Tuesday, June 06, 2006

Dardari Speaks to Tabler about 5-Year Plan

Abdullah Dardari, Deputy Prime Minister in charge of Syria's economy, explains the Five Year Plan to Andrew Tabler. This is the lead article in this month's "Syria Today," Syria's premier English language magazine that covers current events, business, and culture in Syria. Dardari clarifies that 7% is the target growth figure for 2010.


Squaring the circle?
"Syria Today"
Interview with Deputy Prime Minsiter Abdullah Dardari
By Andrew Tabler


Syria’s economic plan for the next ten years is a departure from the norm, aiming to implement socialist development schemes alongside free market capital enterprise. Andrew Tabler asked the minister in charge how the ideology can be made reality.

Life in Syria – like in many developing countries – does not readily lend itself to planning. Worsening traffic jams to recent international pressures are just a few reasons why Syrians tend to focus on the short-term.

For decades, the Syrian state did very much the same thing. Budgets were passed at the end of the fiscal year, allowing for “perfect” accounting. Ministries pursued projects that often conflicted with other authorities. Such factors – along with worsening regional tensions – led to low economic growth and the slow pace of reform in recent years.

The government claims this is about to change, however, following the passage into law of Syria’s 10th Five-Year Plan (FYP) on May 7. As in past socialist schemes, the FYP’s 28 chapters outline sector development strategies for everything from agriculture and irrigation to education and health. Cutting across the plan, however, are capitalistic development concepts such as “indicative planning”, “stakeholder participation”, “good governance” and “civil society”. How will Syria square this ideological circle?

Syria Today read the plan and asked Abdullah Dardari, Deputy Prime Minister for Economic Affairs and head of the State Planning Commission (SPC) – the executive body tasked with bringing the plan to life – about how the FYP is going to implement the “social-market economy” ideal adopted at the June 2005 Ba’ath Party Conference.


The introduction of the FYP says the transition to a “social-market economy” will require forging a “new social contract” among “vital forces in Syrian society.” It says “such partnerships are the only route to win societal transformation and meet associated challenges.” What will this new contract look like?

First of all, the FYP will represent the substance of the new social contract. This is a dynamic process, not simply a static text. Things will be debated and changing all the time. It will be a new social contract in the sense of a new partnership between the state, the private sector and civil society. A new division of labour and new responsibilities and authorities will be derived from this dynamic over the next few months and years in Syria. The new social contract will be represented by a host of new laws that, by the end of the plan, will have produced a completely different legal framework that runs this country. The government will emerge as the regulator of the economy. State enterprises, the public sector and the private sector will take on new roles. This new set of legislation, in addition to the new parties’ law and media law, will constitute this overall framework we call the new social contract.


The plan talks about “association of just and equitable distribution of wealth with distribution of power through good governance. This boils down to promoting transparency and accountability in respect of the political and social relations, as well as allowing Syrian citizens to stand up for their economic, political and social rights.” The state has just arrested the largest number of civil society and opposition figures since the Damascus Spring crackdown of 2001. How will this part of the plan be implemented in such a climate?

This is a much wider issue than an incident here and there. The FYP touches upon 18 million Syrians, not just a small group of people. First, we are talking about ensuring that all Syrians are equal in the eyes of the law. Secondly, that all Syrians are equal in the eyes of the civil service, and ensuring it is accountable to the people and the legislature. This requires a complete change in the mindset of civil servants, a lot of training, and putting the citizens at the core of civil service operations; ensuring that the citizen is a client to whom the civil service is accountable. It is important also to ensure transparency of expenditures and the budget. We are preparing a new law for public finance that ensures much more transparency.


The role of civil society organisations is “activated” under the FYP. This includes NGO’s “assisting” in poverty reduction, social reform, and “advocacy and support” programmes for women, children, and special groups; “implementing” social mobilisation and consumer protection programmes; and “co-work” for good governance and accountability of state institutions. Is it safe to assume that programme-specific operational NGOs will be permitted under the plan, but that their advocacy activities will remain limited?

It’s safe to say there will be a new NGOs law, and that they will work on different fronts. First, they will have to improve their own governance. Secondly, they will have to move from charity towards more development work. Advocacy is an important part of their work for women, children’s rights, etc. But they will also have to work with us on issues of poverty, monitoring state function on the local level. So I believe the civil society will play a larger role. There is movement already.

