News Round Up: Sept. 28, 05

It was a bad day in Syria yesterday. May Chidiac was nearly killed the previous day in her car. She is one of Lebanon’s most respected regional broadcasters – a Diane Sawyer - who was much loved in Syria even though she was a courageous advocate of Lebanese independence. Everyone admired her. She is alive, but has lost an arm and leg. The Lebanese organized demonstrations to protest the string of killings. Everyone has accused Syria of ordering the assassination attempt. This cowardly job has reignited worries that Syria is playing for keeps and will seriously up the ante in Lebanon, if the Mehlis report corners the Asad family. Syria continues to deny that it is involved.

Today, Elias Murr, Lebanon's Defense Minister explained on LBC that Syrian intelligence officials in Lebanon threatened him months before an attempt on his life in a similar July car bombing. The FBI are now investigating the Chidiac bombing.

There are also reports that members of Ahmad Jabril’s Popular Front for the Liberation of Palestine-General Command (PFLP-GC), which maintains border bases in Deir Al Ashaer and Sultan Yacoub in the Bekaa as well as the Naameh hills south of Beirut, have been caught trying to smuggle weapons from Syria into Lebanon. Haaretz claims that "Assad gave Hamas and Islamic Jihad the green light for terrorism in order to divert attention and pressure from Syria. All of this suggests that Syria is to attempting to develop its regional “cards,” rather than giving them up, as the West insists it do.

Ali Habib, the Syrian Chief of Staff, has gone to Moscow for several days and everyone here is speculating about his visit - whether he has gone to purchase Strella and Alexander missile systems or to look for help against an American push to get Syrian taken to the UN Security Council.

Inside Syria security forces raided a house where pro-democracy activists were meeting on Monday, destroying documents and ordering the gathering's participants to disperse.

The broken-up meeting had been organised by the Commission for the Defence of Democratic Freedoms and Human Rights and was being held in Khan al-Shaykh, some 20 kilometres south of Damascus.

Human rights organisations in the country condemned the authorities' action. The president of the Syrian Centre for Judicial Research, Anwar al-Bunni joined the criticism, denouncing what he said was "the excessive means with which the Syrian government imposes its iron fist on Syrian society and uses force against human rights and civil society activists.

""Syria is showing the world it has two faces, one: Islamic extremism, the other: the regime of the government," Bunni told Adnkronos International (AKI).

A bit of welcome news comes from Cairo, from where Asad has just returned from a short visit. Mubarak’s spokesman said:

"The Egyptian proposal rejects isolating Syria and calls for achieving stability in the region and not opening a new focus of tension that adds to an already complicated situation. (Mubarak) is calling upon Syria to go on cooperating with Mr. Mehlis. He is against any finger pointing at Syria before Mr. Mehlis's report is made available to the United Nations," Egyptian presidential spokesman Suleiman Awad said.

A number of other Arab leaders and opinion makers have come out against isolating Syria. If both Egypt and Saudi reject the notion of isolating Syria, at least until the results of the Hariri investigation are revealed in October, they will play an important role in mitigating the full force of American wrath and hindering its ability to build a seamless coalition against it.

Even in the US administration, there seems to be division over how the US should apply the screws to Damascus.

Christopher Dickey of Newsweek, who also keeps an excellent blog, "The Shadowland Journal," wrote to me yesterday:

There seems to be genuine concern among some members of the US administration that the Syrian regime will, one day soon, crumble into chaos. But, as in Iraq, there is no known or credible scenario for the day after. In its newly cautious post-Iraq, post-Katrina, post-plunging-polls mood, Washington may actually be thinking as much about how to save Bashar as about how to bring him down. And the Saudi role in all this? Hmmmm. - Chris

It looks like Mehlis will not visit Syria again, which has led many in Damascus to speculate that the report will not be a clear indictment. One independent Syrian journalist told me today that the "buzz" around town is that it will be "inconclusive." That is where politics begin.

The reticence to topple Asad is shared by Iraqi president Jalal Al Talabani who said he could not see any alternative to the Asad regime in Syria and had not lost hope in it. As al-Sharq al-Awsat reports, he said,

"Yes, there are disputes but I shall not utter a word against Syria as it is the Country that Harbored us During the Opposition Days.” He pointed out that he has witnessed an American worry towards Iran and so much strictness against Syria. "I said to them: what is the alternative in Syria? Their response was that they do not desire to change the regime in Syria but to change the approach, "he said. He pointed out that he received promises from Syrian officials and said, "I have not lost hope until now. We need to improve relations with Syria, Turkey and Iran. We are in favor of calm and friendly discussions." The Iraqi president said, "We would not become under the influence of anyone. Nevertheless, there are worries in the Arab world of the increase of the Iranian influence. Even Collin Powell said that we have not ended the regime of Saddam Hussein in the past for fear of the Iranian influence.”

