process, and this has not been the case so far.
© 2001 Mena Report (www.menareport.com)