The Umayyad Mosque in Damascus by Alamy in WSJ

IMF economic report on Syria in full, here. Per capita income is $2150 per year. This means the average Syrian is earning about $179 a month or SYP 8200. On the whole, it is a positive report. Read Derhally’s good summary below.

Syria’s Economy May Slow as Result of Links to Gulf, IMF Says
By Massoud A. Derhally

Nov. 27 (Bloomberg) — Syria’s economic growth may slow next year because investment from the oil-rich Persian Gulf states may fall as a result of the global credit crisis, the International Monetary Fund said. The fund forecasts 5.2 percent growth this year compared with 4.2 percent last year. It didn’t provide a forecast for 2009.

Syrian Deputy Prime Minister Abdallah Dardari in August predicted 6 percent growth this year and 7 percent next year. “Syria is likely to be affected by a regional slowdown resulting from global financial linkages with other countries in the region, notably with the Gulf,” an IMF team that visited Syria during October said in a report on its Web site. Still, “worsening international financial conditions” have not affected the financial industry directly because of caps on banks’ foreign exposure and their “limited integration with the global system.”

Foreign investment into Syria from the Gulf was about $750 million last year, the government says, and may have exceeded $2 billion annually over the past five years, according to Dardari. That’s now at risk as the global credit crisis causes borrowing conditions to worsen. Amlak and Tamweel, Dubai’s two largest mortgage lenders, will be taken over by U.A.E. government-owned Real Estate Bank as the global financial crisis squeezed their access to credit and slowed lending to prospective buyers. The Abu Dhabi-based lender will be merged with the Emirates Industrial Bank to form a combined entity called Emirates Development Bank.

Diversification

A decline in Syria’s oil production is likely to continue, the IMF said. Oil revenue fell to 4.9 percent of GDP last year from 7.3 percent in 2006. Syria’s crude production has fallen to about 380,000 barrels a day, from a peak of 600,000 barrels a day in 1996, according to BP Plc’s Statistical Review of World Energy. The country is diversifying away from dependence on oil.

Non- oil exports increased 23.5 percent last year to $11.2 billion from $9.1 billion the year before, spurred by regional demand for textiles, pharmaceuticals, cotton and agricultural produce. They are forecast to reach $13.4 billion at the end of this year.

Non-oil GDP growth is estimated to have been about 6 percent last year compared with 6.9 percent in 2006 as unfavorable weather conditions affected agriculture, the IMF said. Non-oil GDP is forecast to remain at about 6 percent in 2008. Growth of non-oil exports and tourism receipts may “slow down moderately as a result of the weakening of the regional outlook,” the IMF said. “The oil balance is envisaged to deteriorate further on account of declining output and expanding domestic consumption.” ….

Syria’s medium-term outlook is expected to improve as the global and regional slowdown comes to an end and the world economy begins to recover, the IMF said. “This positive assessment would be contingent on perseverance in advancing fiscal and structural,” changes, the report said.

Qantara.de – Taking the Back Alley toward Change

The policy of privatisation and opening up the markets in Syria is bringing substantial social problems in its wake – but at the same time an almost imperceptible relaxing of political repression. Antje Bauer reports from Damascus…

More and more goods, particularly from the Asian region, are flooding onto the formerly insular Syrian market, crowding out small indigenous enterprises. This can also be seen in the textile industry, the country’s second most important export sector after oil.

Adil Rishi operates a small textile factory before the gates of Aleppo; he sells his goods to the neighbouring Arab states. “The Chinese imports are hurting our business,” he admits. …

The government’s partial withdrawal from the market is driving unemployment upward. Officially, the unemployment rate is eleven percent, but off the record it’s estimated to be more like 20-25 percent. The same low wages now have to go toward meeting increasing costs, with ever fewer subsidies available to fill the gap. Large portions of the population are facing poverty. At the same time, a new class of wealthy Syrians is emerging.

“The network of social solidarity is ripping, since it was wholly based on the role of the State, and nothing has risen up to replace it,” explains Samir al-Taqi, director of the government-associated think tank “Orient Centre for Economic Studies” in Damascus. “This is a major problem, and I think that Syria will soon be facing huge challenges on this front.” …..

The transformation from a state-controlled but unproductive economy to one that is at least partially privatized, and is under pressure to renew itself, was in any case unavoidable. In Syria this change is being made with sufficient care to at least cushion somewhat the impact of the deep-reaching social fault lines that shook the formerly socialist states of the Eastern Bloc. A positive side effect is that the economic opening is having the effect of loosening the government’s grip on society.