All of this can only be cold comfort to Syria, which is fighting a growing tide of world anger.

George Bush on 26 September 2005 said:

"Coalition and Iraqi troops are now focusing their efforts in western Iraq where we're trying to stop foreign terrorists from entering through Syria and prevent al Qaida from establishing a safe haven in the Anbar province."

Mr. Bush says the infiltration of foreign terrorists from Syria remains a problem:

"It takes a while to secure the border with Syria because it is a long border that has had smuggling routes in existence for decades. In order to secure a border, it requires cooperation on both sides of the border, and we're getting limited cooperation from Syria. We've made it clear to Syria we expect them to help us secure their border and to stop the transit of suiciders coming from other countries through Syria into Iraq. Their response hasn't been very satisfactory to date. I continue to remind them of their obligation."

Oxford Business Group explains how Syria has been shoring up the Syrian pound in its efforts to combated public fears that have caused a run on the local currency. (This is one way to get currency reform enacted.)

Syria: Tackling the Jitters
26 September 2005
Debate has been intensifying on Damascus's latest moves to shore up its currency and introduce reforms in the financial sector. Yet while many have welcomed the recent easing of foreign exchange controls and hike in interest rates, others see the package as too little, too late.

On September 21, Syrian central bank Governor Adib Mayyaleh announced to reporters that the bank's base rate had been raised from 6.5 to 7%. At the same time, Deputy Prime Minister for Economic Affairs Abdullah Dardari also announced that certificates of deposit were finally to be allowed, at a rate of 9%, with the specific aim of encouraging people to save in Syrian pounds.

Dardari added that banks would now sell currency at a rate of $1 to S£54, slightly under the black market rate of S£55 but above the S£50-52 prevalent a few months ago.

This came after foreign exchange controls that had been in place since the 1960s were eased, with Syrians enabled to open bank accounts in foreign currencies and to trade in foreign denominations. Banks are also now allowed to set their exchange rates within a band around the central bank figure.

The deputy prime minister also announced that Syrian nationals traveling abroad would be able to purchase $3000 per trip, compared with a previous ceiling of $2000. This ruling would not apply to those making the trip over the border to Jordan or Lebanon, however, where the maximum amount that can be purchased would be $1000.

At the same time, local banks will now also be allowed to issue letters of credit for the export and import of some 950 different items - a list accounting for about a quarter of Syria's total trade.

These steps are good, we back them and hope they continue, Rateb Shallah, head of the Syrian Chamber of Commerce, told reporters on September 26.

As a financial package, the moves announced by the government are clearly designed to bolster the pound and bring more dollars into the country and into its banks, boosting hard currency reserves. Estimates vary as to the current status of Syria's forex reserves, but on September 21, AFP claimed that these now stood at around $10bn.

At the same time, the hope is that the freeing up of the forex market and the introduction of letters of credit will also draw Syrians away from the black market - many people's traditional supplier of hard currency. Private currency exchange shops will also be able to operate, further bringing the forex market in from the backstreets.

Dardari also presented the moves as part of the country's broader economic reform programme.

The process of reform and economic liberalisation is heading in the right direction, he said on announcing the introduction of certificates of deposit, based on significant foreign currency reserves and production capacity.

Yet not all analysts were entirely convinced that the package was really going far enough and fast enough.

A lot more needs to be done, Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment, told the Beirut-based Daily Star in its September 26 edition. The government is working on reforms, to give them due credit, but Syria only moved into the modern banking system a year and a half ago so there is much to be done.

With current pressures on Damascus from Washington over alleged failures to prevent militants from using Syria as a base for operations in Iraq, and from the UN inquiry into the assassination of former Lebanese Prime Minister Rafik al-Hariri earlier this year, there is a genuine concern that the pound needs some heftier defences. The recent reprise of US claims over Iraqi militants saw the pound slip 2% in a matter of days as dollar demand surged.

Yet critics argue that while there is clearly a need for some measures to be enacted, what the recent package amounts to is a response mainly to the pressures of recent days, rather than a coherent strategy.