Syria is now under considerable international pressure. Has this made it harder to permit NGOs under the FYP to advocate for such issues as human rights, press freedoms, and democracy?

The plan itself does not talk about press freedoms and democracy. It talks about it in the preamble, but leaves it to other national agencies to deal with it, and other mechanisms. The new media law will expand the horizon of press freedoms considerably. The new parties’ law and the NGO law will also improve the political life of this country. They will be in line with the FYP.


The FYP aims at “recognising, modernising and organising the informal economic sector, financing its expanding activities, [and] enabling it to have a participatory role in achieving prosperity and welfare to larger social groups.” How are you going to entice people who purposely skirt reporting their activities to the state to suddenly allow it to organise and finance their operations?

Well, why does the informal sector skirt reporting in the first place? Two reasons. First, they think they will have to pay higher taxes and administrative costs. Second, there are not incentives for them to legalise their operations. Our tax system is still very complex. We are working on that, and we are looking at including the informal sector in the new tax law. The cost of registering a company in Syria is very high and takes a long time. So SME’s don’t bother. Our banking sector also does not provide special care for SMEs in terms of services and finance. When our banks offer better access to finance that serve the needs of SMEs, they will join the official system.

Ahead of the FYP’s passage, there was considerable talk of resistance to the plan from some ministries. When President Assad signed the plan into law on May 7, the official communiqué read “the SPC is the sole competent authority to draw interpretive instructions of the law and follow up on their implementation.” Did this phrase lessen resistance?

I don’t want to call it resistance. It has been a dialectic process. In 2004 two things happened. First, there was an awakening at the SPC and secondly the preparation of the FYP. This plan brings new ideas in response to the latest Ba’ath Party Congress’ resolutions. This created some shock waves across the government. So you would expect reluctance to adopting everything this plan is bringing. In my direct experiences with ministers, I don’t see any differences on substance. There are some differences on wording. The text of this communiqué has been there for the last nine plans. Since its formation in 1968, SPC was always responsible for interpreting the plan.

The plan talks about setting up “sectoral committees” that will lay the groundwork for participation by ministries and public sector enterprises in project formation, forming visions, strategies, etc. “This will hold the involved authorities accountable during the plan implementation period.” Have these committees been formed?

Yes, there are now sectoral committees, including deputy ministers from line ministries, technical advisors, and people from the SPC. They will report to the prime ministry on the development of the FYP. There is a strong trend towards decentralisation and delegation of authority as well. For the past 30 years, Syria was a centrally planned economy and the SPC played a very big role in supervising plan implementation. We want to give some of this role to the ministries. Ultimately, they will be held accountable. So they need to enjoy the delegation of authority necessary to do this. And if you look at the constitution, they have this authority.

Concerning the use of “indicative planning”, the FYP says that “the state will orchestrate investment and market activities rather than dominate or control them.” The next paragraph reads “the social market policy adopted by the FYP lays much emphasis on government intervention.” It then says “the state will withdraw from any competitions wherever market mechanisms are found to be worthy of playing an essential role…” This seems contradictory. How are you going to square all this?

It’s not contradictory. This will be an evolving process. It starts today with a dual role for the state, where the state runs the economy through laws and policies and at the same time has its own tools in the economy, such as the state-owned enterprises, state monopolies for foreign trade, etc. It is a more Keynesian approach to growth, with a lesser role for the state through direct institutions such as state-owned enterprises. The state will have a more powerful role in policymaking, and the state-owned enterprises’ share of overall production would be reduced.


The FYP says it will “guide” the private sector towards co-investments in all sectors and will “strengthen” the sector’s role by relaxing restrictions, promoting competition, making it pay taxes, and ensuring commercial justice and market transparency. This sounds great on paper. But what is the mechanism for getting the private sector to buy into this process?

First, so far it seems that the private sector has bought into the FYP. The 2005 figures seem to confirm that. The private sector, despite current impediments, can see we are cutting red tape. This has improved the overall mood of the private sector. I hold a joint committee every Monday with the private sector. The results are handed over to the economic committee and then the council of ministers. There will be new regulations and deregulations that will create a new environment for the private sector.

The FYP says it has conducted poverty mapping for the first time. What did you find?

