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Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 21,900 19,500  17,896 64
GNI per capita
 US $ 1,130 1,040     950 131
Ranking is given out of 208 nations - (data from the World Bank)

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Bashir al-Asad

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The Ba'ath Party and the rule of Hafez al-Asad
In many ways modern Syria has followed the familiar course of Arab nationalism during the 1950s inspired by the Egypt of Nasser and from 1958 to 1961 united with Egypt to form the United Arab Republic. Dispute over leadership dissolved that union quickly, and Syria would form the Syrian Arab Republic in 1961. In 1963 the Ba'ath Party seized power. The Ba'ath (renaissance or rebirth) party professed socialist inclinations and it was conceived by the two Syrian teachers the Christian Michel Aflaq and the Muslim Salah al-Din Bitar as an ideology to fight European colonialism in the 1930s. The Ba'ath is the same nominal party that has ruled Iraq from the same period in the 1960s until April 2003 when the rule of its most infamous exponent, Saddam Hussein was terminated by the Anglo-American invasion that began in March of that same year. It's important to recognize that, while the Ba'athist leaders described their seizure of power in 1963 as a revolution, it was in fact a coup carried out by a few military officers, and did not result, nor did it have the support of, a mass uprising of workers and peasants. 
The resulting regime was another military dictatorship. Bitar became the first president from 1963 to 1966 when a more radical faction seized power. A further coup in 1970 brought Hafiz al Asad to power. He ruled Syria until his death in 2000, when his son Bashir al Asad took over. The foundation of the party since the coup has rested with the Alawites, a Shi'i Muslim sect to which less than ten per cent of the Syrian population is affiliated. Asad therefore closed the circle of power to Alawites he could trust and co-opt letting few outsiders into the inner circle. The nominal use of the term 'revolution' to describe what was in fact a coup is crucial in understanding the importance the Syrian Ba'athist party under the Asad regime has placed on maintaining an extensive and repressive internal security apparatus and why reforms, economic and political, have been so difficult to implement. In a very similar approach to that of his neighbouring Ba'athist rival Saddam Hussein, Asad relied on a power group that was organized far more on a tribal or ethnic basis, rather than an ideological one. 

Regional Tensions: The Ottoman past, Israel and the USA
Internal problems have been compounded by the events of the region in which Syria has unavoidably become entangled even before the period of the European mandates in the 1920s and 30s that fuelled the rise of nationalist parties and ideologies. During the Ottoman Empire the area now occupied by Israel, Palestine, Jordan, Lebanon and the current Syria was part of the region known as Bilad-al-Sham. The repercussions of this legacy are still being felt. In 1860 there was a civil war that affected Damascus and the Lebanon involving Druze, Sunni Moslems, Maronite Christians and Jews - along with their European patrons engaged in bitter disputes that are still partially unresolved and that have contributed to fuelling inter-confessional tensions resulting in civil wars in Lebanon in the 1950s, 1970s and 1980s. At the end of World War I and the defeat of Ottoman Turkey, The British and the French divided the region of Sham and drew the boundaries of new states. The inter-confessional tensions acquired a trans-national nature and the region continues to endure a constant level of tension. While Syria has enjoyed generally good relations with Turkey, its neighbour to the north, it has engaged in wars against Israel four times on the battlefield maintaining a level of war readiness best described as a 'cold-war'. 18,000 Syrians still live in the territory of the Golan, a precious source of water and arable land, occupied by Israel in 1967. 
Moreover, Syria has had disputes with fellow Ba'athist Iraq to the east supporting Iran in the latter's costly war with Iraq from 1980 to 1988 and continues to occupy part of Lebanon in which it played an important military role. Syria's initial involvement in Lebanon was during the 1976 civil war when it supported the Christian Maronites. The 1982 Israeli invasion of Lebanon led by General, now Prime Minister, Ariel Sharon saw another round of military clashes between Syrian and Israeli forces. Meanwhile, as Iran's quiet ally in the war against Iraq, Syria also helped sustain the Shi'a faction represented by Hezbollah. In 1989, Syria endorsed the Charter of National Reconciliation, or "Taif Accord," a comprehensive plan for ending the Lebanese conflict negotiated under the auspices of Saudi Arabia, Algeria, and Morocco. More significantly, in May 1991, Lebanon and Syria signed the Treaty of Brotherhood, Cooperation, and Coordination outlined in the Ta'if Accord, which intended to establish the basis for Syrian-Lebanese relations. The Treaty's provisions have yet to be fulfilled. The Israeli occupation of south Lebanon until the spring of 2000, its frequent attacks on Hezbollah and other groups said to be operating in Lebanon and the second Intifada by Palestinians in the West Bank and Gaza territories have heightened Arab - Israeli tensions and precluded Syria's withdrawal from Lebanon. Syria also claims that the UN resolution 425, which called for Israel's withdrawal from Lebanon, also demanded its withdrawal from the Sheba farms in the Golan Heights. This territory is often used by Hezbollah to launch attacks against Israel and is at the heart of continued tensions between the three countries.

