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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 21,517 21,900  19,500 67
GNI per capita
 US $ 1,160 1,130     1,040 130
Ranking is given out of 208 nations - (data from the World Bank)

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Bashir al-Asad

Update No: 030 - (02/05/06)

Making Friends
Syria continues to be treated as an enemy by the United States. Speaking to the press, US secretary of state Donald Rumsfeld reiterated the US position that Syria supports the insurgents in Iraq - even as in recent months, Syria was actually commended by US army generals for having been very active in preventing potential 'terrorists' from entering Iraq. Nevertheless, as noted in last month's update, there is evidence that the neo-conservative movement has been losing steam as has the probability that the United States will launch punitive military action against Syria - distracted as it is by Iran. Some analysts suggested that Syria was hoping to use Iraq - by facilitating relations with the Sunnis and the Baathists - as a means of improving relations with the United States. However, it seemed form the very start that the US was not interested in good relations with Iraqi Sunnis and former Baathists as the first appointed 'governor' Bremer disbanded the largely Baathist and Sunni dominated leadership of the armed forces. Syria has been active in improving relations with its neighbours, including Iraq and Turkey and of course Iran, making it increasingly difficult for the United States to isolate Syria internationally. Indeed, it would seem that the United States attempt to isolate Syria has actually prompted it to establish close relations with its neighbors in a process, which in a sense is isolating the United States from the region - were it not for its presence in Iraq. 
As Syria and Iran concluded a series of commercial and bilateral agreements last February, including the expansion of road links between them, both Iran and Syria need Iraq to be stable. In addition, there is an ambitious gas pipeline project extending from Egypt to Jordan and Turkey, which could conceivably be tied to an Iranian or Iraqi pipeline. In short, Syria is becoming a strategic nexus for the delivery of gas from the Persian Gulf, Egypt and the Middle East to Europe. While, Turkey and Syria have been improving bilateral relations over the past 4 years - Turkey is currently Syria's biggest trading partner, an aspect also fueled by the signing of a free-trade deal between the two countries - Syria has been very active in securing partners throughout the region. Iraq has been favorable to the proposed construction of an oil pipeline between Iran and Syria through its territory. Iran and Syria have already discussed this possibility during an international oil industry convention 'Syroil'. Syroil 2006 is Syria's fifth oil exhibition and 255 companies from North and South America, Europe, Africa and Asia were present. Officials from both countries have conceded that the main obstacle remains instability in Iraq, especially as the Iraqi oil industry is still facing severe logistical and production difficulties. 
Predictably, Iran, which is becoming the true diplomatic power in the Middle East, is becoming a very important partner for Syria, as well as Lebanon. Former president and current chairman of Iran's Expediency Council Hashemi Rafsanjani expects more cooperation with Syria in Oil and Gas. Rafsanjani visited one of Syria's most important refineries at Banyas. Syria and Iran indicated their mutual desire for boosting bilateral ties and cooperation as the Syrian Minister of Economy and Commerce Amera Lutfi met the Iranian Minister of Housing Affairs Mohammed Saeed Kia, who heads the Iranian side in the Syrian-Iranian commission of economic cooperation. The agreements extend beyond oil and pipelines, as the two ministers discussed means of promoting economic, investment and commercial relations, contracts to build grain silos and factories for cars and cement. The Iranian car manufacturing plant operated by Iran-Khodro will soon complete the first phase of its facility and will be able to start production of some 5,000 'Samand' models a year. Eventually, the plant will be capable of producing 30,000 automobiles, some of which the company expects to export to neighbouring countries. The plant offers an opportunity for Iran to portray a different image of the country as it starts to demonstrate its industrial capabilities. Currently, Iranian investments in Syria account for US$1.8 billion and are most prominent in the cement, automobile and refinery industries. Iran expects to increase its investment in Syria to reach some USD5 billion by 2009. Meanwhile, Arab Gulf states continue to show interest in Syria. Kuwait is planning to establish the 'Al-Sham' Bank in Syria with some US$100 million in authorized capital and US$50 million in paid-up capital. The shares of the bank should be floated in May in an IPO according to the Kuwaiti newspaper Al-Qabas. While Syria still does not have a stock exchange, such public offerings are launched to attract investors. Syrian investors will have the majority stake of 51%, while the remaining 49% will be held by Kuwait, other Gulf Cooperation Council (GCC) countries and the Islamic Development Bank. The Syrian government licensed Al-Sham Bank in accordance with the 2005 decree that allowed the establishment of Islamic banks in the country, and it will be one of the first private banks in Syria since the nationalization of banks some forty years ago. In April Syria also strengthened relations with Tunisia, one of the most developed countries in the Arab world, and one of the most successful examples of a transition from state dominated to free market economy in the region. 
Meanwhile, Syria is strengthening its ties to the new Hamas led government in the Palestinian Territories - as has Syria's ally Iran. The strengthening of such ties is remarkable given the negative reception extended to Hamas even in other parts of the Arab world. The new Palestinian foreign affairs minister Mohammed Zahar suffered two diplomatic setbacks in mid-April, as he was denied the chance to meet the Egyptian foreign affairs minister during a visit to Cairo, while Jordan cancelled a planned visit to Amman. The cancellation was attributed to the discovery of a cache of weapons destined for Hamas, which had allegedly originated in Syria. Zahar met president Asad in Damascus, and Syria announced it would increase cooperation with the Hamas government, by allowing entry to Palestinians travellers holding passports issued by the Palestinian Authority. Syria said it would also allow dozens of Palestinians who recently fled the violence in Baghdad and ended up stranded on the Jordan-Iraq border, while also taking steps to ease visits of Palestinians to their families in Syria. 
As for Lebanon, there are also positive developments even as the involvement of Syrian and Lebanese military intelligence officials is investigated by Serge Brammertz, the head of the UN investigation into the death of former Prime Minister Rafiq Hariri. President Bashar al-Asad and vice-president Farouq al-Sharaa met Brammertz in Damascus, even as the former Syrian Vice President Abdul Halim Khaddam, who left the government last year and is said to be living in France, suggested that there was high-level Syrian involvement into the Hariri murder. However, while the involvement of Syrian and Lebanese intelligence continues to be proffered by the inquiry, there is still insufficient evidence to verify this. However, of greater diplomatic significance is the fact that Syria - which experienced strong tensions in Lebanon just one year ago as Syrian troops withdrew from that country, said it is ready to demarcate its border with Lebanon (after Israel leaves from the Shebaa Farms. For his part, Prime Minister Fouad Siniora told the UN Security Council that Lebanon would ask Secretary-General Kofi Annan to indicate the steps required by the UN to recognize Lebanese sovereignty over the territory of the Shebaa Farms. While Syria and Lebanon are still exchanging accusations, there are signs of a softening as Siniora is said to be preparing to visit Damascus. Siniora also publicly defended the legitimacy of the Hizbollah movement (backed by Syria) as a political force in Lebanon. 

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