The political economy of tourism in Syria: state, society, and economic liberalization.

Since his rise to power in 1970, President Hafiz al-Asad has presided over substantial changes to the social, economic, and even the political structure of Syria. The socialist policies of economic development implemented during the 'radical' Ba'ath period (1966-70) have been largely restructured or abandoned, gradually replaced by a more liberal political economy emphasizing economic pluralism (ta'addudiyya). This has included a more balanced relationship between the public and private sectors, with greater cooperation between the two in the form of joint sector enterprises. Under al-Asad, the regime's social priorities have also been transformed, with the regime becoming less reliant on traditional working class bases of support. In the place of a populist orientation, the regime has nurtured and responded to a growth of the middle and professional classes and a small number of very wealthy business elites; groups which have expanded and consolidated their economic position and, as a result, their political influence.

A far more gradual and quiet change in al-Asad's Syria has been the expanding emphasis on, and encouragement of, tourism. Prior to the 1970s, "the tourism industry [in Syria] had hardly existed,"(1) certainly when measured by the number or value of foreign leisure tourists visiting Syria on vacation in the 1990s. Although the Syrian tourism sector remains small compared to other Arab states, especially in its ability to attract wealthy tourists from the Gulf and Europe, it has expanded in size and value since the mid-1970s to become a significant and viable economic activity.

This essay outlines the reasons why the Asad regime has supported and encouraged tourism, the ways in which it has done so, and how the various components of the Syrian political economy have affected the growth and liberalization of tourism. It argues that the regime has nurtured and encouraged tourism through a guided liberalization of the sector, and a 'carrot-and-stick' approach to the economic actors and elites most active and visible in the industry. Political factors have partially stifled the economic potential of tourism, although its contribution to ameliorating economic hardship and stalled development has nonetheless been important. The emphasis of the regime on tourism, and its relations with other actors in the tourism sector, says much about the political economy of the contemporary Middle East, especially about regime responses to changing social and economic conditions.

THE ASAD REGIME AND THE GROWTH OF TOURISM

The Logic of Encouraging Tourism

There are particular reasons why governments throughout the world support the expansion of tourism. First, the potential for tourism to generate foreign currency is important, all the more so in states which have artificial or controlled exchange rates, or which are, often as a result, suffering balance of payments problems. Second is the fact that tourism is labor intensive, and creates employment throughout the economy; tourists spend money on hotels, transport, and meals, but also on a wide variety of goods and services. Third is the fact that the tourism industry does not, on the whole, require expensive or complex technology or a highly skilled workforce. With the exception of a small number of complex projects such as operating an airline, investment in tourism is not comparatively expensive, and will often return a profit reasonably quickly. Finally, many states, including Syria, already have in place the basic and most important requirements for the development of the tourism sector; a pleasant climate, attractive scenery, historical sites, and friendly people. In other words, governments often feel that their state possesses an untapped economic resource, and decide to take advantage of it.

In the case of Syria, these factors are important in explaining the regime's emphasis on tourism. The government's ambitious program of tourism expansion - which includes the creation of 120,000 new jobs in the industry by the year 2000, and the aim to receive five million tourists by 2010 - is an indication of the perceived economic benefits attached to tourism.(2) But more specifically, there are several other reasons why the Asad regime is encouraging tourism. Unlike some other states such as Jordan, Syria's tourist attractions are plentiful, are spread throughout the country and are, for the most part, easily accessible. The sites which are most commonly visited by foreign tourists include the cities of Damascus, Aleppo and Hama, the Roman ruins in the desert at Palmyra, the Crac des Chevaliers in the rural central-west of Syria, the Euphrates River, the Mediterranean coast, and numerous small villages. As a result, foreign (and especially Western) tourists visiting Syria tend to be middle aged, stay longer in Syria than in many other states, have high incomes, travel in groups, and are usually interested primarily in the historical and cultural attractions of Syria. So although Syria receives relatively few Western tourists, perhaps as few as 100,000 a year, these tourists are very lucrative and spend their money throughout the entire country. Since the economic development of rural Syria has been a major goal of successive Ba'athist regimes, including al-Asad's, it may account in part for the emphasis placed on tourism.(3)Further evidence for a rural emphasis in the government's tourism agenda is provided by former Tourism Minister al-Shamat, who stated in 1995 that the regime's primary tourism goals included "Encouraging new styles of tourism such as . . . winter and desert tourism. . . . Celebrating tourism festivals in all seasons [and] . . . encouraging popular and youth tourism. . . ."(4)

A second factor explaining the targeting of tourism by the Asad regime is its politically safe nature. It is politically safe because there are few members of the regime with vested interests in or against tourism, unlike sectors such as agriculture or industry. Further, tourists themselves pose little threat to the stability or popularity of the regime. Tourists rarely have any substantial impact on the politics of the host state. In fact more often than not tourists are kept away from the people in the host state, except for brief, orchestrated meetings such as in the souq.(5) The taking of photographs which depict Syria as an underdeveloped state, or which contain political overtones, are strongly discouraged.