Such critics point to the fact that while certificates of deposit are now allowed, there has been no suggestion so far that the central bank itself will be issuing any. It will be up to the clutch of private banks - all joint ventures between Syrian and Lebanese lenders - to start this up.

At the same time, the move on letters of credit also recognises a reality since Syria's withdrawal from Lebanon, which had historically been the place for Syrian exporters to access such instruments. With relations not what they were, it makes sense for Syrian companies to be able to gain letters of credit back home.

There are, however, rumours that the government may be about to expand its financial toolbox still further by beginning issuing treasury bonds. This would substantially expand the range of investment instruments available and, advocates argue, give the government a valuable tool in tackling inflationary pressures. However, few expect any rapid moves in this direction to take place. Yet the signs are that there is a growing recognition of the necessity not just for reform in the financial sector, but for the creation of a much more multi-faceted one.

The following opinion piece in Al-Quds Al Arabi is fairly typical of one broad current on the region. People worry that the US is trying to do in Arab nationalism by crushing Syria.

Syria’s Arab isolation
“The quick visit of the Syrian President Bashar al-Assad to Cairo, and his meeting with Egyptian President Hosni Mubarak, reflect the state of isolation that the Syrian regime is living in Arab wise under pressures from the US.”

“It is noted that Cairo has now become almost the only Arab country where the plane of President Assad can land after all the Arab countries have closed the doors in his face.

“The Kingdom of Saudi Arabia, which was the main rib in the Egyptian-Syrian-Saudi triangle ruling the region and setting its policies for the past 30 years, is no longer welcoming the Syrian partner after the assassination of former Lebanese Prime Minister Rafik Hariri, especially after what has been leaked about the quick and final meeting between young Syrian President with the current Saudi King Prince Abdullah bin Abdul-Aziz.

“President Mubarak, through his spokesperson, announced yesterday that he is against any attempts to isolate Syria, just like he opposes that accusation be made that it stands behind the assassination of Hariri, until the UN report about this topic be released.

“Maybe the Egyptian president is the only one among his Arab counterparts who expressed this supportive position with Syria in the fact of the increasing American pressures to isolate it Arab wise after its international isolation, in preparation of forcing economic sanctions over it. Everyone has maintained silence and most of the Arab leaders have left Syria face its own fate alone.

“The problems of Syria with the US did not begin with the assassination of former PM Rafik Hariri. They began with the American preparations to invade Iraq and occupy it. And it may be helpful to remind that the US accused Syria more than once of housing Iraq’s weapons of mass destruction in addition to large numbers of the old Iraqi regime.

“What the US currently wants from Syria is clear to the eye and needs no further effort to discover. The whole matter is about Iraq and the lack of cooperation of the Syrian regime with the plans to occupy Iraq and end the national resistance on its land…

“President Bush’s administration which conceded that its military and political plans in Iraq reached a dead end wants the Syrian government to throw the last life jacket by sending its troops to Iraq to launch a war against the resistance and invest its effective and expert security apparatuses in this field.

“The Syrian government, despite our differences with it because of its internal matters like breaching human rights and crushing liberties, has rejected all American pressures and has stood against facing the resistance, and it is a respected national position which deserves the support of the Arabs, governments and people.

“Any Syrian cooperation with the American occupation project in Iraq would have led to the staying of the Syrian forces in Lebanon for decades to come. It would have also removed Syria’s name from the list of countries that support terror, and opened the doors of the White House in front of President Bashar al-Assad.

“Significant Lebanese figures have been assassinated in Lebanon starting with former President Bashir Gemayel, who signed a cooperation agreement with Israel sponsored by the US, going through Kamal Jumblatt, the most notable national figure, and ending with President Renee Mouawad. And despite all that, Washington never dared to point one finger at Syria in these assassination attempts because it cooperated in ending the civil war in Lebanon and supported liberating Kuwait. And the Syrian forces remained in Lebanon ruling the country just like it wanted and without any opposition from Washington or Paris.

“Syria gambled on the Arabism of Iraq and its unity, and this is the secret behind its isolation and the American war being waged against it. And now after two years of withstanding this war and the American pressures, we are starting to hear other Arab voices, the latest of which is of the Saudi Foreign Minister Prince Saud al-Faisal, accusing the American policies of breaking down Iraq, erasing its Arabism, and handing it as a gift to Iran and its allies. This assures that the Syrian compass is usually right when it comes to Arab or national issues. What is hoped for, is that it keeps pointing in the right direction.” - Al Quds Al Arabi, United Kingdom