Demystifying Syria

Salim Kassem, Guest Blogger

Two relationships have long been at play behind the stability of the Syrian regime. The first relationship is an economic relationship, in which the regime would put back into national production just enough to create jobs and produce cheap national goods to keep the working population in steady or, better yet, improving living conditions. The second is a political relationship, in which the regime soberly assesses the balance of power, commits to the right of return under UN resolution 194 and raises the dose of repression the more power, control and wealth become concentrated in the hands of the ruling military elite and its adjunct bourgeois class. As the recent popular uprising has come to show, serious distortions have been incurred to both relationships, which are also, under more concrete conditions, inseparable.

The distortion to the economic relationship began with Syria’s adoption of neoliberal reforms. The Syrian ruling elite siphoned resources that were needed to reproduce the working population under stable or enhanced living conditions. As early as 1987, the Syrian regime, expressing the growing interests of a small military elite, which had clasped the state apparatus,  began to dissociate itself from a relatively planned and heavily state interventionist past. Up until 2002, the reforms were circumscribed to promote private investment with some, albeit very little, erosion to the subsidies and the basic consumption bundle delivered to the working population. The initial reforms did not pay off and, the investment rate as a whole declined. In the uncertainty and geopolitical risk engulfing Syria, private investors steer away from projects with high initial costs and long gestation periods and engage in speculative and ephemeral endeavours. Until 2002, and just prior to the commencement of the second oil boom, real growth rates were on average around zero and unemployment figures reached the two digit level.

In 2006, the second-generation of intensive neoliberal reforms were born. There was a lifting of price control on basic commodities, a lifting of tariff barriers, a relative freeing of the capital accounts and, a soon to be, lifting of subsidies on certain essential commodities. The price of staple commodities rose and, in the early years, the inflation rate jumped on average to more than 10 percent. When inflation tapered down, it did so at still higher costs to employment. In the absence of autonomous trade unionism, the corresponding rise in wages was torpid. It was a prolonged and calculated shock therapy, which formalised the hold of the state bourgeoisie on the economy, desocialised land tenure, widened the income gap, dealt a blow to national industry, and promoted import led growth. But this was no ordinary liberalisation. It was meant for a class that deployed absolute political authority to extract wealth at every juncture of the circuit of capital.[1] Less and less was paid into health and education. Less was paid into wages. A state sponsored merchant was free to mark up prices. The Central Bank would stabilise the local currency with nationally owned reserves so that locally accrued rents could be converted into dollars and sent abroad. The dollar peg unequivocally eroded the efficacy of monetary policy and, subsequently, the economy became gradually dollarized. In the uncertain environment of Syria where complete collapse a la Iraq is a possibility, the rich either save abroad or turn to affluent consumption emulating in a Veblenian manner the rich classes of Western countries. In this second phase of reform, the real growth rate was on average six percent for the past nine years, whilst, once more, income inequality rose at yet a higher rate. But this growth in income to be sure was driven, firstly, by higher oil prices and secondly by geopolitical rents. It is these geopolitical rents that bring us to the distortion incurred to the political relationship.

Undoubtedly, Syria represents a key player on the Middle Eastern stage and there is a price tag associated with the various positions it adopts. So for instance its billions in debts to Iran disappeared from the books at one point. The Hariri Tribunal. which had pointed the finger at the Syrian regime, suddenly swerved to Hezbollah after the borders with Iraq were closed off to the Iraqi resistance, and so on. But for the Syrian working population, this was a regime that signals to the left but turns to the right. There was a certain predictability when dealing with the Syrian regime, which was based on the premise that it is the interests of a small ruling clique that forms the context for decision-making. But the small ruling clique itself did not predict the wave of Arab revolts shattering the fear barrier, the frustration of a dispossessed working population subjected daily to the ostentatious display of nouveau riche wealth, and that the cozy relationship with Iran was no longer tolerable by the US.