Overall, the situation for low-income Syrians has improved. The percentage of people living under poverty line dropped from 14% to 11% between 1997 and 2004. Early indications for 2004-5 confirm that this trend continues. In Hama, for example, the poverty rate dropped from 18% to 9% in the same period. Things are improving, unlike the popular belief.

Concerning “macroeconomic modelling,” the plan talks about a “linear scenario” based on current circumstances and performance levels. This “optimistic scenario” anticipates annual economic growth of 7%. Then there are “two other scenarios” linked to “quantitative and qualitative changes, as well as regional stability and security, and fluctuations in oil prices.” This scenario anticipates a “growth level of 5%.” Is the current situation a linear scenario, or one of the two less optimistic ones?

I was just reading the latest IMF [International Monetary Fund] Article IV report for Syria, which has yet to be published. I am proud of it. The report vindicates our policies. We are talking about a non-oil sector growth rate of 5.5% – one of the highest in the region. This comes from a 25% increase in real investments in 2004 and 2005, respectively. These are very good figures after years of recession. The positive scenario doesn’t say annual growth of 7% now, but by 2010. We are now doing an economic situation analysis using 2004 and 2005 figures. The supply-side response in Syrian economy is proving to be much more elastic than we anticipated.

For a full outline of the FYP, as well as other useful information, visit http://www.planning.gov.sy/en/.

24 Comments:

At 6/06/2006 06:08:00 PM, Blogger EHSANI2 said...

I, for one, will be eagerly waiting the yet-to-be published IMF report that supposedly states that Syria currently enjoys one of the highest growth rates in the region.

In the meantime, reading this article is like reading about the story of a woman who would love to be half pregnant. The state wants to be in control and orchestrate investment and market activity but not dominate them. The state needs to intervene but it will also withdraw from competition wherever market mechanisms are found to be worthy of playing an essential role. Who is going to make these decisions and when?

Frankly, I find this whole economic policy extremely confusing and schizophrenic.

Having visited the site and read the report, one of the things that caught my attention is that only 7% of the population has a university degree. It was cited as one of the main reasons behind low labor productivity. Generations of young men and women have decided not to enter college and earn a university degree. For a country that offers almost free university education, this is alarming and tragic. The government ought to forget about running/regulating/controlling the economy. It must instead improve the education standards to better prepare its graduates for the highly productive global economy. It must attract businesses that have the need for an educated labor force. This way such graduates will have the incentive to go through their education knowing that it will pay off when done. At the present time, there is a disincentive to do so.

I could not resist commenting on what Mr. Moubayed said in the “students and politics” article posted earlier:

Eighty percent of Syrians don’t care about political reform, says Sami Moubayed. “They want jobs and more money”.

Lots of people here have made similar remarks.

I am curious as to how Mr. Moubayed reached his specific 80 % number. Is it based on his gut feel, or was it based on a scientific poll of a statistically significant sample of the Syrian people?

Moreover, what are we to learn from his statement? Are we to assume that the Syrian people are too stupid to care for political reforms or too smart to worry about them?

Mr. Moubayed presents the issues as mutually exclusive ones. It is an either or.

Has it occurred to him that after 43 years of no political or economic reforms, the Syrian people may have given up hope on politics and instead opted just to focus on making sure that they keep their job and bring food to the table?

Sir,

I suspect that the Syrian people “care” about political reform just like all other human beings do. Syrians were not somehow born genetically different than others. If they seem to care more for their jobs and money, it is because they are realists. They have been well conditioned to act and think this way given their predicament. To say that they somehow “don’t care” is presumptuous at best.

 
At 6/06/2006 09:20:00 PM, Blogger Alex said...

My friend Ehsani2,

Your comments above are totally absurd!

I'm joking. But, still, I will support Sami's claims. Yes they are based partially on gut feel, but they are also based on something that applies to all human beings, Syrians or not; this is the forth time I paste the same link, but I'll do it anyway, because it answers your question:

Maslow's hierarchy of needs explains that Syrians who are in the middle of the turbulent Middle East are mostly preoccupied with security ... and all those young Syrians who can not get married because they can not afford a new house for example, really do not care YET about democracy.

As you stated, they will care about democracy just like all other human beings, but after they fulfill their security and physical needs.

 
At 6/06/2006 09:40:00 PM, Blogger EHSANI2 said...

