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Syria
Between Two Transitions
Hisham Melhem
The
Syrian leadership realizes that the continuation of economic reforms
and the peace process will increase pressure for, and the expectation
of, greater political openness. While conceding that this could
lead to less governmental intrusion into the lives of the citizenry,
some Syrian officials claim that economic liberalization can continue
without a corresponding political liberalization.
In recent years, Syria
has initiated two processes of fundamental transition. The first is
a transition from a statist economy to greater liberalization or,
to use a more accurate term, infitah (open-door policy). The second
of these transitions is from a state of belligerency with Israel to
one of coexistence with the possible eventuality of peace. Although
not organically linked, the two reinforce one another. The interplay
among the dynamics both have created profoundly shapes state and society
in Syria, as it has the politics of the Eastern Mediterranean.
Seven Lean
Years
The 1980s began with Syria
still embroiled in a low intensity civil war with the Muslim Brotherhood.
In Lebanon, Syria's dominant position faced growing challenges from
both Lebanese adversaries and Israel. At the same time, official assistance
to Syria from Arab Gulf states (which had fueled the first infitah
of the 1970s) began to drop as a result of reduced international demand
for oil, as well as the desire of these states to signal their dissatisfaction
with Syrian support for Iran in the war with Iraq. Iran's concessionary
oil shipments to Syria along with other forms of aid, while helpful,
were not sufficient compensation for Syria's losses. The impact of
diminishing official resources, aggravated by a fall in worker remittances,
was compounded by two years of drought which affected Syria's most
productive sector and led to an unprecedented foreign exchange crisis.[1]
Only the flourishing "invisible" economy involving neighboring states,
particularly Lebanon, which included the smuggling of contraband and
the trade of illicit narcotics, kept the Syrian economy afloat. Syria's
second infitah was reluctantly initiated as a response to this severe
economic crisis.[2]
Lacking a
comprehensive program of reforms, the government reacted with a
series of measures and laws--some of which were contradictory or
of limited impact--intended to introduce gradual structural changes
in an inefficient public sector, reduce reliance upon imports, promote
exports and liberalize trade by increasing the role of the private
sector in the economy. More important than the economic impact of
these measures was the political-ideological thrust behind them:
the state's recognition that it must relinquish some sectoral monopolies
and grant a larger economic space to the private sector.
The government,
realizing that it could not ignore the demands of an emerging private
bourgeoisie (many of its members the children of the privileged
elite) and of the old Damascene merchant class for wider reforms
and a greater role in setting economic policies, enacted a series
of laws to accommodate these groups' demands. In May 1991, Investment
Law Number 10 was passed to encourage private Syrian and foreign
investment in areas traditionally reserved for state monopolies.
The Pendulum
Swings
After the lean years of
the 1980s, four consecutive years of plenty (1990-93) followed in
which real GDP growth averaged 7-8 percent.[3] This period saw the
slow dismantling of the public sector and the socialist measures associated
with it. Private investment overtook public investment and, for the
first time since the Ba'thist takeover, a mixed-sector company was
established in the "strategic industry" of electricity production
and private joint stock companies were formed. Today, agriculture
is virtually the exclusive domain of the private sector and fertilizer
and seed subsidies have been reduced. The country is moving in the
direction of unified exchange rates, and there is talk of overhauling
the archaic banking system and reopening the Damascus stock exchange.[4]
Early in 1997, the government announced it was lifting all taxes on
agricultural exports, thus allowing farmers to retain all their foreign
exchange proceeds. [5]
Liberalization
and Its Discontents
The improved performance
by the Syrian economy was buttressed by the influx of assistance from
Kuwait, Saudi Arabia and the United Arab Emirates in the wake of the
1991 Gulf crisis. This enhanced the ability of the Syrian leadership
to confront formidable challenges: the collapse of the Soviet Union
and the beginning of negotiations with Israel.