Further, tourism usually contributes to traditional industries, which otherwise may not be viable. Few tourists visit any country - Syria included - without buying a souvenir or momento. Syria, in fact, has become a popular shopping destination, particularly for nationals of Russia and the former-USSR, Iran, and Western Europe. As a mode of development, with positive economic and political implications for the regime, Miyoko Kuroda argues that traditional industries may provide an area in which 'late developers' often have a comparative advantage and in which they usually excel.(6)

Finally, the private sector is relatively eager to enter the tourism sector, and "there is unanimity that the potential is enormous-especially in tourism . . ."(7) The private sector's willingness to invest and participate in tourism is the result of several characteristics of tourism generally, and its treatment under Syrian law in particular. There is the potential for Syrian tourism to continue to expand over the coming years, given that its growth rate between 1986 and 1993 was an impressive 19.6 percent per annum.(8) The private sector is also attracted to tourism by the ease with which the sector can be entered. Start-up times for tourism projects are shorter than for industry, returns are greater than for agriculture, and less specific skills are required to manage tourism projects compared with other sectors. The most important motivation for the private sector, however, has been economic liberalization.

Economic Liberalization and Tourism: The First Infitah (1973-1981)

Under al-Asad, there has been a gradual introduction of economic liberalization to the Syrian political economy. While it has been far less spectacular than the economic opening (al-infitah) in Egypt or Tunisia, a considerable amount of reform has occurred over the past two decades. There have been two main periods with especially rapid or substantial liberalization; the first infitah of the late 1970s, which especially targeted tourism, and the second infitah from the mid-1980s to the present.

The first infitah emerged as al-Asad sought ways to differentiate his presidency from that of his predecessors. Initially reforms were limited in scope, and applied mostly to industrial activity. In 1977 and 1978, however, tourism became a primary focus of economic liberalization, with the creation of mixed sector companies in the industry. Most significant were Law Number 56 of 1977, which led to the formation of the Arab Syrian Company for Touristic Establishments (ASCTE) by the Syrian businessman Uthman A'idi, and Law Number 41 of 1978 which created the Syrian Transport and Tourism Marketing Company (TRANSTOUR) under the prominent businessman Sa'ib Nahhas. A'idi and Nahhas, along with hotel owner Abd al-Rahman al-Attar and a handful of wealthy businessmen in other sectors of the economy, have become known as the "new rich"(9) business elites of Syria, as a result of the favorable treatment received under the laws of the first infitah.

The common characteristics of these laws, and of many which followed in the 1980s, was the creation of mixed sector companies, with the government handing over to the private sector the managerial responsibilities of the enterprise.(10) The government maintained a minimum 25 percent interest in the company, but its role was usually limited to the provision of capital such as land, property, and access to utilities. Such joint ventures enjoyed exemption from the otherwise extremely rigorous and controlled currency exchange rules, and exemptions were also granted from income taxes and some duties for up to seven years.

Joint venture companies such as ASCTE and TRANSTOUR were largely protected from competition by the fact that their establishment was made through specific laws, and not as the result of a general law liberalizing the economy, or sector, more broadly. They therefore represented liberalization in an extremely limited form, although such enterprises certainly "represented an element of infitah"(11) in the sense that the role of the private sector in the economy was increased.

The more general economic reforms during the first infitah had little impact on the numbers of wealthy foreign tourists visiting Syria, despite the continual optimism of the Asad regime in claiming that tourism had the potential to become one of the three most important sources of foreign income and employment. Real and perceived instability in the Middle East, as well as some perceived instability within Syria, provided little incentive for tourists to visit Syria during the 1970s.

The limited nature of the first infitah suggests that its motives were predominantly political. The 1970s was, above all, an era of regime consolidation in Syria, with al-Asad attempting to establish his own brand of 'socialism' in Syria. The goal in the 1970s was to achieve rapid and popular economic growth, which accounts for the limits on the first infitah and the importance of tourism in it. The Syrian economy remained under the dominance of the public sector, as borne out by al-Asad's assertion - a continual assertion, until ta 'addudiyya replaced it - of the public sector being "the leading sector".(12)

Economic Liberalization and Tourism: The Second Infitah (1986-)

The second infitah was much different than the first. Whereas the first infitah was largely a case of al-Asad stamping his own philosophy and leadership style on the Syrian political economy and on Syrian society, the second infitah emerged in response to a serious economic crisis which began in 1986. The Syrian economy performed poorly in the 1980s(13) - a decade which also witnessed extreme changes in the international economic and political system, which were to have an equally profound impact on Syria.

The crisis of 1986 was predominantly one of foreign exchange and balance of payments, after many years of declining income from trade and remittances, growing government debt, low foreign investment, and a fall in oil prices. Added to these problems was a rapidly growing population (3.4 percent per annum), and drought.(14) The result was an economy in stagnation, with a growth rate of only about one percent per annum in the mid-1980s - compared to around 10 percent per annum in the 1970s - and thus there arose the need for significant changes to the economy.

