Dear Dr. Landis,

The title of your post is “can Syria attract $55 billion in foreign Investment in 5 years?” The answer in my opinion is a resounding yes. Capital is always in search of return. The job for Syrian officials, therefore, is to convince global and regional investors that choosing to invest in the country will yield an acceptable adjusted for risk return. I think that the Syrian government must learn from their Turkish counterparts in the way that country’s coast was developed. Land was given largely for free to international hotel chains to develop. Tax breaks were offered in addition to entice investments. This model was also followed in Dubai. The Syrian ministry in Syria in contrast is yet to understand that they ought to keep very attractive incentives to investors to come. They are yet to put themselves in the shoes of investors and ask themselves if the projects that they propose make sense. Suppose that the ministry decides to give a global hotel chain free land on the Syrian coast and in addition offer it tax breaks for say 5 years and then let us ask ourselves if investments may follow. Syria’s GDP is reportedly at $50 billion (this is like the US having to attract $13 trillion in 5 years). When you try to attract almost that sum in 5 years, you must fire on all cylinders. You must do whatever it takes to convince those investors not to go to Egypt, Jordan or Morocco and instead decide to come to Syria. Investors will oblige on one condition-if they know that they will get a higher return.

Ehsani, Explain how giving such easy terms to capitalists would be good for Syria. Wouldn’t such deals be giving away Syria’s patrimony for nothing? Wouldn’t Syrians howl with outrage over inside deals? If this is so good for Syria, why isn’t the government already doing it? Best, Joshua

I believe that as long as the enmity between the US and Syria exists (talking mainly of sanctions) Syria will not be able to attract those amounts of capital. We have already seen how potential deals (even with friendly inclined states as Turkey) come to a halt when it dawns upon the investors that them investing in Syria might jeopardize their relationship with US firms.

The above being beside the lack of productivity, the regional political climate and the corruption on all levels of society.

Investments will increase, I’m sure, but to that amount that soon?

Wouldn’t such deals be giving away Syria’s patrimony for nothing?
No, it would be for kickbacks.
Wouldn’t Syrians howl with outrage over inside deals?
No, a few would whisper, and the powers that be would not give a damn.

Syria’s GDP is 50 bl dollars.

Is it even possible to attract investments the size of one’s whole economy? or even absorb them?

The Syrian Government can attract investments by building the infrastructure and simplifying doing business in Syria and they should not be limiting themselves to foreign investments as Syrians are loaded with money they park in Real estate for lack of taxes on those , a friend of ours bought a condo in Homs for about 750, 000.00 Dollars which could have been spent on better things ,
few thing the government can do ,

1) build the infrastructure by using Syrian born companies and low wage Syria workers , train System for products and people which will connect all Syrian cities and the neighbouring countries , part of the things that disconnects Syria is the lack of knowing each other for lack of easy transportation , Airports in every region in the country including the northeast , large seaport in Latakia and Tartose that can accommodate products coming from the EU to the Middle East , using this massive spending might devalue the Syrian pound slightly and make Syrian products more affordable and competitive ,

2) Syria has to be careful not to give away the country , they need to simplify doing business and make it easier for Syrians more than others , we need Syrians to build hotels and other attractions , it should encourage small business by providing capital ,contract laws and tort laws ,

Doctors , Lawyers, Plumbers, Electricians , shopping stores Accountants Building Maintenance are the backbone of any economy and specially the Syrian one and making it easier to start these businesses will improve the economy and decrease unemployment ,

can anybody explain this graph? (Syria GDP per capita from 60’s to present)
1- what happened economically from 83 to 89 that almost slashed gdp in half?
2- whats with the 90’s ? there was no growth?
3- what would be the result now if the trend from 73 to 81 was continued?

http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_pcap_cd&idim=country:SYR&dl=en&hl=en&q=syria+gdp+per+capita

Good question. 1982 saw both Hama and the Israeli invasion of Lebanon, which would have had a major impact on the economy. Both threatened stability. But I am sure that is only a small part of the story. I imagine that a large part is that socialism didn’t perform.

