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June 23, 2008

Syria, how we might learn to love profit (or issues in getting away from Leftist rentier exploitation)

The Financial Times has a fine article on Syria Syria see[ing the] benefits of liberalisation that is worthy of some reflexion.

A couple of quick obs up front, given that Syria is moving from an utterly basket case socialist economy (with all the usual emerging markets double talk about 'social justice' that really means protecting the ruling elite and labour elite Soviet style to the detriment of the overall economy and post-revolution or new job entrants), their challenges are major.

Giving the article a quick read, it struck me that this pseudo-liberalisation (or maybe "shopping and not entreprenurial" liberalisation) is probably the very worst form insofar as it will definitely not deliver proper growth, will boost the corrupt rentier elites (I have nothing against entrepreneurial wealth, and related forms, but rent extractors I detest - whether in the most pernicious form as governmentally enabled or via private cartels [that US libertarians tend to forget as a serious issue]).

But let us look at the arty:

Syria sees benefits of liberalisation


Chic sidewalk cafés offering fashionable coffees and trendy western dishes have sprung up in the more upmarket areas of Damascus.

The clients are invariably well-dressed, and the neighbourhoods are studded with shops selling international brand name clothing such as Benetton and Stefanel, some of whose merchandise is made in Syria.

In the arcade attached to the Four Seasons Hotel, imported shoes and fashions from top designers are available to those who can pay more than £1,000 ($2,000) for a single item of clothing.

A quick note, one of the funny contrasts between the Machreq (ex Lebanon) and the Maghreb is the degree to which Western / international culture in terms of Malls etc revolves around the Five Star hotels.

Less true in Egypt, it would seem utterly bizarre in the Maghreb to build one's socializing (in terms of high end business and whatever interaction) around say restaurants or whatever in 5 stars. In the Machreq, really the point of departuture (ex-Lebabnon and Dubai).

The picture is at odds with Syria’s image as a pariah state with a centrally planned economy, a large and unprofitable public sector and a security apparatus breathing down everyone’s neck.

But Syria has been forced to liberalise aspects of its economic system to make up for oil revenue that has been falling by about 10 per cent a year.

The economy remains in desperate need of restructuring, and privatisation has stalled. The country’s foreign policy, at odds with most of its neighbours in the Arab world, has been deterring investment from abroad.

In most respects Syria is almost a museum case - in fact the radical maximalist greater Israel types have to absolutely thank God for Syria's neanderthalic government and cretinous approach to even its own interests.

Moving forward in the arty, we find this fine quote

“Foreign investment to manufacturing is not there,” he said. “The multinationals are not there. I can only think of two.” But he argues that “the business climate is no longer the deterrent to foreign investment. It is the media image and the United States accusing Syria of terrorism”.

The economic cost of a hardline foreign policy might be an additional factor driving the Syrian regime to send signals recently that it wants a better relationship with the west.

Officials are in contact with Israeli counterparts on reaching a peace agreement that would return the occupied Golan Heights to Syria.

Having acquiesced in a deal that ended almost two years of crisis in Lebanon – after being accused of blocking it – Syria is starting to reap benefits, with France in particular resuming its engagement with Damascus.

The US, however, remains unconvinced that the regime, accused of the 2005 assassination of Rafiq Hariri, the former Lebanese prime minister, deserves to be rewarded at this time.

Deserves?

What the bloody fuck is going on with US FP? Are they in primary school?


Washington first imposed trade sanctions on Syria in 2004. Last month it was reported the US Treasury had been pressing Turkcell, a Turkish mobile phone operator, to abandon a $1bn (€645m, £512m) takeover of Syriatel, which is owned by Rami Makhlouf, the tycoon cousin of Bashar al-Assad, the Syrian president.

Frankly if Turkcell is smart, they will natter on with these current cretins in waiting for a more, well intelligent policy.

The stunning thing is whether Cuba and Syria, American policy seems to depend on wildly ideological and indeed childish policy reads.

Posted by The Lounsbury at June 23, 2008 04:52 PM
Filed Under: Economic Development , Levant , MENA Region General

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Comments

"The country’s foreign policy, at odds with most of its neighbours in the Arab world, has been deterring investment from abroad."

I do think that is overstated; it has been the internal kleptocracy that's always held back foreign investment in the main.

(On the US libertarian point, private cartels are only enabled to be so by some kind of government biasing; OR the commodity they deal in is so inconsequential at the moment that no one cares to aggressively compete.)

Back to Syria, though, the article is of the type that seems to say that because rich folks can buy stuff, socialism must be out. Not quite the real world, though it may be the case that Syria may nevertheless indeed see real economic change as a result of new developments.

Posted by: matthew hogan at June 23, 2008 10:46 PM

(On the US libertarian point, private cartels are only enabled to be so by some kind of government biasing; OR the commodity they deal in is so inconsequential at the moment that no one cares to aggressively compete.)

Which is blinkered.

Posted by: The Lounsbury at June 24, 2008 04:17 AM

It's not only oil revenue that's dropping. Two of the leadership's largest sources of private/patronage income were Iraq and Lebanon --in the first case, running sanctions and skimming off the oil transit; in the second case, edging in on every business deal in Lebanon through Hariri and assorted networks. All in all, now, they really need to get the economy going, or they won't be able to pay their bribery bills to keep the various mukhabarat types, Sunni grandes familles, and Alawi tribals happy. Not to mention subsidizing all and sundry with state purchases of agricultural produce and by doling out jobs.

Unfortunately, they don't seem to be doing that at anywhere near the pace required, even if it's in the right direction. The "benefits of liberalization" as seen by the author in the form of rich Westernized youth in expensive cafés, is more likely the benefits of dad being on the Party Central Committee.

In fact, I would argue that they're about to mess up the whole liberalization process by moving so aggressively to control it and suck money out of it to make up for the Lebanon/Iraq/oil losses. Regime connected entrepreneurs (Rami Makhluf, Bashar's cousin, being a case in point) are squeezing out everyone else, to their own long-term detriment.

Posted by: alle at June 25, 2008 05:48 AM

Oh, just noticed that dear Rami is mentioned in the article too. I don't know about how this particular deal works/doesn't work, but if they're going to pressure the Asad regime somehow, it makes pretty good sense to go after their private cashier rather than to slap sanctions on the entire nation.

On deserving your fate, I'm with Clint Eastwood.

Posted by: alle at June 25, 2008 06:29 AM

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