After 1986, a number of broad macro-economic reforms were made to the Syrian economy, including exchange rate reforms, trade liberalization, an expansion of the private sector, price adjustments, and a reduction in government subsidies on commodities and utilities. These reforms, while not aimed directly at the tourism sector, did have some impact on the sector. The role of the private sector in tourism, especially in hotel and restaurant m management, increased markedly during the late 1980s and in the 1990s. Exchange rate reforms, including those of 1993 which established a 'neighboring countries rate' for some transactions of S[pounds]42 to the US dollar - as opposed to the previous single rate of S[pounds]11.25 to the US dollar - reduced many of the costs incurred by tourists visiting Syria.

The key tourism reform of the second infitah was the 1986 resolution 186 of the Supreme Council for Tourism, which increased the role of the private sector in developing tourism facilities in Syria. A number of private hotels and tour companies appeared at this time, and the late 1980s were also the period of most rapid growth for the Chain Palace hotel group.(15) Resolution 186 allowed investors who were establishing a tourist facility to by-pass laws on the importation of raw materials, tools, and manufactured equipment - especially for the construction of luxury hotels and facilities - and also to gain exemptions and favorable treatment on taxes and customs duties.(16) Partly reflecting these reforms, there was a moderate increase in the number of Western tourists which Syria received during the late 1980s, until the outbreak of the 1990-91 Gulf crisis.(17)

Perhaps the most significant reform of the second infitah was the promulgation of Law Number 10 of May 1991 for the Encouraging of (Productive) Investment,(18) aimed at increasing direct foreign investment in Syria. The law offered a number of incentives for any investment project in excess of ten million Syrian pounds which generated employment, resulted in exports, and transferred technology or expertise.(19) Law Number 10 included exemptions from the strict Foreign Exchange Law Number 24 of 1986, which placed severe restrictions on foreign currency transactions. Other incentives included customs and duties exemptions, exemptions from company taxes for up to seven years, and the freedom to repatriate profits overseas.

The anticipated source of investment under Law Number 10 is open to speculation. Whether the government's emphasis was really on 'Western" investment has been a question of some controversy, as the law may have been aimed more toward the repatriation of funds held by Syrians overseas and investment from Arab states rather than Western sources. One observer contended that Arab investment and Syrians abroad "might well be the government's intention, as it is not keen to see the country inundated by foreign interests due to its political sensitivities and the vested interests of the establishment, and because it implies an erosion of state control and sovereignty."(20)

Regardless of the government's intentions in promulgating the law, its results to date have been mixed. Small and medium-sized businesses, and Syrian expatriates especially, have used the law to their advantage and have invested modest sums in different areas of the Syrian economy, including the tourism sector. Restaurants and medium priced hotels have been created or expanded as a result of the law, especially by those seeking short-term investments.(21) Equally prominent, however, have been abuses of the law, most notably in car rental companies.(22) Nonetheless, there have been important investment projects initiated under Law Number 10.(23)

In the second infitah, the tourism sector was liberalized during a time of economic constraint and hardship, when the regime was particularly short of rentier income. Although tourism does not technically fall into the category of a rentier industry, many of its characteristics are not dissimilar to a rentier industry. This would suggest that the emphasis on both liberalization and tourism during times of state financial austerity, especially the direct liberalization in the tourism sector, may be an attempt to breach the state's financial gap between income and (socially-oriented) spending. The part-privatization of tourism, the emphasis on large foreign (read: hard currency) investments, and the reluctance to unify Syria's exchange rates all point to this possibility.

SYRIAN SOCIETY AND TOURISM

Besides the state, other important actors and forces within Syria have played a role in the tourism sector, and in the formulation of the state's tourism policy. Most important have been wealthy business elites, especially those which have a large financial interest in the tourism sector, and other smaller, but more numerous, private sector actors involved in the tourism sector.

Business Elites and Tourism

In the Syrian economy generally, and especially in the tourism sector, a handful of wealthy businessmen have come to prominence under the Asad regime. These include Sa'ib Nahhas, Uthman A'idi, and 'Abd al-Rahman Attar. In political terms, the relationship between these men and the Asad regime is one of 'symbiosis,'(24) although given the patrimonial system of leadership in Syria, al-Asad maintains direct political dominance over his businessmen clients.

Sa'ib Nahhas,(25) a Shiite businessman, entered the tourism industry in 1965, when he established 'Nahhas Travel and Tourism', a company which represented the East German airline Interflug in Syria. Nahhas gained business contacts in East Germany and elsewhere after beginning his career in his father's textile company. Nahhas Travel and Tourism subsequently expanded its airline representation activities, and also organized tours abroad for Syrians, and inbound tours for Arab and Western visitors. The most important step for Nahhas was during the first infitah, when Law Number 41 of 1978 established TRANSTOUR. TRANSTOUR is a joint-sector firm involved in several tourism areas. One is transportation, especially limousine and car rental under the trading name 'Europcar'. Another is in tourism marketing, and the organization and delivery of tours and organized travel in Syria. By the late 1980s, it was the largest tour company in Syria. Finally, TRANSTOUR undertakes tourism investment projects; designing, financing, and building tourism infrastructure such as the al-Sayedah Zeinab complex, a 4-star resort at Amrit, as well as other resorts, hotels and other facilities in tourism areas such as Palmyra. A branch of TRANSTOUR also manages hotels and facilities owned by the government. TRANSTOUR is the largest and best-known tourism firm in Syria, with the possible exception of Uthman Aidi's Cham Palaces and Hotels firm.