Joshua,
Between 1980 and 1990 , there was the Iraq Iran war where Syria sided with Iran and that dried up the Gulf states investments in Syria , Hama and the MB insurgency did not help ,The inflated growth during the the seventies was because of the intervention in Lebanon ,

The nineties lack of growth is probably related to lack of faith in the socialist system that was still present in Syria while being dismantled in the USSR,

Guys,
do not be so negative about Syria.
All what the Syria government have to do is to make sure that the average return on investment should be equal or better than the one in Russia, Georgia, Moldova, Bangladesh, CHINA,… for the last twenty years world investors, including the great Buffet and Soros, dumped billions into countries that had bad infrastructure, corrupt legal system… I listed few examples above. The number that I have seen is about 20% yearly returns. You give 20% and people will be willing to take 100% risk. They will sell their own shirts and underwear just to invest. I visited Turkey before its great boom. Trust me the situation back then in Turkey was worse than the current situation of Syria (infrastructure). The Syrian government should declare a good section of its territory as Free Trade Zone. That zone should stand on its own (Las Vegas style). it should have its own legal system (no Sharia rules, its own banking, its own educational system, its own local government,…

Joshua,
Syria was socialist since the 60’s, why would socialism stop performing in the 80’s? could it be related to soviet aid? can we add the demise of soviet onion as a factor to the drop in GDP in the 80’s?

Norman,
what do you mean by “inflated growth during the the seventies because of the intervention in Lebanon”? in 1973 the GDP per capita was $459, in 1975 it was $979 almost the double. the intervention in Lebanon started in 75 (correct me if I’m wrong).

Youngsyria,
in the first half of the seventies and that is untill 1975 was after the 1973 war which brought with it higher oil prices and masive Gulf state investments ,
The most important thing i see is that since 2007 and while the world economy is shrinking Syria is booming ,

Youngsyria:

Your chart is GDP per capita in US Dollars. The dip between 1983 and 1987 is due to the devaluation of the Syrian currency. When the local currency loses it value, so does the translation of GDP in Dollar terms.

IDIT,

You make an important observation which I alluded to in my comment above. Attracting $55 billion in 5 years is like the U.S. having to attract $13 trillion in 5 years. Turkey’s current GDP is close to $650 billion. In 2007 and at the peak of their FDI, the country attracted $22 billion. Most noteworthy is that real estate only made up $3 billion of this number with equity investments making up the rest. How did Turkey do it? I believe it was due to the opening up of key markets such as banking, telecommunications, energy and agriculture to competition. Most importantly, it was the privatizations that attracted foreign investors to these sectors. Last but not least, the Turkish parliament passed a law back in 2003 that guarantees equal treatments for all investors, with no distinction made between international and locals.

DOC,

You are correct. The U.S. economic sanctions will make it hard for Syria to achieve this goal.

Dr. Landis,

As Mr. President noted, investors have to earn an acceptable after-risk return to come to a country which faces U.S. economic sanctions. This is not about giving easy terms to capitalists. This is about calibrating how attractive your terms must be before investors decide to forgo going to Morocco, Dubai, Turkey or Egypt and instead decide that Syria offers them that better risk-adjusted return. As of today, investors have not poured anywhere near the objective of $10 billion a year. I can only surmise that the terms have not been attractive enough yet.

I stick to my long held view that for Syria to succeed at securing such enormous sums, it must privatize. The economic team continues to feel that they do not need to do so and that they can grow the economy and attract $55 billion over 5 years in investments without having to make this politically sensitive decision. I strongly feel that in the long run Syria can only make its economy prosper when they embrace privatizing the inefficient public sector. Barring this, growth will not be at potential and investment goals will not be fulfilled.

