Syrian Leaders to Address Economic Problems

Syria's ruling Baath Party opened a congress Monday to discuss political and economic reforms. Syria, which has a centrally planned economy, suffers from a high unemployment rate. Economists and businessmen say they have seen positive changes in recent years, but warn that the government must do more to battle corruption and streamline the inefficient state bureaucracy.

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The ruler of Syria is trying to repair his country's economy. President Bashar Al-Assad has been under pressure lately. Syria has been forced to withdraw troops from Lebanon. It's been accused of providing sanctuary to insurgents in Iraq. And the government faces pressure for reform at home. The autocratic government directs the economy. So in a sense, Assad is taking on his own bureaucracy. NPR's Ivan Watson reports from Damascus.

IVAN WATSON reporting:

On the elegant boulevards of the Syrian capital, it's not unusual to see carefully maintained cars that were manufactured two generations ago.

(Soundbite of traffic and brakes squeaking)

WATSON: This is one of the legacies of Syria's centrally planned economy. Until the '90s, only the government could import cars, and until the government slashed tariffs this week, anyone who wanted to buy a foreign car had to pay an import duty of as much as 250 percent.

Mr. SAKAR ALTOON(ph) (Car dealer): It was a big shock, you know? No one was expecting such reduction like this reduction.

WATSON: Car dealer Sakar Altoon says overnight the price of the French-made Citroen in his showroom dropped from $36,000 to $18,000, making it much more affordable for Syrians.

Mr. ALTOON: Before the change in Citroen, we used to sell 50 cars per month. Now I think we will sell more than a hundred cars per month.

WATSON: Economist Nabil Sukkar applauds the decision to cut automobile import duties, but this former presidential adviser says the government has yet to truly commit to adopting a free-market economy, something the rest of the region began doing more than a decade ago.

Mr. NABIL SUKKAR (Economist): What's delaying the perform is partly ideology but partly this interest. Bureaucrats make money out of these regulations, and so they have an interest in keeping them. But then you have to remove these regulations in interest of efficiency.

President BASHAR AL-ASSAD: (Foreign language spoken)

WATSON: In his speech to the congress of Syria's ruling Baath Party yesterday, President Bashar Al-Assad acknowledged that some of his efforts to free up the economy over the last five years have been hampered by inept government bureaucrats and rampant corruption. Across Damascus, many Syrians complain that government bribery has become a part of daily life here.

Mr. GEORGE ACZAM (Businessman): The corruption more than 70 percent affect the business.

WATSON: Businessman George Aczam says his project to build a new supermarket has been hampered by Syrian officials who show up looking for handouts.

Mr. ACZAM: You pay under table or something in order to let you work. Otherwise, it will cost you 10 times more.

WATSON: Syrians also complain about corruption among the families of the political elite who have used their position to dominate huge sectors of the economy. That spread resentment in a country where an estimated 20 percent of the population is unemployed.

(Soundbite of people)

WATSON: At the campus of the University of Damascus, many students said that upon graduation, they plan to leave the country to find work. English literature major Mishele Minaloka(ph) does not expect much to change here in the short term.

Mr. MISHELE MINALOKA (University of Damascus Student): Something would change. I think so but not this time. Maybe in the future.

WATSON: In fact, analysts warn the economic situation for Syrians may soon get worse. Syria has long relied on oil exports to keep its economy afloat, and economist Nabil Sukkar says those oil reserves are rapidly running out.

Mr. SUKKAR: The fact is that about 70 percent of our foreign exchange comes from oil and about 50 percent of the government revenues also are coming from the oil sector. Production is declining which means the money coming to the government from that sector is going to dwindle considerably, and we only have a few years after which the problems start falling upon us.

WATSON: Sukkar says Syria could become a net importer of oil as early as 2008. In his speech yesterday to the party that has ruled Syria for 43 years, President Bashar Al-Assad announced that the government's top priority now would be reforming the economy.

Ivan Watson, NPR News, Damascus.

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Correction June 9, 2005

This story incorrectly reported that 20 percent of the Syrian population is unemployed. In fact, 20 percent of the Syrian workforce is unemployed.

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