The Cham Palace group of hotels was established in 1983, after Aidi's Arab Syrian Company for Touristic Establishments (ASCTE) - the first of the mixed sector companies to be established - came into existence during the first infitah by Law 56 of 1977.(26) Most of Cham's hotels, which now number seventeen and supply some 7,530 beds,(27) were built between 1987 and 1990 after the government surrendered its monopoly in the construction industry. Once the government monopoly was removed, many hotels were constructed quickly - in less than twelve months - despite the government having spent years on construction efforts in housing and hotels? One unique feature of the ownership of the Cham Palace hotels is the fact that about 10 percent of stock is owned by company employees - some 6,000 shareholders out of a total of more than 19,000 - "in what can be described as a unique experiment in popular capitalism."(29) Cham Palaces has increased its value fifty-fold since its establishment, and supplies about 80 percent of Syria's four- and five-star hotel beds. The company is currently planning to expand into Lebanon and the Sudan.(30) Aidi, a Sunni, is probably the wealthiest entrepreneur in the Syrian tourism industry, and is often considered the most prominent.

Less prominent is Abd al-Rahman Attar, a Sunni with interests in two 4-star Damascus hotels, and in 'Orient' tours and car rental. He is also active in the Chambers of Commerce.(31)

There are also some smaller, but substantial, business actors in the tourism industry, especially in hotel ownership and management, and car rentals. Nahhas, A'idi, and Attar, together with other key businessmen and bourgeoisie elites, form what Syrians refer to as al-tabaqa al-jadida, or 'the new class.'(32)

Al-tabaqa al-jadida have certain characteristics which distinguish them not only from other classes in society, but also from other elites. Their social mobility, from merchant or bourgeoisie class to elite, has usually been sponsored by the president, or occasionally by a political actor very close to the president. Few are members of the old elite families of pre-revolutionary Syria; their predominantly Sunni make-up is indicative of their urban, merchant backgrounds.

The symbiotic, though imbalanced, relationship between al-Asad and the new class offers several insights into the tourism sector, and its position in the political economy of Syria. The most important point, which highlights the symbiotic relationship between al-Asad and the private sector elites, is that they exchange resources and services in which the other possesses a deficiency. The government, or more precisely the patrimonial leader such as al-Asad, maintains a monopoly or dominance over political decision-making, and often control over social mobility as well, due to the nature of the political economy of an authoritarian, patrimonial regime. The president nurtures his relations with key individuals, including the business elites, for several reasons, including the need to maintain economic growth and development, changes in the regime's social bases of support, and the need for solidarity and cohesion beyond that created by blood ties.

In turn, business elites owe their position, and their future, to al-Asad. In the late 1970s and the 1980s, economic development along state-led lines failed to deliver economic growth or improved standards of living. As a result, the private sector, and key business elites in particular, "[have been and] are being invited. . . to provide the dynamism and to stimulate the growth that their economies lack."(33) The state provides the opportunities for entrepreneurs by allowing entry into previously closed fields of activity, and by legislating for monopoly or oligopoly business conditions in many sectors of the economy. This explains the enshrining into law of TRANSTOUR and ASCTE, rather than the complete or competitive liberalization of the tourism sector during the 1970s and 1980s. Controlled liberalization has meant high prices and profits, which in turn forces the businessmen to continue to rely on al-Asad for their privileged position.(34)

Besides the threat of losing their position, the political behavior of these businessmen is kept in check in two other main ways. First, the regime informally places limits on the length to which business elites can influence policy. On occasions when a businessman oversteps his political bounds, he is often arrested or discredited by the official press as a profiteer or as corrupt. Aidi, Nahhas, and Attar were all arrested in 1977 after a campaign against corruption. The campaign was more likely intended as a warning to these businessmen, who had grown wealthy very quickly, not to translate their wealth into political power or aspirations. As recently as 1996, Aidi was accused of corruption. In the 1990s, however, an encroaching limit on the regime is the fact that Syria's economy seriously needs investment and business confidence, and the regime cannot be seen to act capriciously or to be hostile to wealthy actors in the economy.(35) That campaigns against the business elites have had little impact on their positions, and that many have been arrested several times, indicates the 'carrot and stick' approach by al-Asad to his relationship with these individuals.

The regime also maintains some control over these elites by officially or unofficially allowing them exemptions to laws.(36) For example, Sa'ib Nahhas is said to have permission to dismiss staff at will, despite the extremely strict labor laws which protect staff from arbitrary dismissal.(37) Some of these concessions are granted because of the government's involvement in joint sector firms - hence the lenient labor laws for many of those enterprises - although in the case of Nahhas it supposedly extends further than just the joint-sector TRANSTOUR.

Favors such as these place businessmen in a position where loyalty and assistance to the regime has been rewarded with gifts that can easily be retracted. One method by which businessmen can protect themselves from attacks such as that of 1977 is by establishing joint sector firms with the government. These public-private enterprises represent a relationship between the businessmen and the regime, and between the businessmen and the public sector more generally. For the bureaucracy, which often plays a role in organizing many of the opportunities seized by the businessmen, joint sector enterprises are an opportunity for some individuals to venture into the profitable private sphere, while the regime gains economic and political benefit.