In 1980-1987 we hAD VERY BAD PRIMEMINISTER HE WAS ABDULRAUF ALKASM
,this good point by yougsyria does not adjust for inflation which is 100- 500 time from 1970-till now,if we adjust this for inflation the line will go down.
the money that was smuggled outside Syria,by corrupt officials, way exceed 50 billion dollars, if it come back we will easily achieve this goal, a lot of these monies we were told it is in AYDI AMINEH.
yes socialism did not help, to start investments in Syria required that someone from the officials has to be a partner, or get paid a lot.
Revenue from oil transport from Iraq to syrian coast were lost.
Ehsani Would you consider up value the Dollar compare to Lira would be deceiving yourself, in inflation,you have more lira but it worth less.

Jewish symbolic aid ship en route to Gaza. (To those, on both sides, who still categorize the conflict as being “Jewish vs. Arab”)

http://www.haaretz.com/news/diplomacy-defense/jews-for-justice-aid-boat-sets-sail-for-gaza-1.315773

Shai ,
I saw that and i thought of you , it is time to forget the past and look forward ,

EHSANI2,
I agree with you. I’m not an economic expert, but isn’t GDP growth (regardless of cause)a good indicator for the performance of the economy? in other words, why did the currency devaluation happened?

Ehsani2,

Your comments and suggestions are factual and convincing. Thank you.

May I add that a re-ordering of government’s spending priorities needs to be undertaken. You have already pointed out that foreign investors are not likely to rush to invest in a country that does not boast impressive infrastructure in all fields. Hours in daily brown-outs and household water cut-offs in Syria’s major cities do not attract investors.

Many billions of dollars and years of earnest effort will be needed to solve Syria’s basic infrastructural requirements. To fund such huge undertakings, and given the fact that Syria’s international creditworthiness and past borrowing record are not strong enough to allow the borrowing of huge amounts of foreign currencies the government must provide the funding primarily from its own resources (assuming GCC donors will ignore helping in a major way).

Specifically, military spending should be reduced and investment in irrigation projects stopped.

Syria’s military cannot solve the country’s confrontation with Israel. Billions of dollars should be diverted annually to desperately needed infrastructural investments. In time, better educated and healthier population will supply better soldiers.

An arid/ semi arid Syria cannot achieve food self-sufficiency. It’ll be more beneficial to invest in low water using manufacturing industries to generate foreign currencies from exports (or save foreign currencies spent on industrial imports) in order to import high water using foodstuffs. Agricultural investment should be confined to rain fed lands. In so doing, over-extraction of groundwater for irrigation, which turned the water balance in five of Syria’s seven water basins negative could also finally be stopped.

SHAI,

Thanks for the link. It is a moving wonderful act. Where there is goodwill there is hope!

Elie

Youngsyria:

You are partially correct. In Syria’s case, it was indeed the economic difficulties of that period that forced it to devalue its currency. Measured in a foreign currency like the U.S. Dollar, the country’s income/product did take a hit. My point is that in local SYP terms, you would not have seen the same dip in incomes/production. Since that episode, Syria’s economic leadership (led by the Central Bank) has adopted a stable and strong currency as a focal point of its economic management. While this has kept inflation in check it has meant that exporters have become decidedly more uncompetitive while the government’s ability to finance its spending (paying salaries) with a strong currency has added to the budgetary stress. In contrast to Syria, industrial countries are now caught in a race to the bottom when it comes to their own currencies as each tries to devalue and get a competitive foothold in the global cross border trading system. I believe that Syrian officials doubt the merits of devaluing the currency to boost exports as it may take a very large weakening of the currency to make Syrian exports competitive in world and regional markets. There is little doubt though that it would help the government fund its vast public sector spending.

Elie,

You are correct on both. I doubt military spending will go down much anytime soon. Your point on irrigation projects is spot on. As I have learnt from your writings, Syria has made big mistakes in this field.