Domestic oil
production crested at around 600,000 barrels per day in the early
1990s, generating between $1.6 and $2 billion a year. Syrian agriculture
was booming, with bumper crops of wheat, cotton and citrus, contributing
to a seven percent increase in Syria's GDP in 1992.[6] Aleppo, fast
becoming the Syrian center for private sector development, currently
boasts over 27,000 industrial firms.[7]
Despite these
growth rates, signs of stagnation began to appear in 1994. The trade
deficit that year was estimated at $1 billion, and oil revenues
and exploration activities had begun to recede. Falling international
oil prices and a serious oil fire at Dayr az-Zur dampened the prospects
for that sector. The reduction of subsidies and rising world prices
for key imports further slowed the economy. In addition, interruptions
of electricity supplies slowed industrial growth.[8]
Many Syrian
businessmen, seeking quick return on their money, invested in expensive
real estate instead of labor-intensive industrial projects. Rather
than following up on Investment Law Number 10 with more far-reaching
reforms, the government opted for small moves, such as allowing
businesses to own fax machines and install satellite dishes. The
public sector is still the largest employer in Syria. Unless the
government enacts some of the major reforms that have been under
discussion for years (unifying exchange rates, reopening the stock
market, authorizing the establishment of private banks, and curbing
the endemic corruption), Syria's gains of the recent past will have
been in vain. Without additional reforms, the economy will be overtaken
by a population growth rate of more than 3.4 percent, one of the
highest in the world.
Resistance
to additional reforms on the part of some in the bureaucracy, the
Ba'th Party and the military, widespread patronage, wasta
(contacts) and corruption constitute serious obstacles to rational
economic policies. Even in the still-limited private sector, "the
game is often fixed, with licenses doled out as favors to friends
of the regime."[9]
Advocates
of economic reform value political stability in Syria; the hallmark
of the Asad era. Few merchants or industrialists would call for
full and immediate liberalization and privatization of the means
of production, let alone political reforms. Furthermore, "[a]ll
agree a Soviet-type collapse of the statist system before a market
is in place must be avoided by gradual transition."[10] The need
to balance the interests of various and changing regime constituencies,
and to avoid drastic measures, led President Asad to give his conditional
support to Muhammad al-'Imadi, the minister of economy and foreign
trade and a major force behind liberalization. It was reported that
Asad told the minister that support would be forthcoming in the
face of intensified opposition to al-'Imadi's reforms. Asad noted,
however, that the minister cannot expect blanket support for all
his measures.[11]
Addressing
those who "blame us sometimes for being slow in procedures," Minister
al-'Imadi said that Syria should do its utmost to avoid "making
mistakes or falling into quicksand from which many countries were
not spared."[12] Ratib Challah, president of the Damascus Chamber
of Commerce agrees. "Isn't gradual change much better and more controllable?"
he asks, noting that it provides "an excellent safety valve to make
sure we do not fall into the trap of social upheaval and dislocation..."[13]
The Ceaseless
Quest
Since he assumed power
in 1970, Asad, along with consolidating his regime's constituencies,
has focused his considerable tactical skills on a limited and well-defined
strategic objective: the containment of Israel. The Syrian leadership
believes that after the 1967 war Israel became the region's superpower.
Any Israeli advances in the Levant, whether political, economic or
strategic, would only be achieved at Syria's expense. Syria's defeat
deepened Asad's determination not only recover its lost territories,
but to make Damascus an indispensable power in the defense of Arab
rights.[14]
Syria's remarkably
consistent commitment to a peaceful resolution of the Arab-Israeli
conflict dates back to the May 1974 disengagement agreement with
Israel. This is true despite the fact that Damascus did not play
a crucial role in the peace process from the time of that agreement
until 1991, by design as well as by the force of circumstances.[15]
Although Syria demonstrated greater flexibility, and modified its
tactics to accommodate changing regional and international constellations,
its fundamental objectives remained unaltered: the restoration of
Arab rights and the preservation of Syria's regional interests.
In July 1991, Asad reluctantly accepted the US formula for a peace
conference after making procedural concessions.[16]
Bitter Legacy
In his long and, at times,
stormy career, President Asad has embarked on a number of bold, risky
and surprising moves. This was the case when he intervened in Lebanon
in 1976 to contain the PLO and its allies, when he sided with Iran
against Iraq in the 1980s and when he dispatched troops to Saudi Arabia
to join the anti-Iraq coalition in 1990. These moves were initially
controversial, opposed by some in the ruling coalition and by many
Syrians. In each of the cases, Asad held lengthy sessions with Ba'th
officials, senior officers and other influential elements in the Syrian
power structure to explain his moves. He also addressed ordinary Syrians
and Arabs throughout the region, in efforts beyond simple public rhetoric,
seeking understanding and support.