Alex,

If you mean by the turbulent Middle East the Iraq invasion, let us remember that this was only three years ago. When you say that young Syrians are too busy putting funds together to get married and buy a house instead of caring for democracy one can therefore conclude that one of the ways in which governments can avoid political reforms therefore, is by keeping their populations hungry and busy looking for houses. It follows therefore that a dictatorship can avoid and postpone calls for democracy by keeping their population’s standards of living as low as possible. Perhaps your Maslow chart hangs on their walls?

 
At 6/06/2006 09:59:00 PM, Blogger Alex said...

Well, you are partially right of course. I lived in Egypt for 5 years, and when Sadat did his dramatic Camp David switch, most Egyptians did not bother analyzing what happened and why it happened. They really did not care much for politics.

Syria, is similar, but there is more interest in politics... mostly in foreign affairs, and you can thank/blame late president Hafez Assad for that. My generation for example rarely discuss internal Syrian affairs, we keep discussing the whole Midlle East.

The only internal politics I heard Syrians discuss are related to stability and/or corruption... if Bashar can do a bit of economic reforms and enough fighting corruption, he is going to be even more popular (he is personally popular now, you agree?)

Maslow's chart is not something you need to memorize or understand ... you just live it.

Most of the Syrians who are fighting for democracy today are either:

1) comfortable economically, or
2) intellectuals who are into higher level needs, even if they are not rich, but they are not the materialistic type
3) Or they are acting out of another higher level need ... religious in this case (upset at the minority ruling their majority)

So ALL the above is explained by Maslow's chart ... and not many syrians needed to consult it to have their own set of motivating factors.

Concclusion: The only Syrians you can really count of to be very motivated to ask for political reforms now are:

1) the rich and safe (like if they have a Canadian citizenship as a safety escape)

2) the ones who are VERY upset at the minority ruling them. This is not about those merely complaining about it in private, it is those who are very upset.

3) The intellectuals who are willing to be hungry and take risks on their life for the sake of justice.

The above three are not a majority of Syrians.

 
At 6/06/2006 11:47:00 PM, Blogger majedkhaldoon said...

a lots of hopes, but nothing is practical, without eliminating corruption, which is very common in Syria, and we need reforming the justice system , provide freedom,and real competition,things are so bad in Syria, the rich are richer, the poor are very poor, I cry when I see someone ,searching through the trash can looking for things to take home.

 
At 6/07/2006 01:02:00 AM, Blogger Nafdik said...

Alex your invocation of Maslow is brilliant.

I fully agree Syrians are not discussing democracy and are voicing their love for Bashar because they value their safety.

They are afraid to end up in the torture cells operated by your beloved Bashar.

 
At 6/07/2006 01:10:00 AM, Blogger Nafdik said...

Oh yes and talking of psycho-political analysis you should check this:

http://en.wikipedia.org/wiki/Stockholm_syndrome

 
At 6/07/2006 01:22:00 AM, Blogger souria el hora said...

I agree with all of you guys, your comments are very interesting.
But I think that "The only Syrians you can really count of to be very motivated to ask for political reforms now " are more than enough to do the change since they constitute more than half the population of Syria, and most of the others,who are not willing to join in the changing of the regime, won't stand against this changement. I don't think we can wait till later to care about democracy because I don't think their will be a 'later' if the regime manages to live through this mess. It could be now or....maybe till the next hafez comes.

 
At 6/07/2006 01:22:00 AM, Blogger BP said...

Syrian Poet Adonis: The Arabs Are Extinct, Like the Sumerians, Greeks, and Pharoahs. If the Arabs Are So Inept They Cannot Be Democratic, External Intervention Will Not Make Them Democratic

Following are excerpts from an interview by Syrian poet Adonis [Ali Ahmad Said Asbar], aired on Dubai TV on March 11, 2006.

Adonis: Words are treated today as a crime. Throughout history, there has never been anything similar to what's happening today in our Arab society - when you say a word, it is like committing a crime.

Interviewer: True.

Adonis: Words and opinions are treated as a crime. This is inconceivable.

Interviewer: True. You can be arrested for writing an article.

Adonis: That's one example.

[...]

In the Koran itself, it says that Allah listened to his first enemy, Satan, and Satan refused to obey him. I believe that Allah was capable of wiping out Satan, yet He listened to Satan's refusal to obey Him.

At the very least, we demand that Muslims today listen to people with different opinions.

[...]