The importance of tourism in the Syrian economy, therefore, is the result of its political benefits, and its relatively few drawbacks, to the state. The liberalization of tourism has allowed new economic elites and an expanded private sector and middle class to emerge, which are reliant on tourism and, because of favorable treatment in the liberalization program, loyal to al-Asad's regime. Not only are the business elites a prominent component of tourism, but tourism is a prominent component of these individuals' activities. Almost all have major holdings in tourism projects, and in Aidi's case it is his main area of activity. This is to say that tourism is not merely an economic activity, it is a political component of the Asad regime as well.

Other Social and Economic Actors and Tourism

Activity in the tourism sector, and support for its liberalization and expansion, has also come from the private sector middle class; the merchants, the small businessmen, craftsmen, and other self-employed entrepreneurs and professionals of Syria. The growth in the private sector middle class under al-Asad, and especially in the past fifteen years, has been substantial; the private sector middle class grew ". . . between 1970 and 1991. . . from 140,000 to around 410,000 economically active persons and their families. . . from around 9 percent to 11 percent [of the total population]."(38) Most of their economic activity has been in trade, transport, and services, not in manufacturing or industrial activity, mostly because of the profitability of the former. Although members of the private sector middle class are often religious and socially conservative, suggesting they might otherwise oppose uncontrolled tourism, their reliance on tourism and the money tourists spend means that they have not actively (if at all) objected to the tourism sector and its expansion.

The merchants and craftsmen have little direct impact on the tourism or economic policy-making process in Syria, but have an indirect impact in other ways. Some political activity is undertaken on behalf of the private sector middle class by the new business elites, and the views of these two groups are rarely at odds. For example in 1993 Sa'ib Nahhas was interviewed on Syrian radio, which "in a highly symbolic interview . . . allow[ed] him to speak for almost an hour . . . about the private sector, its performance and its advantages."(39) The relationship between the private sector middle classes and the business elites, through institutions such as chambers of commerce and industry and through economic contact between the two, has resulted in a convergence of their political and economic interests. As the private sector middle class has become increasingly involved in tourism, their reliance on the business elites, and the latter's relationship with the regime, has likewise increased. In other words, the regime's relationship with the private sector middle classes has not been through democratization or direct inclusion in the decision-making process, but rather a 'trickle-down' of economic favors and a 'trickle-up' of economic requests and ideas, the majority via the business elites.(40)

The only direct input into economic decisions by the private middle-class is through limited regime consultation with chambers of commerce and industry, and with the parliament (majlis al-sha'b). The private sector middle class features quite prominently in these institutions, but their influence remains limited and under tight political control. These institutions provide the opportunity for the private sector middle class, among other groups, to voice their views on matters such as tourism policy.

Finally, rural Syrian society has also been important in the tourism sector. As the traditional base of support for the Ba'ath regime, tourism has been a tool through which the regime has attempted to develop rural Syria, and thus maintain its popular support. Syria's tourism attractions are spread throughout the country, and some of the most popular are in the countryside. This allows for economic development and job creation in rural areas as a result of tourism expansion, with political benefits for the regime.

Rural Syrians employed in areas related to tourism - retailing, traditional crafts, and regional transport, for example - increased slightly in number during the 1980s, partly in response to a small expansion in tourism. Evidence from other Middle East states suggests that rural workers are increasingly turning to non-farming sources of income, whether or not they also remain as farmers or agricultural workers in some capacity.(41)

From the regime's perspective, it is preferable to have rural Syrians work in the tourism sector rather than to struggle financially as farmers. Some rural workers have been quite successful in transferring their economic activity to tourism. Furthermore, there has also been an expansion in the size of the rural middle class, and its role in the tourism sector. To maximize the economic benefits of tourism for rural Syria, the regime has emphasized rural Syria in its marketing of tourism. Both foreign tourists, and internal tourists from the major cities, have been encouraged to travel to the countryside, especially for desert expeditions and rural cultural festivals.(42)

INTERNATIONAL INFLUENCES ON TOURISM

The tourism sector in Syria has not only been shaped by internal political and economic dynamics, but also by external actors and events. For better or worse, events outside of the control of the regime and the forces of society have had an impact on the propensity of tourists to visit Syria, and on the internal circumstances influencing tourism in Syria.

Tourism and International Competition

As other Arab states have become drawn into the international economic system, and have sought advantage in areas which include tourism, Syria has gradually been forced to adapt to this change. The older industries, such as manufacturing, emphasized by socialist development policies have become inefficient as a source of export income, forcing these states to find new sources of foreign trade and economic growth. Tourism satisfies this requirement especially well, as it provides labor-intensive employment and valuable foreign currency. However, to compete effectively for tourists against other developing states, Syria has had to attract foreign investment and international expertise, which accounts in large part for its program of economic liberalization.

