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All alone

Cairo Magazine, Wednesday March 2, 2005

All alone

The assassination of Al Hariri may doom the E.U.-backed reform process in Syria

By Andrew Tabler, in Damascus

The assassination of former Lebanese prime minister Rafiq Al Hariri has sent shockwaves through Lebanon as well as its estranged neighbor, Syria. As international investigators now comb the bombsite in an attempt to determine who did it, the circumstance of Al Hariri’s death have placed Damascus under intense scrutiny, with calls from the United States, France and the UN to withdraw Syrian army and security services from Lebanon as early as April.

The last few years have seen periods of heavy U.S. pressure on Syria, coinciding with the occasional bursts of reform. While Syria has so far weathered U.S. sanctions reasonably well, early indications show that Al Hariri’s assassination hit Syria’s E.U. supporters pretty hard-a fact that could have serious implications for Syria’s E.U.-assisted reform programs.

The U.S. invasion of Iraq ushered in a delicate economic period for Syria. Cut off abruptly from a major market for its not-particularly-competitive goods, Syria was also deprived of a lucrative trade that it had been carrying out in cheap, smuggled oil.

The result was a spurt of reform, as the economy suddenly became a national priority. After years of promises, private sector banks were suddenly permitted, with three private banks getting the official go-ahead on 29 April 2002. In other areas, Baath party influence on decision-making was cut back and a French team issued a report about streamlining the bureaucracy.

Once trade resumed, however, the pace of reform slackened again.

The temperature of U.S.-Syrian relations spiked upwards with a massive suicide bomb in Haifa and the 5 October 2003 Israeli retaliation against alleged Islamic Jihad bases in Syria. Rather than condemning the move, the Bush administration backed Israel’s charges of Syrian collusion and followed up with the Syrian Accountability and Lebanese Sovereignty Restoration Act (SALSA). This congressional bill outlined a series of economic and political sanctions designed to pressure Damascus to halt its support for Hizbullah and Palestinian militant groups and to pull its forces out of Lebanon.

Reforms again kicked into high gear. Long anticipated cuts in Syria’s high tax rates were passed in November 2003, along with legislation on tax evasion. In December 2003, the state finalized its marathon eight-year technical negotiations with the European Union towards forming an association agreement and cut deposit rates in public sector banks by 3 percent. Two private banks opened their doors to the public in January 2004, and a presidential decree the following month abolished the country’s dreaded economic security courts.

In March 2004, Damascus extended feelers towards the United States, with the Syrian Petroleum Company (SPC) announcing its acceptance of a $750 million bid by a venture involving the U.S.-based Occidental Petroleum to develop two major gas fields near Palmyra, with estimated reserves of 5-6 trillion cubic meters. The venture followed the earlier successful investment in Syrian gas by ConocoPhillips, whose $430 milliion gas-recycling project (the largest U.S. investment in Syria) is scheduled for completion in 2005.

But Washington didn’t bite. On 15 May, the Bush Administration announced that it would enact two of five penalties outlined under SALSA, including a ban on U.S. exports other than food and medicine and a ban on already non-existent Syrian flights to the United States. And that wasn’t all. Washington then rolled out two other penalties few saw coming. First, using section 311 of the U.S. Patriot Act, the president instructed U.S. financial institutions “to sever correspondent accounts with the Commercial Bank of Syria based on money laundering concerns.” The second was the implementation of the International Emergency Economic Powers Act, which allowed the Bush Administration to seize the U.S. assets of the Syrian regime and those associated with it.

Rebuffed by the Americans, Damascus turned to Europe. The Syrians accepted stiffer language in the proposed text of its E.U. association agreement concerning Weapons of Mass Destruction (WMDs), and further implemented E.U.-sponsored reform programs with a new scheme, the Institutional Structural Modernization Facility, putting European experts at the disposal of Syrian ministries to help them accelerate and implement reform.

In late August, Syria’s efforts bore fruit when the European Union accepted its commitments on WMDs and agreed to initial the text of its association agreement with Syria. On 19 October, Syria and the European Union initialed the association agreement’s text in a ceremony little covered in Syria or abroad.

October also saw a cabinet reshuffle that put regime critic Mehdi Dahlalah into the position of minister of information. Freedom of expression increased, and new private sector publications seemed to open constantly. While “red lines” concerning the president, his family and sectarian issues largely remained in place, information on Syria’s reform problems began reaching both the people and the international community.

At the same time, however, Syria’s foreign policy seemed to be hardening and this undercut the progress that it might have made with its domestic agenda. In August and September, Damascus strong-armed Lebanon into amending the constitution to extend the term of its client, President Emile Lahoud. Suddenly, France and the United States were seeing eye-to-eye on Syria and sponsored what became UN Security Council Resolution 1559, which, among other things, demanded that “all foreign forces” leave Lebanon.

The 14 February assassination of Al Hariri may strip away the last of Syria’s European patrons, leaving it at the mercy of Bush’s agenda in the region. There is talk that E.U. parliamentary approvals of Syria’s association agreement are now on hold. The fact that French President Jacques Chirac is openly furious over the assassination and the fact that it happened on Syria’s security watch in Lebanon also does not bode well for Syria’s E.U.-assisted reform programs.

Some E.U. consultants have already been told not to expect their contracts to be renewed, and talk of the association agreement and its benefits have already been excised from the newsletters and promotional materials of E.U.-funded projects. Nevertheless, France and the European Union have supported Assad and his reform efforts under difficult circumstances before. Despite their disagreements with the Syrian regime over Lebanon, most diplomats see little alternative to Assad’s leadership, especially in light of fears over the country’s increasing Islamic fundamentalist trend.

 source: Cairo Magazine