Interviewer: How do you view the plan for democracy, the "Greater Middle East" plan?

Adonis: First of all, I oppose any external intervention in Arab affairs. If the Arabs are so inept that they cannot be democratic by themselves, they can never be democratic through the intervention of others.

If we want to be democratic, we must be so by ourselves. But the preconditions for democracy do not exist in Arab society, and cannot exist unless religion is reexamined in a new and accurate way, and unless religion becomes a personal and spiritual experience, which must be respected.

On the other hand, all issues pertaining to civil and human affairs must be left up to the law and to the people themselves.

Interviewer: Mr. Adonis, how do you view the democracy in Palestine, which brought Hamas to power?

Adonis: I support it, but I oppose the establishment of any state on the basis of religion, even if it's done by Hamas.

Interviewer: Even if it liberates Palestine?

Adonis: Yes, because in such a case, it would be my duty to fight this religious state.

Interviewer: What are the reasons for growing glorification of dictatorships - sometimes in the name of pan-Arabism, and other times in the name of rejecting foreigners? The glorification comes even from the elites, as can be seen, for example, in the Saddam Hussein trial, and in all the people who support him.

Adonis: This phenomenon is very dangerous, and I believe it has to do with the concept of "oneness," which is reflected - in practical or political terms - in the concept of the hero, the savior, or the leader. This concept offers an inner sense of security to people who are afraid of freedom. Some human beings are afraid of freedom.

Interviewer: Because it is synonymous with anarchy?

Adonis: No, because being free is a great burden. It is by no means easy.

Interviewer: You've got to have a boss...

Adonis: When you are free, you have to face reality, the world in its entirety. You have to deal with the world's problems, with everything...

Interviewer: With all the issues...

Adonis: On the other hand, if we are slaves, we can be content and not have to deal with anything. Just as Allah solves all our problems, the dictator will solve all our problems.

[...]

I don't understand what is happening in Arab society today. I don't know how to interpret this situation, except by making the following hypothesis: When I look at the Arab world, with all its resources, the capacities of Arabs individuals, especially abroad - you will find among them great philosophers, scientists, engineers, and doctors. In other words, the Arab individual is no less smart, no less a genius, than anyone else in the world. He can excel - but only outside his society. I have nothing against the individuals - only against the institutions and the regimes.

If I look at the Arabs, with all their resources and great capacities, and I compare what they have achieved over the past century with what others have achieved in that period, I would have to say that we Arabs are in a phase of extinction, in the sense that we have no creative presence in the world.

Interviewer: Are we on the brink of extinction, or we are already extinct?

Adonis: We have become extinct. We have the quantity. We have the masses of people, but a people becomes extinct when it no longer has a creative capacity, and the capacity to change its world.

[...]

The great Sumerians became extinct, the great Greeks became extinct, and the Pharaohs became extinct. The clearest sign of this extinction is when we intellectuals continue to think in the context of this extinction.

Interviewer: That is very dangerous.

Adonis: That is our real intellectual crisis. We are facing a new world with ideas that no longer exist, and in a context that is obsolete. We must sever ourselves completely from that context, on all levels, and think of a new Arab identity, a new culture, and a new Arab society.

[...]

Imagine that Arab societies had no Western influence. What would be left? The Muslims must...

Interviewer: What would be left?

Adonis: Nothing. Nothing would be left except for the mosque, the church, and the commerce, of course.

[...]

The Muslims today - forgive me for saying this - with their accepted interpretation [of the religious text] are the first to destroy Islam, whereas those who criticize the Muslims - the non-believers, the infidels, as they call them - are the ones who perceive in Islam the vitality that could adapt it to life. These infidels serve Islam better than the believers.

 
At 6/07/2006 05:11:00 AM, Blogger t_desco said...

Ehsani, if you want to learn more about development economics (the role of the state in economic development, the importance of institution building in the transition process, etc), here is an excellent place to start.

Both the plan and what Dardari says sound very good, but as always the devil is in the details and - in this case - in the implementation.

 
At 6/07/2006 08:15:00 AM, Blogger EHSANI2 said...

