Tuesday, February 26, 2008

Schmidt: Syria – the ’little China’ of the Middle East or an Islamic Revolution Waiting to Happen?

Søren Schmidt

Has the Syrian regime succeeded in plagiarizing the Chinese development model in which economic liberalization and growth goes hand in hand with political dictatorship and oppression of civil rights? In recent years, economic growth has been a good six percent a year, and the regime has apparently succeeded in weakening the democratic opposition and isolating it from the general public. Or is this apparently successful model on the verge of collapse in the face of Islamic resurgence? Does Syria's future lie with an Iranian model more than a Chinese one?

The economic growth is not only due to increased demand by over a million refugees from Iraq, but is also based on increased investments and sales in both the commercial and tourist sectors and export to the Gulf countries in the wake of the free trade agreement approved by the Arab countries a few years ago.

The Danish architect studio, Henning Larsen Architects, won a competition last year to design a 15,000 m2 discovery centre in Damascus. Just outside the city, another ambitious construction project is underway for 3 billion DKK that contains housing and a gigantic shopping and business centre, including a stock market. These two projects, plus several more, are being constructed while Syria’s oil production is decreasing and the country is beleaguered by a US trade embargo.

At the same time, Damascus has recently imprisoned critics who signed the so-called Damascus declaration of October 2005, demanding a liberalization of the political system.

So it does seem on the surface that Syria has succeeded in copying the Chinese model that is so popular among authoritarian regimes.

However, if we dig just a little deeper, we find some serious problems.

The most serious economic problem in Syria is that productivity of the industrial sector has still not improved in any significant way. As a result, Syrian industrial products are still unable to compete on global markets.

Productivity is dependent on three factors: the labour force’s qualifications, organization of the division of labour, and technology. A country’s long-term economic development depends mainly on its ability to bring these three factors into play.

Many private schools and universities have been established in recent years and contributed to improving the educational level and thus the labour force’s qualifications. However, only a minority can afford to pay tuition at these schools, and also the main areas being taught are political science and the humanities and not the natural sciences or mathematics. As a result, more men are being educated for the commercial sector, and more future housewives are extending their knowledge of English literature etc., while few are being trained to run modern industrial enterprises. The government is satisfied with liberalizing the educational sector, while neglecting to take any constructive and active steps to improve education.

The division of labour is mainly accomplished today by integrating enterprises in global value and marketing chains in order to make mass-production benefits and specialization possible. These benefits cannot be exploited by producing for the limited Syrian market. Rather, in order to realize them, production must be aimed at international markets through cooperation with large international companies.

Syria’s political isolation and high level of economic risk have caused Syria to be the country in the Middle East that continues to be least integrated into the international economy. This isolation in turn has led to high production costs and poor ability to compete.

Authoritarianism continues to be a drawback on the economic side of the ledger. Because of the lack of due process in the country, foreign investments are restricted to the commercial sector and tourism, where earnings are quick and safe. Risk capital and long-term investments, which characterize the industrial sector, are avoided.

An optimal division of labour in the country’s production also requires a financial system that makes it possible for citizens to channel their savings into the most profitable investments. In this area, Syria has actually made progress. Private banks have been established and the activities of the financial sector have been liberalized; however, corruption and inefficiency within the government limit the ability to control the private financial sector effectively. This creates possibilities for swindle and sets a limit for confidence and credibility in the financial sector among economic actors. Government investments in physical and regulatory infrastructure are also decisive for an optimal organization of the division of labour. Although roads and harbours function reasonably well, especially the authorities’ ability to implement and enforce regulations is seriously deficient.

The greatest technological progress in Syria in recent years has been the introduction of cell phones and the internet. These technologies are also used everywhere else, however. The only way to increase Syria’s use of modern technology in the industrial sector is to encourage foreign investments for this purpose.

Thus, state policies are the crucial determinant of the qualifications of the labour force, the division of labour, and the implementation of technology.

Without regular control by the voters (democracy) and freedom of expression it is difficult to prevent corruption and inefficiency within the public sector. In China, a public-service oriented elite still compensates for the lack of democracy, whereas the political elite in Syria does not seem to take such considerations seriously. Therefore, countless examples can be found of government officials acting as a kind of mafia, greedily making themselves rich and using brutal violence when necessary. However, so far President Bashar al-Asad has understood how to distribute benefits among the elite without antagonizing more people than absolutely necessary, while also appropriately punishing those who ’misbehave’ – for example, by expropriating all the property belonging to the former vice-president and present regime critic, Abdul Halim Khaddam, and his family.

One result of the government’s failure is the growing inequality in income distribution and the general population’s increasing dependence on social assistance, such as mutual health insurance arrangements and burial funds.

Some observers have descriptively termed this economic growth as ’Beirutization’, implying that Syria increasingly resembles Lebanon, where the elites are jet-setters while the rest of the population slides into poverty and underdevelopment.

The government’s lack of ability and will to provide public health services and other forms of social welfare has led many Syrians to turn to fundamentalist Islam. Because of the absence of the public sector, the Islamic organizations have grown and created self-help programmes; and increasing numbers of veiled women and bearded men are seen in the streets. Even though the Islamist organizations cooperate with the regime, which also finances large new mosques, it is difficult to imagine that these organizations will not in the long run come to influence the way in which the country is governed. In addition to social solidarity, two of the most important elements in the Islamist ideology are fighting against corruption and enforcing moral virtue. Thus, the elite’s fondness for fast cars and bordellos that attract tourists from the Persian Gulf cannot help offending the virtuous Islamists.

All in all, the Syrian regime has proved to be far more pragmatic than many had imagined. But without some form of democracy, freedom of expression and a certain degree of social justice that can strengthen the country’s democratic opposition, it seems certain that the Islamist opposition will at some point challenge the present regime’s monopoly on political power. Whether the result will be a form of modern ’Turkish’ Islamism or a more radical ’Iranian’ form is still difficult to predict.

Project Researcher
Danish Institute for International Studies
Strandgade 56
1401 København K


Maja Bak-Hansen said...

Interesting article!

It seems that one important factor in "The Chinese Model", that Syria lacks, is the strong sense of obedience and respect towards the Communist Party and the government that has existed for decades - and still prevails to exist - in most Chinese. The same cannot be said for the Syrians' feelings towards their government and their underlying political ideology.
Therefore it seems that the Syrian regime will have a much tougher time surviving a social and economic transition-period, than the Chinese has - and that the battle for power therefore in the end will be between Islamic and democratic forces.

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