Because of their long history of tourism, Egypt, Israel, Morocco and Turkey have been the most successful regional states in developing their tourism industries, although states such as Tunisia and, more recently Jordan, provide something of an example for Syria. Tunisia has liberalized its economy, including its tourism sector, and at the same time achieved quite spectacular tourism growth, especially tourists from Europe. Jordan owes a recent leap in tourism to its peace agreement with Israel in 1994, which almost immediately delivered economic benefits. Jordan has also been especially clever in marketing itself internationally, taking advantage of tourists visiting Israel or Egypt by encouraging them to also include Jordan on their itineraries.(43)

It is in this environment that Syria has to compete for tourists, with regional competitors often having a more liberalized tourism sector and more experience in servicing Western tourists. Structural deficiencies in the sector, such as a comparative lack of English, German, and Japanese language skills among Syrian workers, has been something that the Asad regime has tried to remedy for this reason. In recognition of the need to compete with the facilities of neighboring states, the Syrian government has tried to improve a number of facilities and services which not only attract tourists, but encourage them to return to Syria for a second or third visit. The increased emphasis on international marketing (spending on which has increased by about 20 percent per annum since 1990), supplying road signs and travel literature in English, and reductions in the complexity of currency regulations are examples.(44) To expand and develop tourism, it is not enough to simply have tourist attractions, although these are obviously a necessity, but the facilities available have to satisfy the requirements of visitors as well. It is these areas which determine a tourist's satisfaction with the destination visited, and are important factors in a tourist's decision to return to a destination several times. So far, Egypt, Jordan, and Tunisia have done it better than Syria.

Regional Stability and Tourism in Syria

The real and perceived political stability of the Middle East has been an important determinant of tourists' willingness to visit the region. Over the past few decades, the number of 'Western' tourists traveling to Syria has depended on regional events and the tourists' perceived threats to their safety. During periods of international conflict or internal political instability, the number of tourists has fallen. In periods of stability, the numbers have recovered and often increased substantially. This is not the case only in Syria; a study of tourism to Israel has found a similar trend.(45)

The centrality of the Arab-Israeli conflict in tourists' perceptions of Middle East instability has previously accounted for the small tourism sector in many Arab states. As a result of the Arab-Israeli peace process, however, the tourism sector is expected to expand dramatically; by one estimate, an expansion of 235 percent between 1995 and 2005.(46) Such growth would be unlikely to bypass Syria, although whether or not Syria reaches a peace agreement with Israel will be an important factor in the future growth of its tourism sector.

Should a peace agreement between Syria and Israel eventuate, it would undoubtedly benefit the tourism industry and, by increasing the confidence of foreign investors, would also increase foreign investment in the tourism sector and attract more tourists, especially Western tourists. In 1991, for example, Egypt received 120,228 Israeli tourists and visitors,(47) and in 1994 about 12,000 Egyptians visited Israel.(48) Many more tourists from outside of these two states crossed the Egypt-Israel border, visiting both states instead of only one. Former Syrian Minister of Tourism Muhammad Amin Abu al-Shamat outlined the importance of peace to the tourism sector in 1995 when he stated that "I think that [the eventuating of] the just and comprehensive peace specified by President Hafiz al-Asad would realize more and more chances for tourism exploitation and tourism marketing, for the states that export tourism wish for safe and secure regions that are far away from the atmosphere of war. . . ."(49)

With or without a peace agreement with Israel, however, Syria has begun to benefit from greater stability and cooperation in the region; from an increased sense of safety and stability in the minds of potential travelers, and from regional cooperation with other Arab states. Syria, Jordan, and Lebanon have signed a tourism agreement, for example, to undertake some joint marketing of their states, and joint travel information bureau overseas, in recognition of the fact that most travelers who visit the Levant want to visit as many of the major regional sites as possible, which are spread over several states.(50) Further, the host states benefit from such an agreement by saving money on advertising, publicity, and overseas representation costs.

Syria's Minister of Tourism has also held meetings with his counterparts from Morocco, Tunisia, Egypt, and the United Arab Emirates, in an attempt to encourage international tourism within the Arab World and investment between states.(51) The Gulf, and the UAE in particular, has been a significant investor in the Syrian tourism sector. The idea of establishing an Arab Tourism Organization, or something similar, has also been raised.

Many states, including Syria, have begun targeting Arab tourists, as well as those from Europe, North America and East Asia. Arab tourists traveling within the region typically have a greater respect for the culture and values of the host state, and, although some spend less money per day than Western tourists, Arab tourists tend to make their visit longer than their Western counterparts.(52) Given that Arab tourists account for over seventy percent of Syria's tourist arrivals, it is not surprising that they continue to be targeted in its tourism plans.

CONCLUSION

The political economy of Syria, as with any state, has a powerful influence on its tourism industry. Under al-Asad, the Syrian state has surrendered some of its popular support in response to the increasing urgency of economic development, opting in exchange for a broader relationship with private sector elites. The economic liberalization program, of which tourism is an important component, is a clear example. Liberalization, which creates new socio-economic elites, has been tightly controlled by a regime which is fearful of political competition.

The political methods of al-Asad have changed little since his ascension to power, even though the structure of political relations has undergone some substantial changes. In the 1990s, al-Asad has continued to rule Syria, and to conduct elite political relations, by the same methods as in previous decades; through patron-client relations, informal decision-making processes, and in the broader political system, through a combination of co-optation and repression.