The regime had survived because it soberly assessed the balance of power and knew what distance to keep from war and peace, which made a best friend out of an enemy. The left ignored its transgressions on human rights because Syria did not go the unilateral peace way of Egypt and Jordan. The US and Israel acquiesced because repression hollowed development, the radical splinter groups were effectively contained and not a bullet was fired over the Golan for nearly forty years. But Syria also lies in a region that falls squarely under the diktat of accumulation by encroachment and dispossession, where war and dislocation represent inherent relationships, which compose a steadying force for global capital accumulation.  The pertinent questions then become: does the US’s impending hegemony over the Iranian side of the Persian Gulf necessitate a US/Israeli instigated ‘sectarian strife’ in  Syria, will the West overlook the horrendous events in exchange for delivering Hezbollah, or will the regime reform and resist with Iran coming to the rescue. The regime is faced with a choice between resistance aligning a broad spectrum of social classes integrated and empowered in a reformed political process or dissolution. Discrete sectarian lines running also within the army and forty years of authoritarian rule have dimmed the possibility of sacrificing a president to save a social class.

The regime’s reaction, so far, has not been to embark on serious reforms. Raising salaries as if it was a handout to subjects under an absolute monarch and a lifting of the ban on niqab-wearing teachers appeasing a minority of ultra fundamentalist does not amount to reform. Appointing Islamic bankers in the new government will not redress the resource allocation inequities. The Arab protests are about the right to political participation and decent living conditions. In 2008, a basket of eggs, a principal protein provider for children, was costing three to four times the price it cost two years earlier. There was an active and purposeful act of pauperisation of the Syrian working population, which also compromised national security. The fate of Syria as a nation always hinged upon upholding Arab rights to return to Palestine (UN/RES. 194) and on maintaining a national front based on a relatively equitable distribution of resources. For a social class in power to relinquish any of these tenets is to relinquish the state as form of social organisation that mediates class differences. At this most vulnerable point in time, with Iran being of primary concern to western capital, no effort is being spared in co-opting Syria. If Syria jumps into the US orbit, the whole of the Arab Near East will be under pax Americana. Which way will the regime go?

The answer to this remains to be seen in the concessions that are going to be made to the US and moderate Arab regimes vis-a-vis the Syrian working population. On the economic side, a reform pattern from autocratic state planning, to neoliberal reform, to full integration into the world financial system is on offer by world capital, when and if the Syrian political structure makes the transition. It is a leap from national to full status comprador bourgeoisie. On the flip side, many instruments from the past appeared to have functioned effectively in both dynamic and welfare terms. In the uncertain environment that Syria is, the state acted as a guarantor of long term investment in plant and equipment. Industrial and agricultural state owned banks lent to national projects at concessional long term rates. A so-called black list protected the national industry from unfair foreign competition. A tightening of the capital account and a multiple interest rate policy galvanised national resources and provided exchange rate stability. Subsidies and price controls in life essentials raised the standard of living for the working population. Land reforms, which have now been rolled back, had made Syria a net producer of food. Many of these policies can still be remoulded to fit the present.

On the political side, sticks and carrots are also on offer. There is the ominous indictment by and international criminal court, which could come reeling in at the behest of western powers. There is also the possibility of the smallest glitch over the border in South Lebanon, which could happen at any time and, would, at least in the interim, realign all the national forces behind the regime. The outstanding Arab-Israeli question, the continued occupation of Arab land and the Palestinian refugees waiting to return represent the ultimate cause for steadying all the Arab dictatorships. But a most dangerous outcome occurs at the conjunction where class meets sect, which will be an object of manipulation by many. The only way out remains in the form of serious concessions to the working population, including political empowerment, and economic and social rights. Only these could turn back the clock now.

Footnotes:
[1] Mr. Makhlouf (the president’s cousin) controls as much as 60 per cent of the country’s economy through a complex web of holding companies.

[2] According to UNICEF, 28 percent of children under 5 are stunted.

Salim Kassem is a nom de plume of an Arab social scientist based in London.

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