Syrian economy and the requirements of the syrian european partnership.

Dr. Mtanios HABIB

Abstract

Though it began liberalizing economic activity since 1970, Syria is still suffering from:

· Decreasing income per capita ($1200 a year compared with $20000 in Europe).

· indebtness increasing (33% of GDP in 1998 with debt service of 24%).

· Weakness of fixed capital formation (less than 75 Euro annually per capita compared to 2375 in Europe).

· Syria is a micro economy in all measures (in 1998, the GDP was $20 billion, which is less than the sales of a European medium-sized company).

· Syria’s economy is semi rental where the added value represents 25% of industrial production. Its productivity is 1/15 of that of the European Union.

· Weak attractiveness of foreign investments because of the public sector monopoly, and the undecided attitude towards economic liberalization and joining the WTO.

· High annual population growth rate (3.2%) and high unemployment rate (apparent, disguised and structural).

European Union has the biggest economy in the world (10% more than the American’s, and two times the Japanese’s). It represents 20% of the international trade. This important economy helps Mediterranean economies to surmount the capital shortage and the local market weakness.

European orientation towards the Mediterranean region aims at enlarging the economic region around Europe and sustaining the European political and economic influence in the new international system. It aspires to establish the adequate environment to achieve the peace and integrate Israel in the region by means of economic cooperation with Arab countries.

Barcelona declaration in 1995 represents an integrated work plan with economic, political, social, cultural and environmental prospects. This invokes several remarks:

1. Europe uses political conditions such as democracy and human rights to contract financial commitments.

2. Though it has already signed that Declaration, Israel does not respect it.

3. the precedent treaties required an equal treatment, whereas, the declaration was regressed to the principle of free trade region.

4. Insisting on the harmony with WTO terms, the treaty seems to be a part of globalization.

5. The declaration aims to make social and economic structural correction to enable the private sector to build a market economy system.

Europe aspires to integrating mediterranean countries in the market economy and globalization process and solving the problem of mediterranean immigrants. These goals would not be fruitful if social and economic development were not carried out on both sides. This necessitates not only the transfer of economic surplus, but the diffusion of the development mechanism from poles to perimeters.

Syria’s joining Barcelona declaration imposes structural reforms in order to be compatible with the partnership requirements:

Ending Arab-Israeli struggle to enable the multilateral regional cooperation; Syria cannot cooperate with a country occupying a part of its territory. This leads Syria to limit the cooperation on arab region and join other countries when possible.

If joining free trade region has to be done, it must be gradual with long transitional period with the principle of non trade-off in the first stage and the differentiated reciprocity in the next one. The Syrian GDP per capita represents 6.2% of the european one. So, liberalizing the trade in Syria means a death sentence for the syrian emergent industry and the control of the european banking and insurance on syrian saving activities. Oil represents 90% of the Syrian exports to the EU.

Barcelona declaration clearly called for supporting the private sector and restructuring the public one. The state has to play an important role in regulating the economy like what is happening in China and South-East Asia.

The partnership between Syria and Europe is indispensable to both sides. This stipulates the good formulation of rules, determination of execution conditions and the possibility of adjustment in accordance with results. The transition from tutelage to competitive partnership does not mean accusing Europe of being responsible of the syrian economic degradation. It means implementing an administrative revolution and activating initiatives and open mentality. Syria must be transformed to an agro-industrial economy specializing in products with competitive characteristics. Meanwhile, in order to build a strategic region including Mediterranean Sea and Eastern Europe and extend to the Caribbean and Africa, the EU has to pay the leadership tax.

In his comments on the article, Dr. Adnan SHOUMAN thinks that free economy principles cannot achieve development in Syria. This development happened in Europe under inhuman circumstances. A free trade zone would impede building the common Arab market. The partnership treaty is an attempt to separate Arab peoples. Insisting on democracy and human rights is apparently inapplicable on all nations. If not, why has the partnership treaty been signed with Israel? And how does such partnership help the Middle East dictatorial governments violate the human rights.

however, we need partnership with Europe, particularly in this period aiming at having a new development perspective. This partnership has to be based on equity and counsel. Historic compromise between Europe and the mediterranean countries necessitates the compensation of huge damage caused to the Arabs when Europe spoiled its fortunes and planted Israel in the region. This will mean forwarding apology and paying indemnities.