The Two 'Gulf' Wars, Intifada II and the War on Terror
Escalating regional tensions exacerbated by the continuing intractability of the stalled Arab Israeli 'peace-process' and the USA's war on Iraq suggest that the Syrian presence in Lebanon will be extended indefinitely. However, when dealing with the United States, Asad has often adopted more strategic and pragmatic policies rather than ideological ones, confirming the need to insulate the party from popular tensions. Indeed, Asad's participation on the side of the American coalition during the 1991 Gulf War was a calculated gamble that paid off handsomely in terms of regional politics and international prestige - in the West. Syria's support was rewarded by considerable financial aid upwards of $2 billion from the USA and Arab oil producing states of the Gulf - who had, ironically, ignored Syria in the 80s for supporting Iran in the Iraq-Iran war - while also receiving a virtual blessing to pursue its interests in Lebanon. The important element that eluded it was the return of the Golan Heights, which are still occupied by Israel. In the mid 90s Syria's international prestige was heightened as it became clear that Syria's participation was crucial in any comprehensive Arab-Israeli peace arrangement.
The collapse of the Soviet Union also facilitated Syria's position in foreign policy orientation and it succeeded in securing better relations with the West and America during the Bush sr. and Clinton administrations. But, even as Bashir al Asad has taken steps to relax some of the Ba'ath party control while gradually shifting to a more liberal economic system, Syria has been relegated merely one step below 'Axis of Evil' status by the Bush jr. administration after the September 11th attacks and the so called War on Terror. Syria had provided assistance to the US in its pursuit of militant Islamic groups, but was opposed to Gulf War II as Syrian - Iraqi relations improved considerably in the last decade leading to the war. Syria even received oil from Iraq after re-opening a pipeline leading to the Mediterranean Sea, which was shut down in the tense period of the 80s decade. Moreover, the failure of the Arab - Israeli peace process has also relegated Syria to a less favourable geo-political position in the Americans' view and heightened tensions in the region of Sham, particularly in terms of allegations by Israel and the US that Syria continues to back Hezbollah, which is now also a fully recognized political party with representation at the Lebanese parliament. It seems that little has changed since Ottoman times. The political risks that Syria faces now are high as tensions between itself and Israel continue to increase, but there are also internal issues related to Bashir al Asad's gradual efforts to liberalize the economy as well as the political system.

The economy and economic liberalization efforts
Most analysts have conceded that during the 1950s Syria was one of the most rapidly developing countries in the Third World. Its economic growth was diversified and relied on one of the healthiest agricultural production systems in the entire Middle East that was even in the declining growth years of the 1980s, still capable of guaranteeing a high degree of self sufficiency in food supply. Few countries in the MENA (Middle East and North Africa) region can claim such an achievement. Syria was also industrializing at a better rate than Egypt and could also count on petroleum and natural gas resources. However, the frequent coups and political instability in the early decades of Syria's independence mismanaged the many advantages that it held over its neighbours, not least of which were a relatively strong supply of water and arable land. Ideological concerns led to the nationalization of most enterprises and the alienation of the business and economic establishment. Many of the Sunni capitalists fled to neighbouring Lebanon where they shifted their economic activity from capital intensive industry and agriculture to services and trade. 
The economy of Syria, then, has since the 1960s been characterized by varying degrees of state intervention designed to reduce regional and class disparities. This is crucial in understanding the Asad's regime's reluctance to adopt full liberalization measures and the ineffectiveness of reforms. As in any highly nationalized economy, reform presents severe economic as well as political challenges; Syria's situation is made all the more difficult as such reforms also have a delicate ethnic dimension. 