Like Palestinians,
Syrians see the struggle with Zionism in existential terms. Next
to Palestine, Syria was the Arab society most affected and traumatized
by the establishment of Israel in a part of Bilad al-Sham. Since
the 1930s, the question of Palestine has been the defining factor
in the political ethos of contemporary Syria. The Syrians saw the
Zionist project as an obstacle to Arab unity, a threat to neighboring
countries and a potential danger to their economy.[17] The Palestinian
tragedy compounded the earlier loss of Alexandretta to Turkey and
the incorporation of Syrian territories into Greater Lebanon. This
legacy has shaped the political outlook of President Asad's generation
and still weighs heavily on its thinking.
There is broad
agreement in Syria concerning the terms upon which peace with Israel
should be predicated. When the Syrian leadership insists with confidence
that there will be no peace unless Syria regains sovereignty over
all of the area that Syria controlled on June 4, 1967, it reflects
something of a Syrian consensus. This is further illustrated by
Syria's insistence on reciprocal security measures as well as the
recognition of Syria's vital interests in the Levant. Furthermore,
no vision of peace exists without a parallel and total Israeli withdrawal
from southern Lebanon. Even so, there is no such agreement among
the pillars of the regime or in the general population concerning
the scope of normalization of relations with Israel. Entrenched
elements of the bureaucracy, the security services, the public sector,
intellectuals and select members of other social strata will resist
immediate normalization. On this question, the gradualist incremental
approach will most likely be adopted.
As a realist
steeped in the balance-of-power approach to international relations,
Asad recognizes the uses and limits of ideology. He is driven not
by ideological considerations but by raison d'etat. For him, the
fact that Syria is in the heart of the Arab world and leads the
efforts to check Israeli power establishes that Syrian interests
are ipso facto the interests of the Arabs. Asad is very aware of
his strategic predicament vis-a-vis Israel. He knows that Syria,
lacking the demographic weight of Egypt and the material resources
of Iraq, cannot lead the Arab world alone--hence, his ceaseless
quest for coalitions, small or large. Asad's obsession with containing
the Israeli threat explains most of his domestic, regional and international
moves. Asad's awareness of the constraints, or the cruelty, of geography
shapes his behavior.
The Shrinking
Circle
Syria, like Israel, sees
itself and Israel as the two major powers in the Levant. The other
players, Lebanon, Jordan and the Palestinians, are weaker and will
always be susceptible to pressure. Always the balancer, Asad is the
only Arab leader who has sought to negotiate with Israel in the regional
context and not merely to engage it in bilateral talks. Asad accepted
the Madrid formula, thinking that his ability to function within two
concentric regional circles would allow him to prevent the outcome
he dreaded most--separate peace agreements. The wider circle contains
the triangle of Damascus-Cairo-Riyadh, which extended Asad's influence
beyond Syria's immediate environment. The smaller circle outlines
Syria's traditional domain in the Levant. The strategy failed when
both the PLO and Jordan opted for separate deals with Israel. Syria's
inability or unwillingness to thwart these separate agreements is
a function of the changing regional and international environment.
Regardless, bolting from the peace process was not a viable option.
Syria has already invested a great deal of political capital in the
process, contrary to the claims of some of its critics. Furthermore,
as long as Syria remains under the umbrella of the peace process,
it will be difficult for its adversaries to treat it as a "rogue state."
Syria views
this defection of the PLO and Jordan as not only a compromise of
its negotiating posture in the present, but a factor that will undermine
its position in the post-peace era of economic, political and cultural
competition between the two Levantine powers.[18] Syria's vociferous
rejection of the concept of a new Middle East based on economic
integration, as proposed by Shimon Peres, reflects the bitter Syrian
experience with Israel in Lebanon in the early 1980s when Israel's
economic advances there yielded subsequent gains in other Arab countries.
In the negotiations
with Israel, Syria has been flexible on the modalities of a peace
agreement, such as the timetable for withdrawal and security arrangements,
but not on fundamentals, such as total withdrawal and sovereignty.
Syria offered Israel "full peace for full withdrawal."[19] The Israelis
demanded full and immediate normalization. Although Asad stated
that Syria "realizes that peace has its objective requirements [and]
will comply with those objective requirements that may be agreed
upon,"[20] he and his senior aides have warned repeatedly that a
"warm" peace cannot be imposed from above.[21] At a time of slow
and controlled economic liberalization in Syria, where it is hoped
that such reforms would make the economy more immune to Israeli
penetration, Israel's talk of open markets and economic integration
raises serious concerns among Syrian officials. Syria's ambassador
to Washington, Walid al-Moualem, summarized these concerns when
he asked, "And how can you integrate two economies when one has
a per capita income of $900 per year and the other has a per capita
income of $15,000 per year?"[22] This is a clear indication that
progress in peace negotiations will increase the pressure on Damascus
to accelerate economic reforms. Furthermore, while the Syrians have
consistently shown diplomatic acumen in their negotiations with
Israel, there are no indications that they are planning with the
same precision to deal with the economic repercussions of peace.
