Obama has nominated diplomat Robert S. Ford to be the first U.S. ambassador to Syria since 2005. There were reports in the last few days that the nomination might not go through, but it has. Laura Rozen belives it was timed in part to add pressure on Iran to fall in line.

Several friends have told me that Syria has been hosting one delegation of American and European businessmen after another as Western banks scramble to get in on the bottom floor of the Syrian economy. The normalization of US – Syrian relations has been in the air for some time and the reform process in Syria is beginning to reach a critical mass. There remains much to be done in the way of reforming the legal infrastructure and, perhaps even more importantly, the judicial system, but capitalists are taking notice and no one wants to be left out while Syrian assets are undervalued.

Human rights issues continue to dog Syria. The president has shown little inclination to loosen security controls as a response to improving relations with the West and growing economic activity.

Obama announces return of ambassador to Syria
Laura Rozen:
February 16, 2010

Ford is a highly regarded diplomat and career Foreign Service officer who currently serves as deputy chief of mission at the U.S. embassy in Iraq. He previously served as the U.S. Ambassador to Algeria, and deputy chief of mission in Bahrain, among many other assignments. An Arabic speaker, Ford is the recipient of a half dozen several State Department awards for honor and outstanding service.

“Ambassador Ford is a highly accomplished diplomat with many years of experience in the Middle East,” White House spokesman Robert Gibbs said in a statement. “His appointment represents President Obama’s commitment to use engagement to advance U.S. interests by improving communication with the Syrian government and people. If confirmed by the Senate, Ambassador Ford will engage the Syrian government on how we can enhance relations, while addressing areas of ongoing concern.”

POLITICO previously reported that Ford would be the nominee.

His prospective nomination was conveyed to Damascus last month by U.S. Middle East envoy George Mitchell, journalist Hisham Melham reported.

Undersecretary of State Bill Burns is traveling to Syria this week to discuss it further, as well as efforts to ensure that Syria help prevent insurgents from crossing its border into Iraq, especially ahead of Iraq’s elections next month, Syrian-Lebanese relations, and chiefly, Iran.

The timing of the White House announcement of the plan to return an envoy to Damascus also has a great deal to do with Washington’s efforts to signal Iran that its failure to engage will lead to greater international isolation and pressure. Syria is one of Iran’s closest allies, and both nations arm militant groups Hamas and Lebanese-based Hezbollah.

Tensions have been sharply escalating in recent weeks between Israel and Lebanon, with many Lebanese commentators fearing a possible new Israeli attack on their country over recent Hezbollah moves. Hezbollah leader Hassan Nasrallah today warned Israel that if it attacked Lebanon’s airport as it did in 2006, Hezbollah would attack Israel’s airport.

Group sees Syria as a stepping stone
February 15 2010, Damascus, Syria

No doubt his superiors at Halcrow, a leading British design and planning consultant, looked at the Arab nation and thought of a maverick state accused of backing Islamist extremists – more international pariah than business destination.

Yet Mr Jazairi, a Syrian based in the UK for 30 years, believed there was potential. He convinced Halcrow that things were slowly changing in Syria as reformers within the government have tentatively pushed to open up the struggling economy and shift it away from a socialist legacy which has seriously stymied growth and development.

In 2006, after two years of market studies and visits by senior management, Halcrow took the plunge, opening an office on the outskirts of Damascus, initially with just a handful of staff. It is a decision which appears to have paid off.

Today, Halcrow is the biggest private consultant operating in Syria and boasts some 250 engineers and administrators in the country. And while Halcrow’s Middle East headquarters in debt-stricken Dubai has been laying off staff, with its personnel dropping from around 335 to 240 in the wake of that emirate’s economic crisis, the Syrian office has continued to grow.

It has hired around 60 people over the past 18 months and expects to continue to expand its Syria operation.

“We saw evidence of changes, of the policies and openness, and we saw a need for our company on the engineering side,” says Mr Jazairi, general manager of the Damascus office. “There is enough work here, probably for 30 years.”

Driving the business is government spending on infrastructure – water, roads, bridges, sewerage treatment plans and water projects – as well as increasing private sector activity. Being relatively isolated from the international economy has also meant that the country has been less affected by the global financial crisis than neighbouring states.

