Two relationships have long been key to the stability of the Syrian regime. The first is an economic relationship: the regime puts 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 one: the regime, soberly assessing the balance of power, yet remains committed to the Palestinian right of return under UN General Assembly Resolution 194, even while raising the dose of repression as 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, under concrete conditions, inseparable.
The distortion to the economic relationship began with Syria’s adoption of neoliberal reforms. The Syrian ruling elite siphoned resources needed to reproduce the working population under stable 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 limited to promoting private investment with some, albeit very little, erosion of 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. Given the uncertainty due to 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 was born: a lifting of price control on basic commodities, a lifting of tariff barriers, a relative freeing of the capital account, and, a soon-to-be lifting of subsidies for certain essential commodities. The price of staple commodities rose and, in the initial years of second-generation reforms, 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 dollarised. In the uncertain environment of Syria where complete collapse à 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 a yet higher rate. But even this growth in income 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 signalled to the left but turned to the right.
There was a certain predictability when dealing with the Syrian regime, based on the premise that it was the interests of a small ruling clique that formed the context for decision-making. But the small ruling clique itself could not predict the wave of Arab revolts shattering the fear barrier, nor did it sense the frustration of a dispossessed working population subjected daily to the ostentatious display of nouveau riche wealth, nor could it see that the cosy relationship with Iran was no longer tolerable to the US.
The regime survived because it carefully 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 assertion of 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 Syria in exchange for delivering Hezbollah to it? Or will the Syrian regime reform and resist, with Iran coming to the rescue? The regime is faced with a stark choice: resistance based on a broad spectrum of social classes integrated and empowered in a reformed political process; or dissolution. Discrete sectarian lines running within the army as well as 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 were a handout to subjects under an absolute monarch and lifting the ban on niqab-wearing teachers to appease a minority of ultra-fundamentalists do 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 had cost two years earlier.2 A purposeful act of pauperisation of the Syrian working population also compromised national security. The fate of Syria as a nation always hinged upon upholding the Arab right to return to Palestine (UN Res. 194) and 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.
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 question remains to be seen in the concessions that the regime is going to make: will it make concessions to the US and moderate Arab regimes or to 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 from world capital, if and when the Syrian political structure makes the transition. That would be a leap from national to full-status comprador bourgeoisie. On the other hand, many instruments in the past, it appears, functioned effectively in both development and welfare terms. In the uncertain environment that Syria was (and still 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 on 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 as well as carrots are also on offer. There is the ominous possibility of indictment by the International Criminal Court which could come at the behest of Western powers. There is also a possibility that a smallest glitch over the border in South Lebanon, which could happen at any time, 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 are the ultimate cause for the stability of all Arab dictatorships. But the most serious danger lurks at the junction where class meets sect, which will be an object of manipulation by many. The only way out lies in the form of serious concessions to the working population, including political empowerment and economic and social rights.
1 Mr. Makhlouf (the president’s cousin) controls as much as 60 percent of the country’s economy through a complex web of holding companies.
Salim Kassem is a nom de plume of an Arab social scientist based in London. The text above is adapted from an article published in TripleCrisis on 27 April 2011. See, also, Myriam Ababsa, “Privatisation in Syria: State Farms and the Case of the Euphrates Project” (2005); Angela Joya, “Economic Liberalization and Reform in Syria: 1970-2005” (2006); Syrian Communist Party (Bakdash), “Regarding Syria” (MRZine, 18 April 2011).