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SYRIA - Muhammad Naji Al-Utri.

The prime minister in Syria, Muhammad Naji al-Utri, is formally in charge of oil and gas exports or imports as the Petroleum Marketing Committee, a powerful body, is attached to the prime ministry. Part of this committee is Sytrol, an oil marketing entity (see OMT 12).

But actual control over oil export sales, pricing and marketing is in the hands of a few men in the invisible layer.

The second Prime Minister in the regime of Bashar al-Assad, Utri was first appointed to this post on Sept. 10, 2003 to succeed Muhammad Mustafa Miro. Utri formed his first cabinet on Sept. 18, 2003. He kept in office all those powerful political appointees who had been associated with the late Hafez al-Assad for many years (see Gas Market Trends).

Utri's predecessor Miro, prime minister since March 2000, had succeeded Mahmoud al-Zo'bi. Zo'bi, prime minister since 1987, commmitted suicide in 2000 after he and other key officials were implicated in a major corruption scandal (see background in Vol. 58, No. 16).

Miro's government had been widely criticised for having moved too slowly on a programme of reforms promised by the young Assad years before his father died. Until now and despite Uri's efforts, however, the pace of reforms has been very slow and disappointing. No real change has occurred in the past six years and the chances of improvement in the near future appear to be slim, unless the regime has been changed or forced to alter its behaviour.

Utri formed his second cabinet on Feb. 11, 2006. He brought in 14 new ministers, including Sufian Allaw who replaced Ibrahim Haddad as minister of petroleum and mineral resources. All the associates of the invisible layer were again retained in their key positions, as in the case of Defence Minister Hassan Turkmani who, like Utri, is a member of the ruling Ba'th Party's Regional (local) Command. President Assad heads this command as well as the party's "national" (pan-Arab) leadership.

The cabinet shake-up was needed for three main reasons: (1) to boost the position of hardliners in defiance of a US-led campaign for Syria to open up and change its behaviour, in view of the Ba'thist regime's implication in the Hariri murder; (2) to appoint veteran diplomat Walid al-Mu'allem as foreign minister, to succeed hardliner Farouq al-Shara' who had been promoted to first vice president; and (3) to fill the vacancy at the Interior Ministry, with military police chief Bassam Abdel-Majid made interior minister to succeed Gen. Ghazi Kan'an who died in October 2005- the official version being that the latter had committed suicide, while in Lebanon the rumour was that he was assassinated because he had been favoured by the US as a possible candidate to replace Assad as president.

President Assad on March 23 appointed former culture minister Najah al-Attar as a second vice-president. Attar, from a prominent Sunni family of Damascus, is thus the first woman to hold such a high position in Syria. By appointing her, Assad has completed filling the country's two mostly ceremonial posts. As First Vice-President, Shara' replaced Abdul-Halim Khaddam, who resigned during a Ba'th Party congress last June and later defected to France to join the opposition. The official Syrian News Agency (SANA) said as Second Vice-President Ms Attar "will be responsible for following culture policy according to the directions of the President".

Attar, part of the old guard in the ruling Ba'th Party, was culture minister for 24 under the late President Hafez al-Assad, who ruled Syria for 30 years and was succeeded by his son in 2000.

The main policy decision makers for the petroleum sector, excluding those of the formal layer, belong to the invisible group. Both layers are controlled nominally by President Assad but invisibly by a small elite of figures who took over hours after Hafez al-Assad died on June 10, 2000 (see Gas Market Trends).

Utri's previous position was speaker of the People's Assembly (parliament). Before becoming speaker in 2002, Utri was deputy prime minister for services and assumed that post on March 13, 2000, when Miro formed his first government.

An engineer, Utri is also an expert in modern banking and finance and electronic trade (e-commerce) as well as in IT. (But the services sector in Syria remains limited to highly inefficient, state-owned banks and state institutions which one modern businessman describes as "belonging to the past centuries").

Utri has a reputation as a moderniser and an advocate of economic reform. His appointment in September 2003 was viewed as an attempt by President Assad to accelerate economic reform. But nothing much has occurred since then, other than a slow evolution of measures taken since 2000.

Within his cabinet, Utri is squeezed between two contradictory poles: the powerful Minister of Finance, Dr. Muhammad al-Hussein, who for years has been resisting rapid measures to liberalise the Syrian economy; and the pro-reform Deputy Prime Minister for Economic Affairs, Abdullah al-Dardari. The latter has the support of President Assad, while the former is backed by the old guard in the invisible layer of authority.