One of the most important reason for investors not to come to Syria is if they feel that they will be losing their investments in a currency exchange and therefore if Syria wants to attract investments she has to keep the Syrian pound exchange to the Dollar stable ,

Youngsyria ,
I agree with you that the Syrian economy went sour during the Eightie and i believe that was because of Syria’s stand with Iran against Iraq and that drove the Gulf state investments away , all that weaken the Syrian pound that was dependent also on Gold which also went down in value during the Eighties ,

50 billion in 5 years? Are you kidding me? I don’t see how Syria can attract such investments given the Baath party slogans governing every aspect of life in Syria. Emergency laws are still in place. Socialism and bureaucracy are still dominating the economy. Laws and arrests are arbitrary. No wonder billionaires like Naguib Swaires swore that they would never do business in Syria anymore after the awful experience they had. Syria needs a new constitution liberalizing the economy and adding more freedoms for the people to operate without the interference of the security apparatus or corrupt politicians. Egypt removed all articles that relate to socialism from its constitution and was able to attract a lot of FDI in the last recent years. What crazy foreign investor is going to invest in a country where if he is to criticize a public policy he is at risk of losing his business? What crazy investor is going to invest in a place where major bids are most likely to go to officials and relatives close to the regime? Only when statements such as mine become acceptable to be said publicly in Syria without the threat of physical retaliation or accusation of weakening national morale would we be able to attract such foreign investments. Let’s get real here.

ELIE AL HADJ

” Hours in daily brown-outs and household water cut-offs in Syria’s major cities do not attract investors. ”

Lebanon has much more water problems and in Beirut there are around 4-6 hours cut of electricity a day. This does not seem to prevent foreign investments there, unfortunately all lebanon invetments are in real estate, nothing else, because they are less risky in case of a war than industrial investments.
In my view in Syria, the lack of investments is due to the heavy bureaucracy, the corruption and the bad climate created by the US and the media about Syria’s instability.

WHY-DISCUSS,

Thanks.

You have already explained why investors ignore problematic infrastructure in water and electricity in Lebanon and identified the shortcomings of Lebanese development: “unfortunately all lebanon invetments are in real estate, nothing else”.

Due to their differences in natural endowments and population size, Syria’s developmental needs are more encompassing than Lebanon. Syria needs serious industrial development. Electricity is the first building block in industrial development.

Industrialists expect, among other requirements (well articulated in the above 22 comments) a market with a high quality infrastructure. Syria will be competing with rather advanced host countries in the region to win investors over.

“In February 2009, Dardari said: ‘Syria’s infrastructural needs are estimated to cost 50 billion dollars over the next 10 years.'”

Such a figure is enormous, equivalent to Syria’s GDP, or as EHSANI2 pointed out: “(this is like the US having to attract $13 trillion in 5 years).

The bulk of this huge amount will have to be underwritten by the Syrian government from its own resources; notwithstanding that a number of possible regional and international development funds might take part here and there.

How might Syria fund the bulk of $50 billion over 10 years? I said in 18 above: military spending should be reduced and investment in irrigation projects stopped.

EHSANI2: You are correct in saying: “I doubt military spending will go down much anytime soon”. I agree with you. Why? Because Syria’s non-participatory type of governance at the very top would make it impossible to argue the case for a re-ordering in government’s spending priorities, despite the fact that Syria’s military is of little weight in the regional balance of power and should, therefore, waste less of the scarce resources of a poor country.

Why raise the issue? To lift the curtain surrounding the sacredness, invented sacredness that is, in the national discourse of an institution that it has been the main culprit in impoverishing Syria since the early 1960s.

Without a fundamental re-allocation of Syria’s scarce resources, I am afraid that all ministerial planning, posturing, and media hype would produce little tangible results–a waste of time.