“We who live here and read the newspaper and watch television can tell that something has changed in the past few years,” comments Ibrahim Hamidi,…

By contrast, the regime still reacts with knee-jerk repression against the opposition. Just recently, twelve signers of the “Damascus Declaration,” which called for a multiparty system, democracy and the repealing of the emergency laws that have been in effect since 1963, were each sentenced to two-and-a-half years in prison – a judgment that was interpreted in Syria as “especially mild.”

In the course of 45 years of dictatorship by the Assad dynasty, Syrians have been forcibly depoliticized, and the left-wing, secularized democrats in particular find little support amongst the population.

“Following independence, Syria had a very active political life. But by now the grass-roots basis for political activities is smaller than ever,” laments Yassin Haj Saleh, who signed the Damascus Declaration. Against this backdrop, the Muslims could prove to be more of a political threat, profiting from the conservative social trend in Syria. ….

…Privatization is picking up its own momentum, which is in turn affecting other areas of society. A policy of sanctions and threats, like the one the USA in particular has practiced toward Syria in recent years, jeopardizes this development. That’s why even a dissident like Yassin Haj Saleh declares that:

“It would be good if the West would invest here to strengthen the economy. And if the Syrian-European partnership agreement would be signed. This kind of involvement would give the West some leverage to influence the Syrian regime’s behaviour at home and in the region.” by
Antje Bauer

Tourists Warm Up to Syria by Brooke Anderson in Wall STreet Journal

…tourists, many of them European, have been warming to Syria for some time. Part of the appeal has been the charm and relative ease of getting around in a place that hasn’t turned into the type of mass tourism destination that other Arab countries like Morocco or Egypt have become. Syria offers inexpensive and reliable public transportation and its tourist attractions are not thronged with crowds….

Stephen Wagner, a 27-year-old paramedic student from Leipzig, Germany, and a fan of Middle Eastern culture, recently spent nearly three weeks traveling through Syria. Friends told him it was an easier place for foreigners to visit than other Arab countries — with no tourist traps and fewer hassles from street vendors. “I was in Morocco in the spring, but I found it too aggressive toward tourists, with people always trying to sell things,” Mr. Wagner says. “I heard Syria was completely different. And it’s true.”

Spaniard Luis Olivares, who also made a recent trip to the country, adds: “I like the hospitality and the fact that it’s easy to move around here.”

Drawn by a handful of new, boutique hotels in Damascus, an Old City that officials are slowly restoring, and an overseas-marketing campaign, the number of foreign visitors has risen by 50% this year compared with last year, according to the Syrian ministry of tourism.

Photo: by Alamy : A coppersmith at work in Aleppo

At just over seven million visitors in 2007, the boost is helping Syria catch up with some of the region’s more established tourist destinations, like Egypt, which drew 10.6 million visitors last year, according to the World Travel & Tourism Council, a London-based trade group.

 

Most Damascene houses are set round a courtyard with a fountain.

Long-isolated Syria warms to tourism, By Katie Hunt
BBC

It took Mamoun Al-Halabi almost four years to transform a damp and dilapidated Ottoman house on a narrow lane in Damascus’s old city into a chic, five-star hotel.

To prevent damage to the ornate 17th Century wall paintings he made his workers use toothbrushes. His wife scoured Syria to find antique furniture and fittings and commissioned local craftsmen to replicate centuries-old woodwork and chandeliers.

Once finished, he spent six months sleeping in each of the 10 rooms to iron out any problems guests might have encountered.

“It was like a tunnel. You didn’t know when you would come out,” he says, gesturing at the tranquil sun-dappled courtyard, babbling fountain and the opulently decorated rooms beyond.

But his efforts paid off. He says the hotel has been almost fully booked since it opened a year ago. Beit Al-Joury is one of 10 boutique hotels to have opened in Damascus’s old city in the past two years. Many more are in the pipeline as upwardly-mobile Syrians, such as Mr Al-Halabi, take advantage of the country’s newly liberalising economy.

IAEA Broadens Probe of Syria, WSJ:
Jay Solomon, 2008-11-29

The United Nations nuclear watchdog, the International Atomic Energy Agency, is broadening its probe of Syria’s suspected nuclear program and pushing for information from its alleged collaborator, North Korea, as well as from Israel, officials said this past week.

Despite signs that the U.S. and Israel aren’t in a punitive mood toward Damascus, the suspected nuclear program is emerging as a major international issue.