I am glad that you at least understand what Dardari is saying. I must say that I don't. But I guess being a proponent of the so-called development economics discipline and your hero Stiglitz one would expect you to have a leg up. As for me, I don’t even know what Dardari and the like even do. If you ask the vast majority of business owners in Syria, I bet that all they care for is for the government to reduce its heavy-handed role, lower taxes, streamline regulation and red tape and let the free market and fair competition do the rest. They are not interested in Joseph Stiglitz’s institutions or Mr. Dardari’s 10-year plan. Alan Greenspan (the ex head of the US central bank) was fond of reminding everyone that armed with more than 400 full time economists; his institution was incapable of accurately forecasting the US economy more than 3 months ahead. With all due respect to Mr. Dardari, and his able staff, trusting his forecasts 10-year out in the future is something that I would like to give a pass to.

 
At 6/07/2006 08:39:00 AM, Blogger ugarit said...

EHSANI2 said "The government ought to forget about running/regulating/controlling the economy"

You can't be serious! Every country regulates and controls the economy. Without this one would end up in the dark ages. Even the beloved US economy is regulated and controled by the government. There are different levels of control and regulation, agreed.

 
At 6/07/2006 09:45:00 AM, Blogger VIVA LIBAN said...

Removing Israel name from this list of countries is extremely offensive to human intelligence.

After all Syria's roll here is minimal and caused primarily by the U.S. War and continued illegal occupation of Iraq. Israel roll is colossal and notorious, it is the number one country in human trafficking and sex slaves industries as the facts point to.

But again, they are the bosses that run the U.S. and its policy now, so one can expect that Israel name be removed from the list and like everything else, the facts are deceptively distorted.

Another unreliably worthless report. Keep spending money on this kind of trash, please do not look at the U.S National Debt Clock and try to ask the boss in Israel how he is going to stop this, by what means other than invading the Persian Gulf and cashing it’s oil.

Link for the clock , check it out.



http://www.toptips.com/debtclock.html

 
At 6/07/2006 12:00:00 PM, Blogger SimoHurtta said...

Ehsani2 has an interesting view of economy and government.

Some business owners undoubtedly think that there should be no taxes and instead the government should pay to them for their “existence”. Most business owners understand that taxes are collected to train form them future labour, to build roads so that they can transport their production, for the salaries for police who protect also their assets etc.

Ehsani2 long term plans are normal in every economy / country. Not even Alan Greenspan and his 400 economics could have built a high way or hydro dam in three months. Each ministry, town etc makes long term plans. Some countries collect these ministries plans and call them 5 year plans. In a way I consider it as a good practice because so the citizens (and investors etc.) get a clearer picture how the country is thought to develop and how the tax money is going to be used.

Ehsani2 regulating is the every government’s main business. Every law means regulating part of the society in some way. For example environmental laws hurt the “free trade” but save the rivers and lakes. Laws that give substitutes to farmers allocate tax payers money to farmers (= business owners). Laws that sanction export to and import from certain countries are also regulating. ETC. Ehsani2 if you take away for while your “free-trade glasses”, you will notice that even in USA the system regulates business owners in thousands of different ways. In some areas more than in Syria in some areas less.

Ehsani2 I recommend that you read little more the history how the other industrial countries developed in reality and not keeping repeating those US free trade “mantras”. Also a less hostile and undermining attitude against "present" Syria would make your argumentation a little more convincing. I give you Ehsani2 a home work: which Latin American and Caribbean countries the 200 year long “free trade” and little regulated partnership with the Big Country did make rich and the population good educated and wealthy (which should be the primary goal for every society).

 
At 6/07/2006 02:56:00 PM, Blogger EHSANI2 said...

My good friends t-deco, Ugarit and SimoHurtta never miss a beat when it comes to criticizing my unequivocal support for free trade and markets. As usual, it looks like we will again have to agree to disagree.

All three gentlemen seem to be proponents of government intervention, support, regulation and control in the economy.

Since Syria is our subject matter, I would be curious to know what they think about the fact that the Syrian government is in charge of running and manufacturing the following businesses:

Tires, Glass, Cloths, Shoes, Ceramic, Edible oil, Dairy Products, Biscuits, Bread, Sugar, Carbonated Drinks, Beer and Bottled Water.

Since it is unlikely to turn anyone of you into free marketers, can we at least agree that the Syrian government ought to get out of running the above businesses and allowing the private sector to take charge instead?

 
At 6/07/2006 08:04:00 PM, Blogger ugarit said...