For Halcrow, building up its presence in the domestic market is only a first step, with the company looking to take advantage of operating costs that are about half of those in Gulf states and using its Damascus office as a base to offer design and production services for other markets in the Middle East.

“It’s one of the region’s growth areas and in the future it will not just serve the Syrian market but we will also be able to deliver work back here to the UAE,” says Jim Fyvie, Middle East executive director at Halcrow. Increased interest in Syria’s under-developed market has coincided with a tentative improvement in Damascus’s relations with the west and important regional powers, such as Saudi Arabia.

A British trade official says interest from UK companies has increased by around 70 per cent over the past year, albeit from a tiny base.

“The number of companies visiting the market has gone up markedly – a couple of years ago we would see around two or three new companies. This year we have had over 50, usually as part of [trade] missions,” the British official says.

British exports to Syria rose to £76.7m ($120.4m) between January and July 2009, up from £44.2m over the same period in the previous year.

French companies have also shown renewed interest with Lafarge building a cement plant with capacity of 2.75m tons a year.

However, Syria remains under US sanctions which can cause problems for businesses requiring US parts or software. And while the reform process has had some successes, most noticeably in the financial services sector, experts say far tougher challenges lie ahead.

A three-year drought has highlighted Syria’s dependence on agriculture and its vulnerabilities to nature, while its oil resources, which provide 20 per cent of the government’s revenues and about 40 per cent of its export receipts, have been in decline for some time.

The country is also burdened with a bloated, inefficient bureaucracy. Reformers, meanwhile, face stiff resistance to change from hardliners and vested interests in a country where corruption is rampant and a cabal of powerful businessmen close to the ruling regime hold great sway.

Just how committed the government is to moving ahead with tougher reforms to further open and develop the economy remains to be seen.

“The question we have is: what is the next stage of reform and how do we get to the next stage? From what we hear, there are divisions about how far we should open the economy,” says Bassel Hamwi, general manager of Bank Audi. “I believe that gradual opening is also a high-risk approach. The longer we wait, the more potential burden we are giving ourselves, or the next generation.”

Syria: Population Policy Under Scrutiny

The Syrian authorities have been criticised for lacking an effective birth control strategy, despite warnings from officials and experts of the risks to society and the economy of soaring population growth. The alarm was raised by the Syrian Commission for Family Affairs, an official body responsible for setting family and population-related policies, which said the population is expected to increase from around 22 million today to an estimated 30 million in 15 years’ time.

The head of the commission, Dr Ensaf Hamad, called on the government during a January conference to implement policies that directly address population growth issues.

Policies have yet to match the seriousness of the situation, critics say, even if the need to curb population growth has been recognised by the authorities in recent years.

They started distributing the contraceptive pill a decade ago and in 2001, a new law stipulated that women could have maternity leave and financial support only for their first three pregnancies.

Even that is a remarkable change after decades in which the government encouraged large families. Until the late 1980s, families with more than 12 children received medals as a symbol of national appreciation.

The 2009 Arab Human Development Report issued by the United Nations warned that Syria could face a population explosion. With an annual rate of growth reaching 2.5 per cent, the country had one of the fastest growing populations in the Arab region and the world.

Syria: Reforms Continue
16 February 2010, Oxford Business Group

As the Damascus Securities Exchange (DSE) prepares to celebrate its first birthday on March 10, traders and staff alike will be heartened by figures that demonstrate a continued rise in trading volumes on the bourse.

According to local business publication The Syria Report, volumes surged 55.7% in the first week of February to S£157m ($3.5m), a record for the exchange. The DSE had already posted one new high in 2010, when trading volume hit S£130m ($2.9m) in the third week of January. The growth in volumes is impressive, considering that weekly trade figures in December were as low as S£33m ($750,000). The increase seems to suggest that investors are greeting the New Year with renewed enthusiasm for the bourse, following a slow start to trading when the DSE opened in 2009. Trading volumes for the first month of operation were a modest S£13.6m ($300,000), spread over only nine sessions.

With eight companies listed initially, low volumes were to be expected. By October, after moving from two to three sessions a week (Monday, Tuesday and Thursday), and with an additional three companies joining the exchange in the interim, monthly volumes had risen more than twenty-fold to S£284m ($6.2m), or an average of S£23.6m ($500,000) per session. By January, average volume had risen to S£28.4m ($600,000).