The IAEA is asking North Korea and Israel for more information as part of its probe into Syria. Above, IAEA Director Gen. Mohamed ElBaradei.

The IAEA’s probe places the incoming Obama administration in a difficult spot diplomatically. President-elect Barack Obama has indicated his desire to engage Syria, but he also backs global antiproliferation efforts.

Israeli jets destroyed a suspected Syrian nuclear facility in September 2007. U.S. intelligence agencies said that at the time, the facility was weeks from being operational. Syria has denied it was building a nuclear reactor, and suggested that uranium particles found there by U.N. inspectors in June came from Israeli bombs.

Earlier this week, the IAEA sent a letter to Jerusalem seeking clarification on whether Israeli bombs could have been the source of the uranium particles, U.N. officials and Western diplomats said. An Israeli official declined to comment.

The Central Intelligence Agency has alleged that North Korea was the principal designer and builder of the Syrian facility, known as Al Kibar.

A senior U.N. official close to the investigation said the IAEA is hoping to learn more through the disarmament talks between North Korea, the U.S. and other powers. North Korea’s alleged role in exporting nuclear technologies to third countries is a principal focus of the talks.

Damascus has refused to allow the IAEA to visit at least three other sites suspected of being linked to the Al Kibar complex. It has so far ruled out additional visits to Syria by agency officials.

 … U.N. officials said the investigation has been hampered by the August assassination of Syrian Brig. Gen. Mohammed Suleiman, the IAEA’s principal contact in Damascus. The officials said Gen. Suleiman oversaw the IAEA’s access to suspected Syrian sites, as well as briefings by Syria to the IAEA inspectors. “We don’t have a new source” of contact inside Syria, said the senior U.N. official.

Another snag was cited by IAEA Director General Mohamed ElBaradei this week. He said the agency has had trouble obtaining commercial satellite images of the Syrian site in the weeks after the Israeli attack, perhaps because someone bought them up. “It is regrettable, and indeed baffling, that imagery for this critical period…was not available,” Mr. ElBaradei told the IAEA’s board of governors on Wednesday.

Israel has neither confirmed nor denied its role in the Syria attack. A U.N. official said investigators found no traces of depleted uranium — the normal form of uranium found in munitions — at Al Kibar, but said he couldn’t rule out that other forms of uranium may have been used in the Israeli bombs dropped on the site.

U.N. officials said the IAEA hasn’t found evidence so far that uranium from a North Korean nuclear facility at Yongbyon was diverted to Syria. The IAEA hasn’t ruled out that the uranium could have come from a separate North Korean site, and is looking into whether it came from a third country…..

Raghida Dergam in al-Hayat Counter those who recommend a Syria First policy to peace

…… On the one hand, [Israeli Defense Minister Ehud Barak’s] view is that Lebanon should be sacrificed and returned to Syria, and that the international tribunal to try those implicated in political assassinations should be dropped, under the pretext of separating Syria from Iran for strategic purposes. At the same time, he is effectively doing what he really wants, which is to waste time discussing Syrian-Israeli negotiations in order to prevent any progress in Palestinian-Israeli peace talks.

It became common among the circle of people who surrounded presidential candidate Barack Obama to “buy” the idea of giving priority to Syrian-Israeli negotiations through Turkey at any cost. These people should give up this dangerous idea, because there is no leaping over the Palestinian issue and no rift between Syria and Iran, and because negotiations between Syria and Israel should not be used to end the isolation imposed on Damascus. If Syria is truly honest about turning over a new leaf with Lebanon, one in which it would respect the country’s independence and sovereignty and would cease using it as a battlefield for the armed Palestinian factions that take their instructions from Damascus, then such a development would be welcome. However, Syria’s history with Lebanon does not portend such a qualitative shift, as Damascus is fully convinced that Lebanon remains its strategic depth. If, on the other hand, it has changed its mindset and its methods as a result of ongoing developments, then the coming Obama administration should be given clear guarantees in that respect.

Until then, Lebanon, rather than the ghost of indirect negotiations between Syria and Israel, remains the way for Syria to end its international isolation. Indeed, the real target of international resolutions concerned with Lebanon is Syria, as these resolutions have demanded that Damascus stop interfering in Lebanon’s affairs, stop the flow of weapons to militias in Lebanon that are opposed to the army and to the state, stop refusing to demarcate its borders with Lebanon, and stop trying to freeze the international tribunal. If Syria’s intentions with Lebanon are dishonest, then Syria will remain under observation, regardless of how much it and others believe that it has overcome pressures and reached safety by the mere fact that Obama was elected……