New Struggles
Syrian policymakers, who
have been grappling for some time, albeit on an ad hoc basis, with
the economic requirements of peace, believe, not surprisingly, that
they have to deal with this issue gradually and regionally. Here,
Lebanon and its economic potential figure prominently. It is assumed
in Damascus that Lebanon's expertise in international banking and
trade, its human resources, its traditions in education and access
to information, if combined with the resources of Syria, would cushion
the painful economic transition to a new era of competition.[23] In
this view, Lebanon will remain central to the success of Syria's regional
policies in the future just as it was in the past. If formal peace
is achieved, Syria will also try to induce Jordan (and any new Palestinian
entity that may or may not be associated with it) into greater economic
cooperation, if only to prevent its domination by Israel. Since Israel
will continue to throw around its considerable economic and military
weight, the Levant in the post-peace era will likely become the arena
of a new nonlethal struggle between Syria and Israel for the hearts,
minds and pocketbooks of the Lebanese, Jordanians and Palestinians.
While the
immediate focus of Syria is currently on the liberation of the Golan
and southern Lebanon, Syria's traditional support for Palestinian
objectives will continue. This is not only in keeping with long-held
"Arab" objectives, but also because the strategic interests of Syria
as a nation-state will be served if Israel is pushed back to its
pre-1967 borders.
Barring a
governmental change in Israel, it is unlikely that the peace talks
with Syria will resume any time soon. This is true given the Netanyahu
government's intransigent views on the Golan. In the meantime, the
slow pace of government reforms will continue. In the absence of
major reform initiatives, focus will be increasingly on containing
corruption, including reining in the nephews of President Asad.[24]
These campaigns are not designed to eradicate corruption, which
is tolerated as a useful political and economic tool, but to prevent
its extreme and embarrassing manifestations. Meanwhile, the reformers
will continue their lobbying efforts, sometimes with a wink from
powerful sources. Such was the case when Ilyas Najmah, the Syrian
Ambassador to France, lambasted "the sons of corrupt" Syrian officials
representing foreign companies, stating that they are interested
"only in quick gains." The ambassador also admitted that Law Number
10, while succeeding in attracting Syrian expatriate monies, failed
to draw foreign investments.[25]
The Syrian
leadership realizes that the continuation of economic reforms and
the peace process will increase pressure for, and the expectation
of, greater political openness. While conceding that this could
lead to less governmental intrusion into the lives of the citizenry,
some Syrian officials, citing the examples of China, Chile, Tunisia
and Egypt, claim that economic liberalization can continue without
a corresponding political liberalization. An alliance of a more
assertive capital (old and new, including those created by the regime),
skilled industrial labor, independent members in parliament, enlightened
technocrats, intellectuals and others could play a greater role
in decision-making, thus diminishing somewhat the control of the
state over civil society. While such developments would not necessarily
lead to democratization, an anathema to the current regime, they
could revive civil society and open the possibility for "the return
of politics."[26]
President
Asad's successor or successors, who will lack his strong influence
and stature, will have very little choice other than to pursue the
current policies toward economic reform and the peace process. Much
has been written about the succession question in Syria. Those who
tend to exaggerate the persistence of primordial loyalties in Syria
and the role of the 'Alawis in the regime also tend to exaggerate
the difficulties of succession. The disproportionate number of 'Alawi
officers in the armed forces and the security apparatus lends credence
to the view that there is an 'Alawi core to the instruments of coercion
in Syria. Confessionalism, like patronage, wasta and corruption,
is still exploited by the state. It would be misleading in the extreme,
however, to extrapolate from this that the regime itself is 'Alawi.
If anything, the regime has shown that it has a Syrian-Arab, as
opposed to a sectarian, agenda. Moreover, the 'Alawis are not politically
monolithic and, contrary to widespread allegations, have not been
treated by the state as a privileged community.[27] It is not a
foregone conclusion that the death of the president will leave a
vacuum and lead to a constitutional crisis resulting in a confrontation
among powerful, military "barons." President Asad has surrounded
himself with a number of strong, experienced and trusted lieutenants.