Dr. Hussein, a member of the Ba'th Party's ruling Regional (local) Command, has long been conservative. Until Sept. 18, 2003, he was deputy prime minister for economic affairs. He has since been demoted in a move by President Assad to tilt the balance of power in favour of Utri and other reformists. But the superior stature of Dr. Hussein has prevailed so far. With a PhD in economics from Romania, Dr. Hussein has built up a strong power base in his capacity as head of economic affairs at the Ba'th Party (see backround in Vol. 62, DT No. 12).

Utri and other reformists say Syria has no choice but to open up in line with the requirements of the IMF/World Bank, the World Trade Organisation (WTO) and other multilateral institutions as well as the European Union (EU). Syria applied to join the WTO in October 2001.

On Dec. 9, 2003, after six years of negotiations, Damascus and Brussels signed an EU Association Agreement. Under the terms of this, Syria was then committed to dismantle all tariffs, which range from 10% to over 100%, on EU products over a period of 12 years. In return, the EU is committed to increasing economic co-operation with Syria by extending technical support to new sectors of the economy, including transport, tourism and financial services.

The most dramatic tariff cuts were to be made during the first three years of the agreement. This meant import duties should be slashed in the most heavily taxed areas, such as luxury goods, and the highly protected garment and food sectors. All tariffs above 50% should be cut to 50% in this period. Tariffs below 50% should be dismantled completely within periods of six, nine or twelve years - depending on the product.

Before the Dec. 9, 2003 development, the EU had signed association agreements with every country on the Mediterranean rim with the exception of Syria. These accords allow non-EU states to participate in the Wider Europe Initiative to extend the single European market to its Mediterranean neighbours. Where the Syrians are concerned, the agreement allows their state to draw on EU assistance in its transition to a fully-fledged market economy.

How this will happen, with the old guard in power, remains to be seen. But it was said in late 2003 that it would take a few years before the agreement began to show tangible results.

Among other things, the agreement contains provisions for a general dialogue on human rights - with EU standards in this regard quite different from those of Ba'thist Syria - as well as democracy and good governance. Although there has been no timetable for relevant changes, the EU on Feb. 21, 2006, opened a human rights centre in Damascus headed by Anwar Bunni - a leading Syrian activist for democratization and civil society (see Gas Market Trends).

EU Ambassador to Damascus Frank Hesske has expressed frustration at the slow pace of economic reform in Syria. He has said: "Syria wants to achieve something that is difficult to achieve - reform with zero chance of blunder. Therefore it is taking a timid approach. For example, the reform of the banking sector (under a law approved by President Assad in March 2002 allowing foreign banks to operate onshore) has only seen three foreign banks open in three years" - see background in Vol. 62, OMT 12).

The EU is Syria's largest trading partner. Because of this and in view of US/UN threats of further sanctions, the government on Feb. 13, announced that it had switched from US dollars to the euro in all transactions. The Central Bank said it had stopped using dollars for imports, exports and letters of credit (see omt12SyriaExportsMar20-06).

Syria continues to depend heavily on income from oil exports, which still make up about 80% of total exports. The other main export items for Syria are cotton and phosphate. If oil prices remain high - with April WTI having reached above $62/barrel last week - Syria's revenues this year would greatly reduce the budget deficit.

In his early 60s, Utri has to navigate the cabinet through reforms and the potential dangers of the Internet zone. At the same time, however, he has the extremely difficult task of preserving the political status quo in accordance with instructions originating from the invisible layer.

Like his predecessor Miro, Utri has inherited a high unemployment rate which has exacerbated poverty levels and which has become even more dangerous. The situation has been worsened by lack of jobs for Syrians in Lebanon since early 2005.

In the previous years, more than one million Syrian workers used to be employed in Lebanon. Syria controlled Lebanon from April 1976, when its troops and secret agents entered the neighbouring country, until its military withdrawal was forced by the international community in April 2005 following the murder of Hariri.

Yet Lebanon remains to a smaller extent a safety valve against Syria's unemployment bomb, because Syrians undercut the Lebanese in terms of wages in the sectors of construction, industry, etc. This danger will grow in the coming years, because of a high birth rate in Syria, as the unemployment problem will keep growing despite all efforts in Damascus.

Aref Dalila, an economics professor at the University of Damascus, had warned in November 2000 that by 2010 the population of Syria will have increased by nearly 50% from more than 17 million - with three million additional people to be looking for jobs. Already the population is said to have reached almost 20m.
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Publication:APS Review Oil Market Trends
Date:Mar 27, 2006
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