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Syria Syria at a Glance: 2002-03

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Syria Syria at a Glance: 2002-03 COUNTRY REPORT Syria Syria at a glance: 2002-03 OVERVIEW In the aftermath of the September 11th attacks on the US, regional and domestic political tensions have been acutely heightened. While Syria is not one of the countries to be directly targeted in possible US retaliatory attacks, it remains on the US list of countries “sponsoring terrorism”. However, developments so far indicate that the US is relatively satisfied with Syria’s stance. The Syrian authorities have condemned the attacks on the US but they continue to state their opposition to the killing of Afghan civilians and maintain that the groups that they support are not "terrorists" but ones engaged in legitimate resistance to occupation. Real GDP growth should rise from 2.3% in 2001 to 2.8% in 2002 and 3.6% in 2003. The current account will remain in surplus—albeit a declining one, and the fiscal deficit will widen as oil receipts decline. Key changes from last month Political outlook • The domestic position of the president, Bashar al-Assad, continues to consolidate, but recent events will result in a tightening of controls on the opposition and a slowdown in the political reform process. Relations with Israel will remain tense. Economic policy outlook • Mr Assad's reformist agenda remains in place, and reforms are expected to continue to trickle through. However, the process will slow down in the aftermath of recent global political developments. Economic forecast • The expected continued decline in international oil prices will result in falling current-account surpluses over the forecast period. Economic growth will accelerate but remain modest at 2.8% in 2002 and 3.6% in 2003, and average annual inflation will pick up but remain under 4% over the forecast period. November 2001 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2001 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 0269-7211 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Syria 1 Contents 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2002-03 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 17 Economic policy 20 The domestic economy 20 Economic trends 20 Oil and gas 24 Agriculture 25 Infrastructure, banking and utilities 27 Foreign trade and payments List of tables 9 International assumptions summary 10 Forecast summary 19 Monetary survey 27 Merchandise trade balance List of figures 6 External trade 6 Oil production 11 Gross domestic product 11 Current-account balance 21 Oil prices EIU Country Report November 2001 © The Economist Intelligence Unit Limited 2001 Syria 3 Summary November 2001 Outlook for 2002-03 In the aftermath of the September 11th attacks on the US, regional and domestic political tensions remain heightened. While Syria is not one of the countries to be directly targeted in possible US retaliatory attacks, it remains on the US list of countries “sponsoring terrorism”. However, developments so far indicate that the US accepts Syria’s stance. Relations with Lebanon have improved but tension is likely to resurface. Relations with Israel will remain tense, and a sustainable improvement is unlikely until Israel withdraws from the occupied Golan Heights. Real GDP growth will accelerate over the forecast period, reaching 3.6% in 2003. Inflation will remain benign and the current account in surplus—albeit a declining one. The political scene Syria’s reaction to the September 11th attacks on the US, and the “war on terrorism”, was one of qualified support. The government condemned the attacks but called for the battle to be conducted through the UN. The British prime minister, Tony Blair, visited Syria as part of the effort to garner support for the coalition and to attempt to spur a revival of the Middle East peace process. Tens of political dissidents were arrested and face trial accused of violating aspects of “state security”. In October Syria won a two-year seat on the UN Security Council, backed by 160 states, with no US veto and only Israel in opposition. Economic policy A draft budget was presented for 2002, proposing an annual 10% increase in expenditure to S£356bn (US$7.66 bn). The budget will include a large but unspecified share for investment projects, in an effort to boost the economy and employment, as well as an (also unspecified) increase in civil service salaries. Economic reforms are still the focus of the president’s policy, but progress on this front will slow. The domestic economy Relatively high prices of crude oil over most of 2001, and higher than expected oil export volumes as a result of illicit trade with Iraq, boosted government revenue and expenditure, and hence growth. Moreover, a steady recovery in the agricultural sector since the 1998-99 drought spurred rural incomes and private expenditure. Following a contraction in 1999 and a difficult 2000, when the economy crawled back into positive growth territory, real GDP is estimated to have expanded by 2.3% in 2001. The first half of 2001 also witnessed strong tourism receipts. Inflation remains subdued. Foreign trade and First-half 2001 trade data show a small deficit. The overall annual trade and payments current-account balances should be in surplus. Editors: Hania Farhan (editor); Simon Williams (consulting editor) Editorial closing date: November 5th 2001 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule EIU Country Report November 2001 © The Economist Intelligence Unit Limited 2001 4 Syria Political structure Official name Syrian Arab Republic Form of state Socialist republic Legal system Based on the constitution of 1973 Legislature 250-member Majlis al-Shaab (People’s Assembly) directly elected for a four-year term Electoral system Universal adult suffrage National elections 1998 (legislative), 2000 (presidential); next election due by 2002 (legislative) Head of state President, directly elected for a seven-year term. The president appoints the vice- presidents, the prime minister and the Council of Ministers. Bashar al-Assad, who was elected president in July 2000, holds the posts of commander-in-chief of the armed forces and secretary-general of the Baath Party. The vice-presidents are Abdel-Halim Khaddam and Zuheir Masharka Executive The prime minister heads the Council of Ministers, members of which are drawn from the Baath Party and its partners; last reshuffle in March 2000 Main political parties Seven parties form the ruling National Progressive Front (NPF): Arab Socialist Baath Party; Arab Socialist Party; Arab Socialist Unionist Party; Communist Party; Syrian Arab Socialist Union Party; Unionist Socialist Democratic Party; Union Socialist Party Prime minister Mohammed Mustapha Miro Deputy prime minister & defence minister Mustapha Tlas Deputy prime minister for economic affairs Khaled Raad Deputy prime minister for social services Mohammed Naji Otari Key ministers Agriculture & agrarian reform Assad Mustafa Communications Radwan Martini Construction Nihad Mushanteet Culture Maha Qannut Economy & foreign trade Mohammed al-Imadi Education Mahmoud al-Sayeed Electricity Munib Assad Sayeem al-Daher Finance Khaled Mahayni Foreign affairs Farouq al-Sharaa Health Mohammed Iyad Shatti Housing & utilities Husam al-Safadi Industry Ahmed Hamu Information Adnan Omran Interior Mohammed Harba Irrigation Taha al-Atrash
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