The Reforms and Their Political Risks
Economic reform in Syria has been a gradual process that was actually begun with the ascension of Hafez al Asad to power in 1970. He relaxed some of the nationalization measures of the 1960s and fostered the emergence of a new business class based on state officials who were allowed to amass fortunes in exacting transaction fees from foreign companies wishing to do business in Syria. He also took a risk by inviting some of the Sunni capitalists and landlords, who left Syria in the wake of its nationalization, back, inviting them to invest in the important industrial, tourism, construction and agricultural sectors along with the government officials - mostly from the Alawite minority - as they accumulated wealth. Industry is very important in the Syrian economy accounting for 15% of the labour force and even in the recession in the 80s, Syrian GNP was still made up 18% by industrial manufacturing, while oil exports only accounted for 4% in a pattern which is the very reverse of the Gulf States.
The 1980s saw the first important efforts to implement market reforms. The Iran - Iraq war caused shortages in foreign exchange, while subsidized oil from Iran and budget spending cuts of 5% were unable to sustain the subsidies on which the distributive socialist pretensions of the government rested. Its greatest concern was to prevent a rise of the unemployment rate, while also blocking the rise of the Sunni capitalist class that dominated politics prior to 1958. By 1988, the Syrian pound was devalued by 70% to invite inflows of hard currency and mixed private - public sector enterprises in agriculture (a precursor of Britain's Private Finance Initiatives) were formed with the aid of twelve entrepreneurs. The measures worked, but the government used the extra revenues to re-invest in public enterprises and was then faced by having to import food after a long drought severely reduced agricultural output. 
Nevertheless, while these reforms appear rather typical on paper, it must be appreciated that Asad had to play a skilful balancing act in managing the tensions in the all important ethnic element of the equation. Inviting Sunnis to resume a role at the commanding end of the economy, even if limited, was an affront to the Alawite elite that relied on Asad. The revolt of the Muslim Brotherhood in Hama, which ended with the ruthless extermination of 20,000 of its inhabitants in 1982 by the armed forces, was largely a revolt by the Sunnis against the Alawite minority and was supported by the Sunni business middle class of Damascus. It was this continued threat of reprisal against Sunnis that also gave the government some room for reform. Hama had sent a clear message of what just how much dissent would be tolerated. The Sunnis were allowed to take part in the economy but only so long as the Alawites dominated. The balance that is needed in managing the ethnic tensions is a continuing factor in slowing the rate of reform today. 
Bashir al-Asad cannot move too rapidly in order not damage his Alawite basis of support, which is the only real support he can count on, given the nature of his succession and the continued reliance on a repressive security apparatus to sustain him. Asad the younger, a British trained ophthalmologist, was a reluctant choice as successor and lacks the political determination to engage the kind of massive violent reprisals that his father, a military man, showed with Hama. In many ways, Bashir al Asad is a prisoner of the strong minority that relies on the perpetuation of the Asad legacy for its survival. Reforms will, therefore, inevitably be gradual as he faces both the internal threat of dissent, from his own Alawite sect as well as from the Sunni majority, as well as the external one posed by increasing tensions in the region and continued threats from the United States.

