Al-Hayat Reports on Syrian Economy
Ibrahim Humaydi in Damascus
BBC MidEast: 2008-05-06
Text of report by London-based newspaper Al-Hayat website on 6 May

Itri reveals strict measures to prevent smuggling fuel oil to Lebanon; Itri: Syria's home front is strong and will not be affected by US pressure

Syrian Prime Minister engineer Muhammad Naji Itri, in reply to a question by Al-Hayat, said that Damascus is considering taking 'a series of strict measures' to prevent the smuggling of fuel oil to Lebanon, because Syria has obtained 'documents' showing that the Lebanese government had issued instructions preventing interception of the entry of foodstuff and fuel oil' from Syria. He noted that the Lebanese decision raised the value of smuggled fuel oil to Lebanon in the past year to approximately $1.2 billion.

Itri met the day before yesterday with a number of reporters in the presence of the ministers of economy, finance, and interior to explain the details of 'the host of measures' that the Syrian government has taken to control prices. He stressed that 'the loaf of bread' is a red line, that its price will not be raised, and that there is no intention to change the price of petrol.

In reply to a question on whether there is a connection between the Syrian government's decision to raise the price of fuel oil from 7 to 25 Syrian pounds and the US economic sanctions, Itri said: "The Syrian domestic front is strong and solid, and the Syrian people understand all circumstances. Pressure by foreign parties is aimed at weakening Syria and its economy, but we will not give them a chance. Syria's economy is strong and solid."

It is to be recalled that the Syrian government early this week raised the price of fuel oil as well as the price of a butane gas cylinder from 145 to 250 pounds in tandem with 11 steps that it has taken to improve the living conditions of Syrian citizens. These include raising the salaries of employees and workers in public sector and retirees, totalling approximately 2.1 million out of Syria's 5.3 millions workers, by 25 per cent. Syrian officials said that the measures taken by the government to offset the rise in fuel oil would
cost the treasury approximately $2 billion, which is equal to the sum to be saved by the decision to 'redistribute subsidies to deserving citizens.'

One of the reasons that prompted the Syrian government to take this step was the increase in the quantities of smuggled fuel oil to neighbouring countries. Itri said: Smuggling has been an additional problem. The fraternal Lebanese government met part of its needs through Syria, as approximately 1.5 billion litres of [of fuel oil] was annually smuggled to Lebanon, representing 15 per cent of our local consumption. In other words, we were subsidizing the Lebanese economy by approximately $1.2 billion."

Itri added: "I saw a document released by the current [Lebanese] prime minister, the de facto government, revealing that Maj Gen Ashraf Rifi issued instructions to government departments preventing interception of the entry of foodstuff from Syria, particularly fuel oil." He added: "Some 15 per cent of our people's funds go illegally to the Lebanese government."

The price of fuel oil in Syria is still lower than it is in neighbouring countries. In reply to another question by Al-Hayat, Itri said: "Our concern now is to stop smuggling. We are considering amending the law on smuggling to make punishment of smugglers similar to that of drug traffickers," which reaches to life sentence, and to take further measures at the border, as "our friends on the other side of the border encourage' smuggling. He added: "It is the Syrian people as well as those living with us," in reference to the 1.5 million Iraqi nationals costing the Syrian government $1 billion, "who deserve subsidies, not neighbouring countries."

Syria's annual need of fuel oil totals 10 billion litres, while its two refineries produce 45 per cent of its need. The Syrian government purchases the rest of its needs at $1,100 per tonne, which means that the government's subsidy to fuel oil dropped from 86 to 50 per cent. In addition, the government has started giving out fuel oil cards at the rate of 1,000 litres per family at 9 pound per litre to 3.8 million families. Syria's oil production has recently dropped from 600,000 to 360,000 barrel per day. Itri said: "The trade balance of oil has been losing, and we pay for imports of oil by-products from the budget."

The Syrian government this year faced drought conditions, and as a result it decided to raise the prices of strategic crops (wheat, beet, cotton) by 40 per cent. The Syrian government yesterday set up a fund for subsiding agricultural produce. Itri expressed his hope that the grain produce will total 2 million tonne this season.

Meanwhile, local sources said that people in northeast Syria protested against the rise in the price of fuel oil and foodstuff. Originally published by Al-Hayat website, London, in Arabic 6 May 08.