If the latest figures are supported (they have not yet been published on the DSE’s website), average volume per session for the first week of February would have hit S£52m, or just over $1m. The average number of trades per session has also jumped from only 16 last April to 107 in January, while volume of shares traded has grown from an average 1660 per session to 22,500 (a small drop from October’s average of 25,400).

Joining the positive trading statistics was news that a DSE-listed company has broken the S£1bn mark in terms of the accumulated value of shares traded. The Syrian International Islamic Bank (SIIB) recently hit S£1001.34m ($21m) in value traded, despite being a latecomer to the DSE, and indeed being registered on the secondary “growth” market (designed for smaller companies).

The growth in market activity suggests that a few of the teething troubles experienced by the market in its opening months are being resolved. Initially, a 2% cap on price movements, coupled with limited trading of only four hours a week, led to an absence of liquidity on the bourse and a lack of appetite for trading. By the middle of last year, of 37,000 registered investors in the 11 listed companies on the exchange, only 1200 had actually engaged in any trading.

Despite the recent increases, trading remains modest and confined to a few particular stocks; behind SIIB the next highest traded stock is the Bank of Syria and Overseas at S£375.4m, or less than half the volume, while only three companies out of 12 have broken the S£200m mark. While forming a trading culture will take time and regulations may indeed remain overly cautious, the biggest barrier to greater activity is nonetheless an absence of listed companies.

In an attempt to attract new listings in December the authorities reduced minimum capital requirements for the main market from $6.5m to $2.5m. Time will tell whether the move will have a significant impact; currently, a major barrier to Syria’s myriad family-owned corporations listing on the exchange is not so much an absence of capital as an absence of necessary financial disclosure. Changing accountancy procedures, which may require further reform of the tax code, is arguably the most pressing requirement to increase the number of listings.

Market appetite though is clearly in favour of new IPOs. An IPO by the local subsidiary of Bahrain’s Al Baraka last November was oversubscribed 3.4 times, with S£7.67bn ($167m) of capital chasing a 35% stake running to S£1.75bn ($38m). The news suggests that Syria’s financial institutions, which currently make up the large majority of listed companies, may succeed in meeting new regulations to raise capital from $30m to $200m ($300m in the case of Islamic banks) over the next three years. That in itself would represent a significant advancement in the DSE’s standing, as the bourse continues to evolve into a cornerstone of the new economy.

‘Mossad assassination squad used British passports’ – The Times, February 16, 2010

Why chuckles greeted Hillary’s Gulf tour by Rami Khouri – always good.

Game-Changer: Nasrallah Announces a New Hezbollah Deterrence Strategy by Qifa Nabki

GAZA CITY, Gaza Strip — The United States should break Israel’s blockade of Gaza and deliver badly needed supplies by sea, a U.S. congressman told Gaza students.

Rep. Brian Baird, a Democrat from Washington state, also urged President Barack Obama’s Mideast envoy to visit the Hamas-ruled territory to get a firsthand look at the destruction caused by Israeli’s military offensive last year…..

Israel allows humanitarian supplies and food into Gaza, but has kept out cement and other building supplies needed for reconstruction. Israel argues such materials could be diverted by Hamas for military use.

Baird, who has announced his retirement from Congress, told a group of Gaza students Sunday evening that the U.S. should not condone the blockade.

“We ought to bring roll-on, roll-off ships and roll them right to the beach and bring the relief supplies in, in our version of the Berlin airlift,” he said, adding that the supplies could be delivered to U.N. aid agencies.

Finally a good obituary of Amin al-Hafiz by Lawrence Joffe with a little help from Sami Moubayed

Amin al-Hafez obituary: Leader of Syria’s first Ba’athist regime
by Lawrence Joffe
guardian.co.uk, Tuesday 16 February 2010

Hafez greatly admired Egyptian president Gamal Abdul Nasser. Photograph: AP

Amin al-Hafez, who has died aged 88, ruled Syria’s first Ba’athist administration with a genial smile and an iron fist during the turbulent years from 1963 to 1966. He was also the last genuine president from that country’s Sunni Muslim majority, since his successor was just a Sunni figurehead for two Alawite officers.