Bringing Globalization to Syria
Political risk is doubtless very high. Meanwhile, support from the Gulf States is declining and the unemployment rate, which Asad's father was so concerned in reducing, is now estimated at 25% to 30%. The political and likely military tensions in the region mean that military spending will be sustained and even increased in order deal with the multiple threats. This will free up even less money for social welfare support, which would in political terms allow Bashir al Asad to consider increasing the rate of market reform. A solution to this problem could come in the form of greater foreign involvement in the Syrian economy while increasing efforts to integrate it in the global economy. In other words bring Syria into globalization. Regional efforts promoted by the European Union such as the Mediterranean free trade zone which has been proposed for 2010 are welcome by Syria.
Indeed, Syria maintains very good relations with Italy and Spain, two countries that are sure to play a very significant role in a more open Syrian economy. Hoping to generate foreign investments, Bashir al Asad has announced the privatization of the banking sector in 2002 ending forty years of the exclusively government run financial system. The problem remains, nevertheless, that the legal system is not designed to protect the accumulation of capital; there being no mechanisms in place to protect it institutionally. Any serious effort to invite foreign investment will have to address this fundamental lack of financial structures, which is currently keeping Syria out of the fold of globalization. 
The current instability of the region may also play to Syria's advantage in terms of restructuring the financial system. Lebanon's advanced financial services and its long trading traditions have long played a role akin to what Hong Kong has done for China. In the eventuality that Lebanon became fully absorbed by Syria as part of a regional re-stabilization that also include a peace treaty between Israel and the Arabs, the economic prospects for Syria and the region would improve dramatically. The chances of this happening in the short term are extremely slim, barring a miracle - in a region long famed for this type of phenomenon - but for the time being such hopes merely reflect how many and how obstinate the obstacles are to balanced and sustainable economic growth. 

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Update No: 006 - (29/04/04)

Bombs in Damascus
March of 2004 in Syria was marked by riots involving ethnic Kurds rioting with the authorities after a soccer match. As April ends, a mysterious bombing in the diplomatic district of Mazza in the centre of Damascus raises many questions. While, the attack could at first be seen as an extension of the Kurdish protests of last month, the international nature of the targets suggest otherwise. 
Gunmen, which the Syrian press agency SANA simply called 'a terrorist band' fired automatic rifles and grenade launchers, apparently, at what was once the United Nations office for the Disengagement Observer Force over the Golan Heights of the United Nations or UNDOF. There were also indications that the Canadian embassy might have been a target. The incident provoked four deaths, including a bystander, a gunman and a police officer. The situation did not escalate but the attack seemed to be well coordinated and included the detonation of a car bomb as well as the armed assault. The government claims to have located the hideout of the gunmen, now officially termed terrorists by the state media, which contained a number of weapons and explosives in an area 25km from Damascus. 
It is highly unusual for such attacks to be successfully carried out in Syria. On February 2, 1982, Hafez al Asad ordered the bombing from the air of the city of Hama to stop a revolt by the Muslim Brotherhood, and tanks and artillery shattered the city. Since then, Syria has been very stable and any terrorist style bombing such as what took on April 27 might signal a more serious security issue, internal or external, than had the attack taken place elsewhere in the volatile region. The attack is especially curious, as there was no apparently clear target. In fact, the location of the attack would preclude any anti-government activity that might be suspected to originate from the recent pro-democracy movement protests of March or even from the reformed Muslim Brotherhood, who are part of the civil society for reform encouraged by Bashir al- Asad himself. Asad is a technocrat who believes that the Syrian system might be reformed from within, while actively trying to implement economic and even political reforms. 
Syria's ruling Ba'ath Party has downplayed the demise of the Iraqi branch of the Ba'ath, suggesting it was right to break with it in 1966- even if relations were restored in 1997 to facilitate the import of Iraqi oil via the pipeline. However, unlike the demised Iraqi Party, the Syrian Ba'ath under Bashir al-Asad has publicly confronted the need to renovate the party. To its credit, the Party has made good on the reform rhetoric and adopted reforms such as electing the Party's leadership instead of appointing it. It is also fostering more popular participation over the future of the Party. Moreover, reformists within the party claim that the original party ideology calls for many democratic principles such as freedom of speech and the right to protest. The problem, they indicate, is that the constant threat of war from Israel has forced Syria to maintain emergency laws in place. The threats from the United States, as well as the recent ones from Ariel Sharon to hunt Hamas leaders in Syria, are acting as an obstacle to democracy.
The real challenge for Asad, despite the American neo-conservative think tanks' insistence that he does not have to bow to other interests of the Ba'athist old guard, remains to implement the reforms without stepping on the conservative party elite who are fearful of a loss of Alawite control over the Party. The logistics of the attack in no way seem to indicate that it was the result of an internal power struggle, even if it is claimed that President al-Asad personally drove to the scene to supervise the investigation. 
As for the noted islamist organizations, such as Hamas and Hizbollah, that Western authorities might immediately suspect after similar attacks in the region, there is very little to indicate they would stage an attack inside Syria, a country that has supported both groups; indeed, Khaled Mashaal the Hamas leader lives in Damascus. Moreover, the U.S. State Department claims Syria to be one of the main terror-sponsoring nations precisely for its support of groups like Hamas and Hezbollah. The fact that the Syrian media used the word 'terrorist' also suggests that the Hamas/ Hizbollah connection has been discounted as Syria qualifies these as freedom fighters. On the other hand Syria does consider Al-Qaida a terrorist organization and has even helped the US in fighting against it. Ironically, Syria has been accused by Washington, for failing - or even deliberately failing - to control the movement of militants across its border with Iraq - as well as Israel. Indeed, the US conservative press often cites this reason as a motive to topple the Ba'ath government in Syria. 
Nevertheless, the Damascus attack comes only a few days from the foiled attempt to set off a chemical explosion in Syria's southern neighbour Jordan. Jordan claims the perpetrators crossed to Jordan from Syria. Suggestions and rumours of Al-Qaida involvement abound but the Syrian government has yet to put a name to the group and their motives. The consensus seems to be that the attack was a symptom of the 'poison', which is spreading from Iraq. The event is surely significant as it shows that even the tight Syrian internal control mechanisms are not immune to terrorism, while even the reluctance to suggest the always handy blame-all solution al-Qaida suggests the Syrian government knows more than it is admitting and that it fears the facts may add to the damage.