EHSANI2:

Certainly no one is implying that the Syrian government should be in the business of "Tires, Glass, Cloths, Shoes, Ceramic, Edible oil, Dairy Products, Biscuits, Bread, Sugar, Carbonated Drinks, Beer and Bottled Water." Regulations and controls of the market are essentail for a any economy. Every country does it. They would be foolish to do so. Since clearly markets are based on greed it's can be quite volatile.

 
At 6/07/2006 08:27:00 PM, Blogger EHSANI2 said...

Can we assume that you are in favour of the wholesale immediate privatization of all the above industries?

 
At 6/07/2006 09:05:00 PM, Blogger norman said...

This post has been removed by a blog administrator.

 
At 6/07/2006 09:10:00 PM, Blogger norman said...

IMF report DAMASCUS (AFP) - The International Monetary Fund (IMF) warned of the challenges facing the Syrian economy after its oil exports run out at the end of the decade, in a report received.

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"The recent surge in international oil prices has provided a short-term windfall, but will aggravate the fiscal and external outlook in the medium- to longer run when Syria becomes a net importer" in around 2010, the IMF said.

"The net foreign exchange receipts from oil will swing from a surplus of about 0.7 billion dollars in 2005 to a deficit of about four billion dollars in 2015" and their share of GDP decline from 8.8 percent in 2005 to nil in 2015.

Oil accounts for about 70 percent of Syria's exports, with current output running at about 400,000 barrels a day, or half the level of 1997.

"The loss of oil revenue will make it harder to preserve, let along expand, living standards" and add to an "already precarious unemployment situation", it said in the report drawn up after a number of IMF fact-finding missions.

"To address these challenges, a number of reforms have already been initiated to encourage private entrepreneurship, promote market mechanisms, open the economy to the rest of the world, liberalise the financial system, and begin to strengthen the medium-term fiscal outlook," it said.

The IMF said the reforms, which should be pursued and widened, had "contributed to an improvement in economic performance, reflecting strong confidence despite the unsettling political developments".

It said "real non-oil growth has picked up in 2004-2005, driven notably by higher private investment and exports, building on strong economic activity in the region as well as an increased demand for investment opportunities."

According to preliminary figures, the growth rate reached 5.5 percent in 2005, up from five percent the year before.

"Excess liquidity in the Gulf countries together with some brightening of investment prospects may have supported high growth of private investment," the report said.

"But economic growth has been accompanied by a high rate of inflation, which reached seven percent at the end of December 2005, compared to 4.5 percent in 2004," it said.

Officials in Damascus have said Syria aims for investment of 37 billion dollars over the next five years to meet a seven percent growth target, reduce unemployment and combat poverty.


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At 6/08/2006 05:49:00 AM, Blogger ugarit said...

ehsani2 asked:

"Can we assume that you are in favour of the wholesale immediate privatization of all the above industries?"

I am for privatization of all the above industries. Not sure what is meant by wholesale. I would say rapid privatization and not immediate.

 
At 6/08/2006 06:18:00 AM, Blogger SimoHurtta said...

All three gentlemen seem to be proponents of government intervention, support, regulation and control in the economy.

Eshani2 who are you trying to mislead except your self? Nobody is supporting the government intervention, direct ownership etc. as a final state of Syria’s economy. You should understand that there are development steps in a countries economical development. A poor country has to develop its industry and regulate its import to achieve a state when it can open its markets to free trade. If that is not done a single US / European / Japanese billionaire or multinational company can de facto buy the whole country’s economy + huge amounts of land.

In Finland in the past when some companies went bankrupt the government continued their life as state owned companies to avoid serious local economical consequences. I do not know how your list: Tires, Glass, Cloths, Shoes, Ceramic, Edible oil, Dairy Products, Biscuits, Bread, Sugar, Carbonated Drinks, Beer and Bottled Water got to be state owned companies. Maybe some of them were founded because there was no such production in Syria and so Syria could enlarge its industrial foundation and have less to import (Eshani2 you remember the GDP equation). I suppose Syria will privatize most of those companies in your list when the time is ripe for that and it gets a fair price for them. I would not consider your list as a “proof” of stupid economical policy.

 
At 6/08/2006 05:30:00 PM, Blogger Joe M said...

