Assad’s free market policies transform Damascus, but no political reform in sight in Syria

Reforms transform Syrian economy, but not politics

DAMASCUS,Syria — After delivering a lecture on the increasing role of private banks in Syria, economist Mohammed Ayman al-Maydani got an uncomfortable request from members of the audience to elaborate on a brief reference he made to corruption in the country’s private and public sectors.

“If I answer this question I may not get to spend the night at home,” he quipped, alluding to the possibility he could be arrested. There was nervous laughter from the room.

The tense moment at the Damascus lecture earlier this month underscored how much and how little has changed in Syria under President Bashar Assad in recent years. The Syrian leader has slowly moved to lift Soviet-style economic restrictions his father and predecessor, Hafez Assad, left him.

He opened up the country for foreign banks, threw its doors wide open for imports, authorized private higher education and empowered the private sector.

But the lanky, former eye doctor who came to power 10 years ago this summer has not matched his liberal economic policies with any political reforms. None, in fact, and his powerful security services are in constant watch for criticism of the regime.

In the process, Assad has changed the Syrian regime’s basis of legitimacy. He has depended less on his father’s old anti-Israeli, Arab nationalism rhetoric, basing his power instead on promises of stability, modernization, economic openness and ending Syria’s international isolation.

After 10 years of Assad’s rule, the Damascus that once looked like a grim little place now smells of money, gripped by a consumer boom sustained by a clique of nouveau riche and businessmen living it up in what’s essentially a “money talks” society.

Foreign tourists crowd the old city’s storied bazaar, hotels boast full occupancy and trendy restaurants are so busy that advance booking is always recommended. The latest car models from Japan and Europe are a common sight on the city’s congested streets and boutiques selling designer clothes seem to multiply.

Opening up a country economically while denying the populace democracy and freedoms is perhaps the Arab world’s most popular formula of governance. Close U.S. allies Egypt, Tunisia and Jordan have been pioneers in the field.

It is not entirely risk-free. The free market economy often makes political reform the next logical step in people’s minds. Moreover, some Syrian economists warn that the changes have widened the gap between rich and poor and send prices soaring beyond the reach of most — making the regime vulnerable to popular grumbling or even unrest.

“The real challenge … is managing the switch from a socialist to a free market economy without increasing poverty,” said economist Jihad Yazigi. “But the government has not managed this as well as it should.”

Reform, he said, is desperately needed to root out corruption in the bloated government sector and to make the judiciary more efficient in dealing with trade disputes, if the regime is serious about boosting the economy.

Still, Assad has been strong enough to weather a difficult past few years, as Syria was forced to withdraw its military from neighboring Lebanon in 2005 and endured heavy international isolation that is only now beginning to ease. Assad has so far been able to withstand U.S. pressure that Syria break its alliances with Iran and militant groups like Hezbollah and Hamas.

“Consolidating his power-base has been a trying process, but his grip on power today is undeniable,” said Bilal Saab, a Middle East expert from the University of Maryland at College Park who regularly briefs U.S. officials on Lebanon and Syria.

Assad’s image as a modernizer, helped by the appeal and sophistication of his attractive, British-born wife Asmaa, have helped him increase his popularity among Syria’s 20 million people.

Meanwhile, his family and its trusted associates keep a tight grip on the armed forces, security and intelligence. They and the new business clique that owes its deep pockets to the regime control the biggest and most lucrative businesses like mobile phone line providers and franchises for anything from cars to computers.

Unlike his father, the younger Assad has not responded to political dissent by jailing thousands without trial or by razing entire neighborhoods to the ground — steps that would worsen Syria’s isolation.

Still, after a short-lived accommodation with opponents soon after coming to power in 2000, he has followed the same uncompromising intolerance for dissent.

Haitham al-Maleh is a good example — the prominent 79-year-old reform activist is currently standing trial before a military court on charges of “disseminating false news that could weaken the nation’s morale.”

His crime was criticizing arrests and the emergency law in a TV interview and in Web articles.

In an April 22 court appearance, al-Maleh pleaded to no avail to be released while on trial because of his deteriorating health. He complains of diabetes and arthritis.

Assad’s feared security agencies also keep a close watch on everyone, carefully combing Internet postings for criticism of the regime and any sign of religious militancy. Syrians say they are back to whispering again just as they were when they wanted to talk politics under the rule of the late Assad.

U.S.-based Syria expert Joshua M. Landis said Assad’s claim to legitimacy is no longer rooted in Syria’s conflict with Israel, as it was under his father.

“It is based on the fear of chaos and the promise of stability,” he said.

Still, the younger Assad uses the formal state of war with Israel to his advantage, with his regime citing it to explain away economic woes, emergency laws and harsh treatment of critics.

“Insisting on the idea that we are in a state of war with Israel since 1973 is no longer acceptable,” said Aref Dalilah, a leading economist who in 2008 completed serving a seven-year sentence after criticizing business monopolies awarded by the government.

“It’s being used to justify everything.”