Syria(ous) Efforts To Open Its Economy

Via The Wall Street Journal (subscription required), interesting news that Syria is pushing ahead with steps to open up its economy to investment.  As the article notes:

“…Damascus is preparing to grant new private-banking licenses to foreign investors, while expanding the Damascus Securities Exchange, which made its debut in March, these officials said. It’s also wooing foreign investment in manufacturing and tourism to support economic growth, which has averaged about 5% over the past five years.

“This economy is virgin. There are many opportunities to explore,” Central Bank Governor Adib Mayaleh said in an interview.

It’s a new direction for Damascus, which has maintained one of the Middle East’s most closed economies in recent decades. Middle East analysts also question whether Mr. Assad can achieve his economic goals without changing his authoritarian political system and improving relations with Washington.

President Barack Obama has said he is interested in developing better ties with Syria and sent two high-level diplomatic delegations to Damascus. But last week, Mr. Obama renewed five-year-old economic sanctions on Damascus because of U.S. concerns about Syrian support for militant groups, such as Hezbollah and Hamas, operating in Lebanon and the Palestinian territories.

U.S. officials also charge that Damascus continues to facilitate the flow of foreign fighters into Iraq, an allegation Syria denies.


Mr. Assad assumed power from his late father, Hafez Assad, in 2000 amid high hopes that the new leader’s youth and Western education could lead to changes in Syria’s rigid one-party state.

Mr. Assad, 43 years old, has displayed little appetite for opening Syria’s political system, say Middle East analysts, imprisoning pro-democracy activists in recent years and closing independent media outlets. The International Monetary Fund and other financial institutions, however, praise Mr. Assad and his economic planners for liberalizing finance and trade while reorienting Syria’s economy away from a dependence on oil as their domestic production dwindled. Damascus has moved from exporting nearly 700,000 barrels of oil a day in the mid-1990s to becoming a net importer of oil.

As recently as 2004, the state controlled the banking system. Today, about a dozen private banks — mostly Arab-owned — operate, Syrian officials said. Damascus pegged the Syrian pound to an IMF-administered basket of currencies and allowed its largely free conversion into U.S. dollars. The government is privatizing some state-owned firms and bringing in independent managers to help oversee others. Foreign direct investment in Syria jumped to $2.1 billion last year from $400 million in 2004, according to the IMF. Syria’s non-oil exports, meanwhile, are projected to grow to more than $9 billion next year from less than $4 billion in 2004.

“We see a clear move toward economic reforms in Syria,” said Khaled Sakr, the IMF’s mission chief for the country. “It’s cautiously and steadily moving in the right direction.”

Mr. Mayaleh, the central-bank governor, said another seven to eight private banking licenses will be put up for bidding, and Damascus hopes to see an additional 10 companies listed on the Syrian stock exchange. “We’re open for investment in our economy,” he said.

Analysts say Syria’s economy still faces significant challenges. Damascus is running sizable annual budget deficits, and it is unclear whether the country can develop new streams of revenue to offset dwindling oil supplies. Mr. Assad has been criticized by Washington for directing contracts to his family and political allies.

Current and former U.S. officials say they don’t know whether Syria’s desire to integrate into the global economy will result in greater cooperation with the U.S. Mr. Obama is seeking Mr. Assad’s help in forging Arab-Israeli peace and in stabilizing Iraq. Washington also hopes Mr. Assad will weaken his military alliance with Iran.”

This entry was posted on Thursday, May 14th, 2009 at 12:55 pm and is filed under Syria.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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