Averted Sanctions.but Continued Tensions with the United States
The rhetoric in Washington continues to be tough on Syria. Moreover, Paul Wurmser, a leading advocate for a US led military intervention and harsher sanctions against Syria than the ones President Bush plans to implement joined Cheney's staff under its powerful national security director, I. Lewis "Scooter" Libby, in mid-September, according to Cheney's office. Perhaps, the troubles of securing stability in Iraq have had their part as well as the logistic difficulties of over-stretching the US military but the promised sanctions against Syria have not yet been signed by President Bush, who has postponed this issue since December 2003. Surely, the fact that American tanks remain at the border with Iraq a mere 250km away from Damascus must be a cause of concern for the Ba'ath, but since the start of 2004, President Asad embarked on a vigorous diplomatic campaign to establish economic and political ties in the West as well as the Middle East. Last month it was widely believed that President Bush would finally sign the Syria Sanctions Act in mid-April. He did not, sources say, in order not to further humiliate the Arab states of the Middle East after Israel's extra-judicial assassination of Sheikh Ahmed Yassin at the end of March. The fact that Israel also shot his replacement Dr. Abd-Al-Aziz al-Rantisi even while Washington formalized its policy of allowing Israel to keep its West Bank settlements has averted plans for sanctions. 
Meanwhile, extra-diplomatic tensions between Washington and Damascus persist and the border remains a source of friction, as the US insist that Syria is not doing enough to prevent fighters from crossing into Iraq. Syria rebuffs this rhetoric by saying that the border is long and as difficult to monitor as the US-Mexico border. In March, an American and a Syrian soldier were killed in skirmishes on the border. Lebanese newspapers, have suggested that the US has changed its jurisdiction of Syria and Lebanon from its normal US command in Europe to Central Command in Qatar, which notoriously handles Iraq. The tensions have also been felt by Syria's new Ambassador Imad Moustafa to Washington, who claims to be at a loss in understanding US policy vis--vis Damascus. He complained that while "They [the US] discuss imposing sanctions on us,.then they write us a letter telling us how we can help on stabilizing and pacifying Iraq,". This was in reference to a letter that Secretary of State Colin Powell recently sent President Asad. Ambassador Moustafa also complains of the persistence with which Washington insists that Syria is allowing militants to cross the Iraqi border - without offering constructive suggestions for cooperation in effecting a solution.

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