Syrian Neoliberal Advocates Go International

Syrian Neoliberal Advocates Go International
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Published June 30th, 2013 - 09:57 GMT via SyndiGate.info

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A picture from the opposition-run Shaam News Network shows rebel fighters in the northern city of Aleppo on June 24, 2013. (Source: AFP / HO / SHAAM NEWS NETWORK)
A picture from the opposition-run Shaam News Network shows rebel fighters in the northern city of Aleppo on June 24, 2013. (Source: AFP / HO / SHAAM NEWS NETWORK)
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Washington DC
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Aleppo
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Damascus
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Abdullah Dardari and Co.
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WTO
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Syrian Enterprise and Business Centre
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European Union
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World Bank
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Global EconomyThe government
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International Monetary Fund
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Syrian government
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US Treasury Department

Prior to the conflict in Syria, the regime implemented neoliberal economic policies as part of an “infitah,” or opening, of the Syrian economy to private investment. It was claimed that liberalizing trade would become an engine of growth – one of the favorite slogans of neoliberal economists.

Advocates of liberalization and big business in Syria found the new economic policies, adopted prior to March 2011, an ideal opportunity to enrich themselves at the expense of the people. Some industrialists even shut down their factories, laid off their workers, and turned into importers since it was more profitable than manufacturing.

Syria’s trade liberalization took place through a package of policies that were promoted as part of a comprehensive program to transition into a free-market economy. This prescription, similar to the ones followed by socialist countries after the fall of the Soviet Union, was the brainchild of Washington DC-based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department. The plan came to be known as the Washington Consensus.

Some of the main policy recommendations of this program include:

Increasing reliance on free markets, including liberalizing trade and opening the door to foreign investment.

Encouraging the local private sector and foreign private enterprises to do business in the country, as well as encouraging private-public partnerships or full-scale privatization of public utilities.

Reducing the role and size of the government and scaling back its intervention in economic and social affairs.

The Slogans of Abdullah Dardari and Co.

In other words, trade liberalization is actually one of the pillars of the Washington Consensus. But does liberalization really lead to growth?

The Syrian government’s economic team, led by Abdullah Dardari, fully espoused this slogan, and began promoting it widely. They were assisted by European Union envoys; the Syrian Enterprise and Business Centre (SEBC) in Damascus and Aleppo; the World Bank; and IMF missions.

The trade liberalization program is based on the liberalization of imports, with particular emphasis on elimination of administrative and quantitative restrictions. An element of the program supposedly encourages exports, but it seems that this was a mere afterthought meant to cover up the emphasis on imports.

The paradox here is clear: Removing restrictions on imports and reducing tariffs simply means destroying national manufacturing, as the playing field would favor foreign goods. As a result, thousands of factories, plants, and ateliers would have to shut down, and their products would be driven out of the markets.

This would essentially mean thwarting the second goal of the program, namely, to encourage exports. Indeed, if production stops, what exactly will we export?

The second paradox is that the US – as it calls on developing nations to liberalize trade and open markets to foreign goods – issues its own laws restricting the import of certain manufactured goods from China and even Japan, to protect their national products.

The Deficits by the Numbers

Figures from the Unified Arab Economic Report for 2012 indicate that the Syrian trade balance had recorded a surplus until the effects of trade liberalization set in. Slowly, the deficit crept into Syria’s trade balance, rising from $521 million in 2007 to $4.8 billion in 2011.

In other words, the trade deficit increased about tenfold in five years. Moreover, the reduction of tariffs on imports also led to a decline in customs revenues, as evident from the government’s financial report submitted to parliament.

Integration Into the Global Economy

The government’s economic team has gone out of its way to implement the Washington Consensus recommendations as well as WTO membership requirements. This has surprised even EU and WTO delegates, as the implementation went beyond their requirements and proceeded ahead of all deadlines.

The government’s economic team wanted to give the EU and WTO negotiators a good impression about the seriousness of their desire to catch up with globalization and integrate with the world economy. But the measures adopted by the economic team, led by the liberalization of trade, has weakened the state and undermined its negotiating position.

The economic team championed these measures with no regard to their catastrophic effects on Syrians with limited income and the manufacturing sector. For this group of economic officials, their priority is to adhere to the prescriptions of international institutions. Perhaps this can explain why many of them quickly took jobs with these same institutions as soon as they left the Syrian government. 

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