Syrian Official Pushes for Economic Reform

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An economic crisis looms in Syria, where reformers warn that the country must change its centralized economy or face collapse. Syria's president has appointed a young technocrat to carry out economic reforms. Abdullah Dardari, a former journalist with a doctorate in economics, has the task of transforming a corrupt system to a free market economy.

MICHELE NORRIS, host:

Damascus, the capital of Syria, is one of the last places in the Middle East without a Starbucks or a McDonald's. Syria was aligned with the old Soviet Union, and its economy shows it. It's bureaucratic, bloated and inefficient. Syria's president, Bashar Al-Assad, said he wants economic reforms, but as NPR's Deborah Amos reports, changes are not expected overnight.

(Soundbite of music)

DEBORAH AMOS reporting:

The Damascus Opera House has a summer program of free modern dance recitals. The theme on this night is lost glory.

(Soundbite of music)

AMOS: One dancer, crippled in war, dreams he can dance again. Another, in a mental hospital, leaps and twirls off the ward. These dances of despair and revival could be a metaphor for Syria's crippled economy and the dreams Syrians have of prosperity through promised economic reform.

(Soundbite of music; applause)

AMOS: Abdullah Dardari, the new deputy prime minister, is in charge of transforming Syria's state-run system. Dardari, 40 years old, a former journalist with a PhD in economics, has the firm backing of the president. But even so, he says, he has a tough job ahead.

Dr. ABDULLAH DARDARI (PhD; Deputy Prime Minister, Syria): Well, it's a challenge. I like challenges. But to tell you--I have to be honest and clear. There is no turning back. We have reached a point of no return.

AMOS: Tough talk for dire problems. The economy can no longer produce enough jobs for a young population, 60 percent of whom are under 20 years old. Foreign investors have stayed away from a business system that's based on political and family connections, where bribery is routine. Plus, Syria's oil is running out.

Dr. DARDARI: We have a window of opportunity for the next five to 10 years maximum. If we don't change, we are running into deep trouble.

AMOS: Which is why, Dardari says, Syria's ruling Baath Party endorsed free-market reforms a few months ago.

Dr. DARDARI: Even though the ideas of a new economy are here, the system is--still belongs to the old times. It's not going to be easy. There are well-entrenched systems that work--that have vested interests, that oppose or at least do not support this radical change.

AMOS: According to Western diplomats, these `vested interests' are top leaders in the military, the security services and members of the president's own family, who control business monopolies, including hotel chains, food processing and telecommunications. Faisal Kudsi, a Syrian-born international banker, believes they will block reforms.

Mr. FAISAL KUDSI (International Banker): There are very many vested interests in Syria who see market economy as life-threatening to them.

AMOS: No one symbolizes Syria's so-called vested interests more than the president's cousin, Rami Makhlouf. Makhlouf controls duty-free shops at the airport and on the border, gleaming shopping centers with cappuccino bars, a Dunkin' Donuts, luxury goods not available inside Syria's borders. Samir Aita is a Syrian economist and journalist who has written about Makhlouf and his business deals.

Mr. SAMIR AITA (Economist; Journalist): This is the cousin of the president, the financial and the power system in Syria. Somehow he played not a smart way, which means he was really blunt capitalist.

AMOS: So blunt in monopolizing business opportunities that a few weeks ago when rumors circulated President Assad had forced Makhlouf and his family to move out of Syria, many in Damascus saw it as the first signal of reform. Samir Aita is not convinced cracking down on one man will make a difference.

Mr. AITA: He's trying to solve the problem like this. Is that sufficient? My expectation--not so much.

AMOS: Deputy Prime Minister Dardari dodged specific questions about Makhlouf but said he had the president's backing to end the old system.

Dr. DARDARI: The economy we are building is a competitive economy based on free competition and equal competition, which means no more private or public monopolies.

AMOS: Even if those people are close to the...

Dr. DARDARI: Even if they are the closest you can think of to whoever you mean.

(Soundbite of laughter)

AMOS: Dardari knows that powerful forces inside Syria are not his only problem. The Bush administration is set on isolating Damascus because of alleged support for insurgents in Iraq and meddling in neighboring Lebanon. Dardari says he's getting a better reception from Arab investors.

Dr. DARDARI: They come to Syria and say, `We don't accept this American pressure on you. So to make you strong, here is billions of dollars to build big projects in this country, so that everybody understands we have vested interests in Syria.'

AMOS: So far investments are more promise than fact. Investors are waiting to see if Abdullah Dardari can pull off reforms, and so are Syrians. Deborah Amos, NPR News.

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