Some of them, such as First Vice President 'Abd al-Halim Khaddam
and Chief of Staff Hikmat al-Shihabi, can be relied upon to maintain
domestic stability and to benefit from their extensive regional
contacts. The military pillars of the regime, as well as its various
key political and economic constituencies, have a vested interest
in avoiding a repeat of the near-military confrontation between
the president's younger brother Rif'at and his opponents which occurred
in 1984 during Asad's illness. The most likely scenario is a collective
leadership presided over by a first among equals.
It remains
to be seen whether or not President Asad will see peace with Israel
and greater economic liberalization come to fruition. His commitment
to the former is clear, as is his ambivalence toward the latter.
Regardless, he leaves the successor regime with a legacy and a road
map for peace as well as the domestic realignments and the basis
for economic and possible political liberalization.
Hisham
Melhem is the Washington correspondent for the Lebanese newspaper
as-Safir. This article is based in part on interviews with
Syrian officials conducted over the last four years in Damascus and
Washington.
Endnotes
1 For an incisive analysis
of Syria's first and second infitah see
Volker Perthes, The Political Economy of Syria Under
Asad (London: I.B. Tauris, 1995).
2 Many studies
on Syria's economy in the 1980s predicted a bleak future for the
country and underestimated its ability to pursue structural reform.
For instance, see Elyahu Kanovsky, "What's Behind Syria's Current
Economic Problems?" in Middle East Contemporary Survey 1983-84
(Tel Aviv: Tel Aviv University, 1986), pp. 280-347, and Patrick
Clawson, Unaffordable Ambitions: Syria's Military Build-Up and
Economic Crisis (Washington, DC: The Washington Institute for
Near East Policy, 1989).
3 Embassy
of the United States of America, The 1996 Country Commercial
Guide (Damascus, Syria, 1996).
4 Perthes,
The Political Economy of Syria and Nabil Sukkar, "The Crisis
of 1986 and Syria's Plan for Reform" in Eberhard Kienle, ed., Contemporary
Syria: Liberalization Between Cold War and Cold Peace (New York:
St. Martins Press, 1994).
5 Ash-Sharq
Al-Awsat, February 7, 1997.
6 William
E. Schmidt, "The Fertile Crescent Blooms Anew," New York Times,
November 6, 1994.
7 Embassy
of the United States of America, The 1996 Country Commercial Guide.
8 Syrian Arab
Republic, Statistical Abstract (Damascus: 1996).
9 John Lancaster,
"Syria's Economy Starting to Slow," The Washington Post,
October 9, 1994.
10 Raymond
A. Hinnebusch, "The Political Economy of Economic Liberalization
in Syria," International Journal of Middle East Studies 27
(1995), pp. 305-320.
11 Author's
interview.
12 Muhammad
Al-'Imadi, Syria's Experience in Trade Liberalization and Policies
of Economic Reform (Damascus, Syria, August 1994).
13 Quoted
in The Washington Post, October 9, 1994.
14 Patrick
Seale, Asad: The Struggle for the Middle East (Berkeley:
University of California Press, 1989).
15 Muhammad
Muslih, "Asad is Ready," Foreign Policy 96 (Fall 1994), pp.
145-163.
16 Alasdair
Drysdale and Raymond E. Hinnebusch, Syria and the Middle East
Peace Process (New York: Council on Foreign Relations Press,
1991).
17 Philip
S. Khoury, Syria and the French Mandate: The Politics of Arab
Nationalism, 1920-1945 (Princeton: Princeton University Press,
1987).
18 Author's
interview.
19 The
New York Times, May 11, 1993.
20 Tishrin,
September 11, 1994.
21 Raymond
E. Hinnebusch, "Does Syria Want Peace?" Journal of Palestine
Studies (Autumn 1996), pp. 42-57.
22 Walid al-Moualem,
Interview, Journal of Palestine Studies (Winter 1997), pp.
81-94.
23 Author's
interview.
24 The
New York Times, January 28, 1997.
25 Ash-Sharq
Al-Awsat, January 30, 1997.
26 Eberhard
Kienle, "The Return of Politics? Scenarios for Syria's Second Infitah"
in Contemporary Syria, op. cit.
27 Perthes,
The Political Economy of Syria Under Asad, op. cit.
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