Syria has pushed through a number of new laws on its economic structure since President Bashar Al-Assad came to power in July 2000, seeking to stimulate investment and growth, but experts caution it will be another two years before the country emerges from its economic torpor.
Assad, the former opthologist and son of late Syrian strongman Hafiz Al-Assad, fixed modernization and development as prime objectives on taking charge. He called on the government and parliament to come up with a package of legislative reforms to cut the huge bureaucratic obstacles to investment, and reform the public-owned companies, which showed little or no profit.
The major challenge is employment. More than 200,000 job seekers enter the market each year, while the economy has been stagnating over the last 20 years, leaving the country with unemployment levels rising over 20 percent.
Economist Samir Saifan believes that the government "strategy gives priority to the private sector to relaunch the economy, because it has a greater capacity for investment." "When the economic machinery starts flowing with injections of private capital," Saifan added, "it will be much easier to tackle the problem of state businesses," which "disguise real unemployment and dominate and smother the economy."
Privatization has been avoided for the most part by Syrian officials. The state continues to hold on to vital industries, such as oil reserves, telecommunications, electricity and water distribution. These sectors remain under tight control due to the more than 50-year conflict with Israel.
But in other sectors such as textile manufacturing and agriculture, the state fears the kind of problems experienced by the Russians in a similar transition, selling off industries to private investors. According to Saifan, the state would prefer to hold on to business concerns that could become profitable, and close those that are not salvageable.
If private capital is seductive to the state, "the execution is complicated," Saifan said, recalling the commercial laws in place in 1948 until the ruling Baath party seized power in 1963 and brought about a mass nationalization of the economy. "We must put a financial system in place," he said.
The Syrian banks, nationalized in 1963, only finance the public sector, contributing just 35 percent to the gross national product in 2000, which amounted to $17 billion. The parliament has passed a law allowing the creation of private banks, to offset the six state banks, whose assets total only $12 billion for a population of 17 million.
"But one law does not suffice to create an entire system," said the western economist, adding that it was necessary for the state to put in place mechanisms of banking supervision and to evaluate businesses, in order to introduce a modern banking system.
A measure of the outdated banking standards is that "75 percent of all transactions are carried out in bank notes," the economist said. Business and consumer credit, telephone banking, and even credit card usage do not yet exist, pushing businessmen to go to neighboring countries for banking services — in particular to nearby Lebanon, mostly in Shtaura, just one hour by car from Damascus.
On top of these shortcomings can be added the lack of information technology and qualified personnel, with demoralized Syrian teachers facing low pay of just $100 to $300 per month, to attract the interest and engagement of Syrians living outside the country.
"We can see a private bank in Syria within one year, but it will take two years, let's say three, before we will feel the effect of the reforms for investment," the economist said, forecasting one percent growth and two percent stagnation in 2001. ― (AFP, Damascus)
by Maher Chmaytelli
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