Although Hafez cemented Ba’ath party rule over Syria, he was more a military opportunist than a dedicated ideologue. Ultimately his dictatorial tendencies did not prevent his downfall, and his ties to an Israeli spy proved particularly embarrassing. Syria experienced stability, albeit of a nervous sort, only after Hafez al-Assad became president in 1970.

Al-Hafez’s first taste of politics came in 1958 as part of a Syrian army delegation that visited Gamal Abdul Nasser, the Egyptian president. The 14 officers beseeched the “hero of Suez” to rescue their coup-ridden nation. The two states duly merged into one United Arab Republic in February that year, and Hafez was posted to Cairo.

Soon formerly enthusiastic Ba’athists grew to loathe Nasser for banning their party and turning Syria into a virtual satrapy. The union crumbled after another Syrian uprising in September 1961, and the resultant secessionist regime banished the troublesome Hafez to Argentina as Syria’s military attaché.

Hafez returned to join the Ba’athist-led cabal that toppled Damascus’s pro-western government on 8 March 1963, a month after other Ba’athists had taken Iraq. Suddenly allied radicals were steering two of the region’s most powerful countries.

While Iraq’s Ba’athists were ousted within nine months, in Syria the party’s civilian founders cleverly used the bluff Major General Hafez as their military shield. In May 1963 he became interior minister. And after viciously crushing a pro-Egyptian rebellion on 18 July, submachine gun in hand, he was appointed president of the ruling National Council.

Hafez declared a state of emergency that still exists, and nationalised all Arab-owned banks and oil resources. He also improved ties with the Soviets, bankrolled Yasser Arafat’s Palestinian Fatah guerrillas, and ordered engineers to divert two rivers that fed Israel’s share of the Jordan. The ensuing artillery exchanges across the Israeli-Syrian border almost certainly led to the 1967 six-day war. By then, however, Hafez had been toppled by a bloody coup on 23 February 1966.

Hafez was born in humble circumstances in Aleppo, northern Syria. The son of a policeman, he graduated from Syria’s military academy in 1946, the same year French troops left his country. Hafez gravitated towards the secular, anti-imperialist, pan-Arab Ba’ath party after fighting in the 1948 Arab-Israeli war. Yet he remained at heart a Nasserist, and forlornly dreamt of reuniting Syria, Egypt and Iraq – even when his idol called him a fascist.

While in Buenos Aires, Hafez befriended a supposed Lebanese trader named Kamal Amin Thaabet, in reality an Egyptian-born Jewish Mossad agent, Eli Cohen. The spy arrived in Syria in early 1962, a year before Hafez’s return, and soon began relaying reports and photographs about Syrian military plans to Israel.

As president, Hafez groomed his friend to be a future defence minister, possibly even his successor. He invited him to banquets, thanked him for giving his wife a $1,000 fur coat and led him on tours of secret Golan Heights fortifications. When Cohen was caught red-handed in January 1965, Hafez personally interrogated him and arrested 500 of his high-placed friends. Brushing aside international pleas for clemency and his own qualms, Hafez ordered Cohen’s public execution, by hanging, in Damascus.

Hafez proved as ruthless when he crushed a Sunni uprising in 1964. He authorised the aerial bombing of the Sultan mosque in Hama and awarded himself new titles, including prime minister. But 15 reshuffles from 1963 onwards and numerous army purges eroded his limited support base. Most imprudently, he sacked Salah Jadid, the dynamic leftist general, as chief of staff in September 1965.

In the end, as the historian Sami Moubayed has noted, Hafez fell victim to his stubborn refusal to arbitrate between feuding Ba’ath factions. He seemed startled when Jadid and Assad, of the clandestine Ba’ath military committee, dared to challenge him.

Wounded in a three-hour shootout during their 1966 assault, Hafez was jailed in Damascus’s Mazza prison, then spirited away to Lebanon in June 1967, before relocating to Baghdad in 1968. Damascus sentenced Hafez to death, in absentia, in 1971. Yet Saddam Hussein treated him and his fellow exile, Ba’ath founder Michel Aflaq, like royalty. After the fall of Saddam in 2003, Hafez was allowed home. He received a state funeral. He is survived by his wife, Zainab, and their five children.

• Mohammed Amin al-Hafez, soldier and politician, born 1921; died 17 December 2009