As usual SimoHurtta is right. I don't understand ESHANI2's wild desire to just privatize everything as though nothing in the world is more important then making money. The irony is that ESHANI2 attacks religious fundamentalists, but he is equally irrational. As SimoHurtta pointed out, what do you believe happens if wealth becomes increasingly centralized in the hands of a very few people? Do you think that makes for a stable and prosperous society? Or what happens when these companies become private and 80% of their employees are fired because they were "inefficient", while those people who were relying on government subsidized bread and bottled water can no longer afford to buy these vital products because the price they were selling for while they were government owned does not make enough profit in the eyes of the new owners? Why are the rights of the wealthy so much more important to you then the rights of the poor? That is an especially bad thing in a society so poor as Syria. Anyway, it is true that it is possible that a vibrant private sector can promote growth given the right conditions, but it can also promote exploitation. In a situation of "wholesale immediate privatization" you are basically inviting exploitation. At the very least, if you want to promote privatization, i wish you would be responsible about it.

If you want to be such an advocate of private industry, you should not focus on privatizing state owned industry, but you should ask that private industry be allowed to open competing industries to the government owned ones. For example, if you think it is so bad that the Syrian state makes bread, why don't you advocate that they allow private bread factories to open in the same locations and compete with the government ones? This is better then to argue simply that they sell off the government ones. That way the government ones can still provide their services at prices that are accessible to the poor, but if you believe that private industry is so efficient, they should be able to make a better product for a lower price then the government can, and this way people will buy from them instead and no one will be hurt. maybe at some point when there is enough competition, then it will be safe for the poor people if government sells off its bread factories. To just sell them off without considering the results is very bad public policy.

I mean, it must be assumed that the same people who would normally just buy the government owned industries also have the money to start a private factory from scratch (how else would they buy the factory if they didn't?). Maybe you will argue that the government prices are too low for fair competition, but maybe they need to be so low for the poor to eat bread and drink water. If these private bread companies are still unable to compete with the public ones (despite their great efficiency advantages), then maybe you should start advocating that the government provide some sort of "food stamps" or rationing to make sure that only the poorest people get preferential, government subsidized prices. Under these conditions (of the poorest being protected) the government can allow its prices to rise a little for the general public, and it will give room for the private industry to compete...

As suggestions, these are much more fair then your rabid desire for "wholesale immediate privatization", which is probably the least market friendly way to do something (as only those with the money and information immediately have access to such privatizations...)

 
At 6/08/2006 10:47:00 PM, Blogger EHSANI2 said...

Joe M

You are clearly a well-meaning man. But, your economic rationale needs a massive transformation. I mean this respectfully. Have you read about creative destruction by the late Schumpeter?

 
At 6/09/2006 02:37:00 AM, Blogger SimoHurtta said...

Ehsani2 I think it is your economic rationale (and social consequence) which needs a massive transition. Digging out names like Josef Alois Schumpeter, do not make your argumentation any better. Is what we now see in Iraq “creative destruction”?

Let’s take a short glance to Norway. The oil industry of Norway is dominated by Statoil (= States Oil). Through this state dominated company Norway as a country can maximize its oil and gas income. Though this is not a perfect “free trade” solution the Norwegian people are more happy with that solution than with selling the all the oil drilling rights cheaply to foreign oil companies, which would leave only a fragment of the income to the owner country (like in Nigeria or Angola). Sometimes the country’s and its peoples good is different than wellbeing of “free competition” and a few business owners / companies.

Ehsani2 for what are the governments and democracy in the end? Are they systems created mainly to guaranty a change to business owners to became richer or develop the country to stabile, equal and prosperous society. Ehsani2 name one single underdeveloped country which has jumped straight to “free markets” and has been an economical success.

Noam Chomsky says in a news conference at UN:
As for the economic option, that's being lost, too. The most dramatic case, perhaps, was Argentina. Argentina was the poster child for the IMF. And following IMF rules, it led to the worst economic disaster in its history, totally collapsed. Then, violating IMF rules radically, they pulled out of it and have had rapid growth. And the international investing community and the IMF, which is a branch of the Treasury Department, couldn't do anything about it, even the refusal to pay debt. And Argentina -- in fact, the president of Argentina said, ‘Well, we're ridding ourselves of the IMF.’ That means of U.S. economic strangulation. And worse, he was helped in that by Venezuela, which bought a large part of the debt. Bolivia is probably doing the same. Brazil had already done it. Well, you know, you rid yourself of the IMF, meaning the Treasury Department, that's seriously weakening the measures of economic strangulation.

 

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