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EASING TENSION? Why Syria is reverting to socialist economic policies

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Many Syrians say economic liberalisation enriched oligarchs close to the Assad family. But the government's retreat from reform is worrying businessmen, who have long blamed public sector inefficiency, bureaucracy and rampant corruption for stifling the private sector.

July 6, 2012 5:34 by



The appointment of veteran communist Qadril Jamil, who has a doctorate from Moscow state university, to the new post of deputy prime minister for economic affairs and minister of int ernational trade and consumer protection, along with new finance minister, Mohammad al-Jleilati, who also studied in Russia during the Soviet era, are further cause for concern among reform-minded businessmen.

 

The government has already raised public sector wages substantially in the past year, adding to the budget deficit, and Jamil has stressed the need to raise minimum wages.

 

TRADE WITH RUSSIA SURGES

 

Sanctions imposed by Western governments against the central bank, the main state-owned commercial bank and companies owned by the Assad family have forced Syria to become more self sufficient in the past year. By de f ault that has helped some local industries that had been hit by a flood of cheap Turkish goods under a free-trade deal introduced in 2007.

 

Many Syrian businesses however are hesitant to invest while the political and economic climate is so uncertain. The government says it wants to q u ickly push through an investment law that would reintroduce incentives and tax breaks repealed in 2007, in a bid to encourage inv e stment.

 

Sanctions have also pushed Damascus to foster greater trade ties with Russia. Syrian officials say bilateral trade nearly doubled last year to $2 billion as Syria imported wheat, machinery and other goods from Russia that it used to buy from Western countries.

 

It has also secured barter deals with Iran to import diesel and other energy needs in exchange for Syrian goods such as textiles and foodstuffs.

 

“They are short-term fixes rather than a product of socialist economic strategies,” said one Damascus-based banker, who did not wish to be named.

 

“The authorities realize that the economy’s collapse could speed the regime’s downfall so they are doing everything possible to prevent that – even at the cost of piling up a massive deficit, which no one really knows the size of except those in the close circle around the regime,” he said.



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