Lively town meeting shows where Syria may be headed

By Khaled Yacoub Oweis

DAMASCUS (Reuters): An unusually frank exchange of views at a public economic forum in Syria last week gave an insight into the problems plaguing the country and a hint of where it might be heading.

The command economy that has dominated Syria for most of the past 40 years was under the microscope at the regular weekly seminar of the Syrian Association for Economic Sciences.

But the session turned into a lively town meeting, drawing hundreds of businessmen, ruling party functionaries, bureaucrats, students and academics eager to voice their views about the faltering economy.

The importance of the meeting was underscored by the presence of Bashar al-Assad, son and heir-apparent to President Hafez al- Assad.

Flanked by Bahgat Suleiman, chief of an army intelligence arm, Bashar, 34, sat for almost four hours listening to speakers criticize an economic system that his father says needs reform following a timid 1991 attempt to encourage investment.

"The enormous cost of maintaining this economic bureaucracy has thrown society as out of balance as possible," Riad al- Abrash, professor of economics, told the packed auditorium.

"Pervading corruption and deepening income differentials will limit investment and development in the coming decades," he said under a large picture of President Assad.

Printing money, Abrash said, has become a principal method of financing Syria's unsustainable welfare state and has led to recession and inflation.

"There is desperation and the absence of any hope of reform. Economic policy is floundering, training levels are low, a culture hostile to capital is widespread," Abrash said.

A senior diplomat said afterward: "The forum is interesting. The leadership has chosen to make public the debate going on within the power structure."

Some speakers singled out Bashar, an army colonel with no formal position in government or the ruling Baath party, as the hope for reform.

There is increasing speculation he will become a member of the ruling Baath party's national command as part of changes, including a new government, expected shortly.

Mamoun Hemsi, a Damascus MP, portrayed him as the man of the hour. A crowd gathered at the end of the grueling debate and conveyed more complaints to the man who had to abandon his career as an ophthalmologist and plunge into politics when his elder brother died in a 1994 car accident.

Not all participants blamed the system for Syria's economic difficulties.

Economist Ali Kanan said the current recession could be overcome if the highly liquid state-owned banks, which controlled US$4.3 billion in domestic deposits at the end of 1998, lent more.

But Bashir Zuheiri, a former bank head, called for more state- owned banks and Prof. Samir Seifan cited calls by American financier George Soros to place limits on capitalism.

"There is no alternative except the state to direct resources efficiently. We must not cancel the state's role but change the way it is performing to be non-bureaucratic," Siefan said, drawing muted applause in violation of debate rules.

However, the critical current at the forum was stronger and drew more cheers. Issam Khoury, who helped nationalize banking in the 1960s, said state ownership had driven finance underground. He said the bureaucracy allocated resources badly, with public employees earning one-quarter of average income.

Reforms might not meet expectations. Assad's methodical style means change could be more gradual than the measures sought by international organizations such as the World Bank.

The resumption of peace talks with Israel in December -- now stalled again -- triggered speculation Syria's problems were forcing it to end its half century of conflict with the Jewish state. That sort of allegation of weakness has previously sent the Syrian government into reverse.

"The Syrian desire for peace is not associated with time or false reports about the Syrian economy," said an editorial in the official newspaper Al-Thawra last month.

While Syrian businessmen who are asking for reform might not be so content, Syria's very isolation from the world economy has made it somewhat less vulnerable to economic pressure.

Tishreen, the state newspaper most associated with Bashar's views, emphasized in its wide coverage of last week's debate that reforms had to be guided by self-reliance.

"Talk about economic reform should not be on account of the social aspects and the classes that could be hurt if we apply pure economic criteria," said Tishreen.

But MP Riad Seif, who sees powerful interests benefiting from the status quo, warned that reform which tried to please everyone was likely to fail.

"A new cabinet is going to be brought in," he told Reuters after the debate. "But if it is going to perform real and needed surgery, it has to hurt."