However, some aspects of Syrian politics have changed. Although elite politics remains patrimonial and informal, new members have entered the patrimonial web, most importantly, the wealthy business elites. These individuals, along with an expanding private sector middle class and a revitalizing bourgeoisie, have expanded as a result of the impact of socialist development policies on society, and more recently because of the state's need for economic development. The latter, in which the regime has nurtured the private sector's activities, accounts in large part for the Asad regime's emphasis on the tourism sector; a politically safe sector with strong economic potential.

The political and economic imperatives of the Asad regime have played a major role in the growth of the Syrian tourism industry over the past two decades. Some political factors, such as Syria's foreign relations or the politics of economic liberalization, have stifled the economic potential of tourism. Ultimately, if predictions of the emergence of a civil society in Syria are realized, then the state's role in the economy, and in the tourism sector, may decline. In the more immediate future, however, the economic concerns of the regime, and its relations with society, is likely to have the same impact on the tourism sector as it has in the recent past.

NOTES

1. Sylvia Polling, "Investment Law No. 10: Which Future for the Private Sector?", in Eberhard Kienle, ed., Contemporary Syria: Liberalization between Cold War and Cold Peace (London: British Academic Press, 1994), 16.

2. See "Wazir al-Siyyaha al-Suriyya Abu al-Shamat: Khuttatuna istaqbal 3,5 milayiin sa'ih ai-'am 2000" ["Syrian Minister of Tourism Abu al-Shamat: Our Plan is to Receive 3.5 Million Tourists by the Year 2000"], al-Iqtisad wa al-A'amal, Special Issue 'Tourism Without Borders', 16, March 1995, 59-62.

3. On Ba'ath agrarian policies and the emphasis on rural development see Raymond Hinnebusch, Peasant and Bureaucracy in Ba'thist Syria: The Political Economy of Rural Development (Boulder: Westview Press, 1989); and Volker Perthes, The Political Economy of Syria under Asad (London: I. B. Taurus, 1995), chapter 3.

4. "Wazir al-Siyyaha al-Suriyya Abu al-Shamat. . . .", 61-62.

5. One study highlighted this in the case of Egypt, and many of the Egyptian characteristics can be equally applied to Syria or other developing states. See Tim Mitchell, "Worlds Apart: An Egyptian Village and the International Tourism Industry", Middle East Report, no. 196, (September-October 1995), 8-11 & 23. See especially the subsection entitled 'Enclave Tourism', 9-10.

6. See Miyoko Kuroda, "Economic Liberalization and the Suq in Syria", in Tim Niblock & Emma Murphy, eds., Economic and Political Liberalization in the Middle East (London: British Academic Press, 1993), 203213.

7. Alan George, "No Going Back", The Middle East, November 1996, 20.

8. E. Riordan et al., "The World Economy and the Implications for the MENA Region", Economic Research Forum Working Paper Series, Working Paper Number 9519 (Cairo: Economic Research Forum, 1995), 23, Table 9.

9. Raymond Hinnebusch, "Syria", in Niblock & Murphy, Economic and Political Liberalization in the Middle East, 193.

10. The details which follow are taken from Polling, "Investment Law No. 10. . . .", 15; Sylvia Polling, "The Role of the Private Sector in the Syrian Economy: 'Law No. 10 for the Encouragement of Investment' Against the Background of Ongoing Economic Liberalization and Market Deregulation", Speech to the conference Economic and Political Change in Syria, School of Oriental and African Studies, London, 27-28 May 1993; and from author's interviews in Damascus, May 1996.

11. Perthes, The Political Economy of Syria under Asad, 53.

12. Moshe Ma'oz, Asad: The Sphinx of Damascus. A Political Biography (New York: Grove Weidenfeld, 1988), 79.

13. On Syria's poor economic performance in the 1980s, see Volker Perthes, "The Syrian Economy in the 1980s", Middle East Journal, vol. 46, no. 1, (Winter 1992), 37-58.

14. On the crisis of 1986 and the origins of the second infitah, see Nabil Sukkar, "The Crisis of 1986 and Syria's Plan for Reform", in Kienle, Contemporary Syria, 26-43; and Steven Haydemann, "The Political Logic of Economic Rationality", in Henri Barkey, ed., The Politics of Economic Reform in the Middle East (New York: St. Martin's Press, 1992), 11-39.15. Author's interviews in Damascus, June 1996.

16. "Wazir al-Siyyaha al-Suriyya Abu al-Shamat. . . .", 61-62.

17. Christian Schneider-Sickert and Andrew J. Jeffreys, for Oxford Business Guides, The Oxford Business Guide: Syrian Arab Republic, 1995-6 (Surrey: Oxford Business Guide Publications, 1995), 35.

18. Al-Jumhuriyya al-Arabiyya al-Suriyya (wizarat al-iqtisad wa al-tijara al-kharijiyya), al-qanun raqm 10 li tashji' al-istithmar (Damascus, 1991), [The Syrian Arab Republic, Ministry of Economy and Foreign Trade, Law Number 10 for the Encouraging of Investment (Damascus, 1991)]. For an analysis of Law Number 10, see Polling, "Investment Law No. 10. . . .", 19-23.