Elie

Joint US/syrian comic book soperhero!.

http://www.rawstory.com/rs/2010/09/comic-company-launching-silver-scorpion-disabled-muslim-superhero/

another miscarriage of justice in syria (i know. steve lendman says u.s. but we know u.s. is a democracy and syria is where the govt commits crimes. read syria where see u.s.):

Reaction to Aafia Siddiqui’s Sentencing – by Stephen Lendman

On September 23, the FBI headlined, “Aafia Siddiqui Sentenced in Manhattan Federal Court to 86 Years for Attempting to Murder US Nationals in Afghanistan and Six Additional Crimes.” More on its press release below.

No matter that she’s completely innocent, and has been a US political prisoner since her March 30, 2003 abduction, incarceration, torture, prosecution, and conviction on bogus charges. Her case is one of America’s most egregious examples of horrific abuse and injustice, climaxed by her virtual life sentence for an alleged crime she never committed.

”Jews for Justice’ aid boat sets sail for Gaza
Organizer says goal of boat which left from Cyprus on Sunday is to show that not all Jews support Israeli policies toward Palestinians”

They sail from an illegally Turkish-occupied territory, but the irony is probably lost on them. And you.

though i liked my deleted comment better, this from gilad atzmon is goood:

Jewish Boat On its Way

Ha aretz reported this week that a boat carrying Jewish activists from Israel, Germany, the U.S. and Britain set sail on Sunday for Gaza, hoping to breach Israel’s blockade there and deliver aid.
9 Jews will participate in this brave mission: amongst them is Rami Elhanan, an Israeli peace activist whose daughter Smadar was killed in a suicide bombing in 1997. Elhanan rightly maintained that it was his moral duty to act in support of the Palestinians in Gaza because reconciliation was the surest path to peace. “Those 1.5 million people in Gaza are victims exactly as I am,” he said.
Refusnik Israel Air Force pilot Jonathan Shapira, another passenger aboard the ship, told Haaretz that “we hope that the soldiers and officers of the Israeli navy will think twice before they obey orders to stop us.” Shapira also reflected on recent Jewish history: “Let them remember the history of our people, and those who followed orders and later said we were only following orders.”
Elhanan and Shapira make a lot of sense, for they speak in the spirit of humanism and universalism.
However: when it comes to Jewish political activism, there is always one ‘righteous person’ who insists on providing a glimpse into what is still a deeply Judeo-centric agenda.

Richard Kuper, an organizer with the U.K. group, ‘Jews for Justice for Palestinians’, said “one goal is to show that not all Jews support Israeli policies toward Palestinians.”

Well done Richard. **Let me get it right : amongst the Jewish population of 18 million people, worldwide — all you have managed to apparently represent, speak for and collate, is 9 humanist souls who are not happy with Israeli policies.**

I suggest to Jews — and humanist Jews in particular — to once and for all, drop the ‘not in my name’ strategy : it is not going to work, and it doesn’t make any sense either. Implementing such a tactic is as racist as the Zionist project, for it affirms the Zionist racial and collective attribution to Jews. It basically says, ‘look at me, I am nice in spite of being a Jew’. This common Jewish left tactic is, unfortunately, not as forceful as Zionism for Zionism is supported by the vast majority of world Jewry institutionally and spiritually.

***Also, I would like to advise Mr. Kuper that the goal of a humanitarian mission to Gaza should aim at helping Gazans rather than make Jews look better. ***

I should be clear here : of course I wish the Jewish boat all success in accomplishing its sacred mission. I certainly go along with Shapira and Elhanan’s call. It is very impressive to see heroic Israelis opposing their criminal government. Shapira and Elhanan are the seed of a future reconciliation. It is also important to see Jews around the world standing up against Israel.
However, if these Jewish activists are true humanists, they had better operate as ordinary people within the emerging solidarity movement. If these Jews are humanists, they had better accept the true meaning of universalism and stop buying into, and retaining aspects of Zionist racist philosophy and perhaps they should consider not solely operating in Jews only political cells.