19. At the 'neighboring countries rate' of 42 Syrian pounds to the US dollar, 10 million Syrian pounds equates to a minimum investment of US$238,095.

20. Polling, "Investment Law No. 10. . . .", 21.

21. Author's interviews in Damascus, June 1996.

22. Under such schemes, an individual establishes a firm, buys a number of cars under the provisions of Law Number 10, and then leases them to relatives and friends, thereby evading the otherwise enormous taxes and duties on importing the vehicles. Author's interviews in Damascus, May and June 1996.

23. Polling, "Investment Law No. 10. . . .", 21.

24. The idea of 'symbiosis' is partly based on John Waterbury, Exposed to Innumerable Delusions: Public Enterprise and State Power in Egypt, India, Mexico, and Turkey (Cambridge: Cambridge University Press, 1993), especially chapter 8.

25. The following information on Sa'ib Nahhas's career and business interests is drawn from "rajul al-mu'sasat Sa'ib Nahhas: al-siyyaha tahtaju ila mal wa rijal. . . . wa thiqa", ["Man of Business Enterprises Sa'ib Nabhas: Tourism Needs Funds and Men. . . .and Confidence"], al-iqtisad wa al-a'amal, Special Issue 'Tourism and Prospective Peace', 18, May 1996, 50-52; a detailed brochure issued by Nahhas enterprises which outlines the history and activities of its firms; and from author's interviews in Damascus, May 1996.

26. Polling, "Investment Law No. 10. . . .", 16-17.

27. Al-Sham li al-finadiq: al-sharaka al-funduqiyya al-ra'ida fi al-'alim al-arabi", ["Cham Hotels: The Leading Hotel Company in the Arab World"], al-Iqtisad wa al-a'amal, Special Issue 'Tourism Without Borders', 16, March 1995, 39-42.

28. Polling, "Investment Law No. 10. . . .", 17.

29. Ibid., 17.

30. Author's interviews in Damascus, June 1996.

31. Author's interviews in Damascus, May 1996.

32. Volker Perthes, "The Bourgeoisie and the Ba'th: A Look at Syria's Upper Class", Middle East Report, no. 170 (May-June 1991), 31.

33. Waterbury, Exposed to Innumerable Delusions, 212.

34. See Polling, "Investment Law No. 10. . . ."; and also "suriyya: ihtimam a'ali" [Syria: Global Concerns"], in "finadiq al-sharq al-awsat: al-khassa al-akbar li-safar al-a'amal" [Middle East Hotels: The Greatest Contribution is to Business Travel"], al-iqtisad wa al-a'amal, Special Issue 'Tourism Without Borders', 16, March 1995, 30.

35. Author's interviews in Damascus, May and June 1996.

36. Perthes, "The Bourgeoisie and the Ba'th", 35-36.

37. Author's interviews in Damascus, May 1996. These labor laws mean that, with the exception of some joint sector enterprises, permanent employees can only be dismissed in very extreme cases such as bankruptcy of the firm or because of theft by the employee.

38. Perthes, The Political Economy of Syria under Asad, 101.

39. Ibid., 236.

40. Author's interviews in Damascus, May and June 1996.

41. Alan Richards & John Waterbury, A Political Economy of the Middle East: State, Class, and Economic Development (Boulder: Westview Press, 1990), 178.

42. "Wazir al-Siyyaha al-Suriyya Abu al-Shamat. . . .", 61.

43. Author's interviews in Amman, Jordan, June 1996.

44. "Al-Duktur Dinhu al-Dawoud, wazir al-siyyaha al-suriyya: fi tariq ila. . . .al-warsha al-siyyahiyya", ["Dr. Dinhu Dawoud, Syrian Minister of Tourism: On the Way to. . . the Tourism Workshop"], al-iqtisad wa al-a'amal, Special Issue 'Tourism and Prospective Peace', 18, May 1996, 48-49.

45. Joel Mansfeld, "The Middle East Conflict and Tourism to Israel," Middle Eastern Studies, vol. 30, no. 3, (July 1994).

46. Mukul Pandya, "All Signs Point East", Time Australia, 12 June 1995, 58-59.

47. Robert Vitalis, "The Middle East on the Edge of the Pleasure Periphery", Middle East Report, no. 196, (September-October 1995), 5, Table III.

48. Jerusalem Post International Edition, week ending 7 January 1995, 6 and Ha'aretz, 3 November 1995, quoted in Robert Bowker, Beyond Peace: The Search for Security in the Middle East (Boulder: Lynne Rienner, 1996), 49-50.

49. "Wazir al-Siyyaha al-Suriyya Abu al-Shamat. . . .", 62.

50. Al-Duktur Dinhu Dawoud. . . .", 48-49.

51. Ibid., 48-49. See "Wazir al-Siyyaha al-Suriyya Abu al-Shamat . . .," 62.

52. Author's interviews in Damascus, May 1996. Further, it is only on average that Arab tourists spend less per day when traveling; some, such as those from the Arab Gulf states, spend as much, or more than, Western tourists.

Matthew Gray is a research associate in the Centre for Middle Eastern and Central Asian Studies, the Australian National University, Canberra.