Up against a Wall in Damascus

Meeting Bush's demands could jeopardize Assad's power

Damascus almost seems to be in mourning for Saddam Hussein. Consider the reaction of Said Ramadan al Bouti, the country's best-known Muslim cleric. Brushing off a reporter's interview request, he declares that the world has "been turned upside down" and that he needs time to think. Meanwhile, a top Syrian academic cancels a meeting with another American visitor, explaining that the sudden collapse of Iraqi defenses around Baghdad has left him too depressed to talk.

Statues may not be toppling in Damascus, but the ground is shifting under the feet of Syria's youthful leader, Bashar al Assad. Since the fall of Baghdad and the disappearance of Saddam, Administration officials have intensified the rhetoric against Syria. Washington is angry that Syria allowed 2,000 to 3,000 volunteers to cross its borders to fight U.S. troops in Iraq and permitted Syrian business to ship equipment to Saddam's forces. Administration officials suspect Syria of providing sanctuary for senior Iraqi officials, hiding some of Iraq's weapons of mass destruction, and developing its own chemical and biological weapons. Secretary of State Colin L. Powell has threatened economic sanctions to force Damascus to cooperate. And on Apr. 15, the Pentagon announced that it had shut down an oil pipeline between Iraq and Syria. The pipeline supplied Syria with an estimated 180,000 barrels per day of oil at discounted prices, in violation of U.N. sanctions.

The tough Administration line is a sharp change from the past. Previous American governments gave Assad's shrewd father, Hafez, who ruled Syria for 30 years, a relatively easy ride. U.S. officials long reckoned that Syria's support for militant Palestinian groups and the Lebanese Hezbollah had to be indulged because Damascus was crucial to achieving peace with Israel. With the U.S. on the verge of a new effort to restart talks between Israel and the Palestinians, Washington is playing rough, perhaps hoping to scare Assad into cooperating.

It may be just strategic saber-rattling -- but the U.S. has a pretty big saber. In response, the Syrians are trying to cool things down, although there is no sign they will make concessions on matters of principle. On Apr. 16, the Syrian Foreign Ministry spokesperson, Bouthaina Shaaban, dismissed U.S. charges that Syria was sheltering Iraqi officials as "absolutely groundless" and said Syria's border with Iraq was closed. She also tried to strike a moderate tone, saying "there has been a quiet and positive dialogue between Syria and the U.S. for many years." But she accused Israel of fomenting discord.

The pressure on Assad isn't just coming from outside. When the British-trained ophthalmologist succeeded his father in 2000, he raised hopes of both political and economic reform. But so far he's a disappointment. Businessmen say there has been no improvement in economic conditions. While ordinary people seem to like Assad, they are finding life more and more of a struggle. "High expectations have not been delivered on," says one influential Syrian. In politics, too, Assad has changed little. His regime depends heavily on the security services, whose influence is pervasive. Prominent Syrians assume their phones are tapped, and a Syrian woman was jailed for sending a caricature of Assad over the Internet. Assad has also dismayed business by giving in to the stalwarts of the Baath Party, which is mainly a collection of aging politicians interested in preserving their fiefdoms.

Saddam's demise now leaves Assad exposed as leader of one of the last hard-line, post-colonial regimes in the Arab and wider worlds. Domestic opponents of the regime see parallels to the fall of the Iraqi Baath Party. "The end of the Baath there marks the beginning of the end of the Baath here," says Michel Kilo, a Syrian writer and advocate of civil society reforms.

Granted, precious few signs of such disaffection are visible in the streets of Damascus, a city that is a fascinating blend of the sinister and the charming. Syrians excel at delicate skills such as arranging flowers and embroidering silk. A store called Bakdash in the old Hamidiyeh souk boasts what many consider the finest ice cream in the world -- vanilla with Syrian pistachios, the region's best. At the same time, Damascus has its share of shadowy men in suits toting battered submachine guns. These men are the foot soldiers of the security services and the bodyguards of the rich.

The regime slaps its critics down when it feels like it. Even senior academics and members of Parliament, mostly a rubber-stamp body, are wary of speaking out for fear of landing in jail. Two parliamentarians, Riyadh Seif and Maamoun Homsi, are languishing in prison for drawing attention to corruption and other government shortcomings.

Yet the opposition groups -- most of which aren't legal parties -- continue to publish tracts and hold regular meetings in private houses. These figures think the regime has reached a dead end with little international support, a moribund economy, and no new ideas. Some say the regime must open up to much wider political participation to survive. "Either the regime will change or it will be changed," warns Hassan I. Abdel Azem, leader of the opposition Democratic Arab Socialist Party, which holds meetings but does not participate in Parliament.

Assad may be trapped by the Baath Party's ideology. Take the tricky area of foreign policy. The Syrians style themselves as latter-day Saladins, the foremost defenders of the Arab world against outside aggression. For that reason, it's very difficult for them to back away from supporting groups such as Hamas and Hezbollah. These are "nationalist resistance movements fighting for a just cause," says Muhammad Aziz Shukri, a professor of law at Damascus University.

Thus the whole panoply of Washington's direct and implied demands on Syria would be very difficult for Assad to implement without destroying his power base among the military, security services, and party stalwarts. That's why many observers doubt that he would take such a risk. And if, unexpectedly, Assad were to embrace democracy and an open economy, he might not be the candidate of new political forces. "Can you make these changes without changing the regime?" asks one politician. Assad's challenge is reforming the regime without destroying the loyalty system that glues it together, says this observer.

Assad came to power dreaming of a better economy and a less repressive political system than his father's. But he had no idea how to achieve it, say Syrian political analysts. Instead, he found himself stymied at every turn by the bureaucracy and entrenched interests in the Baath Party and business. No significant privatization has occurred. The government still dominates key sectors of the economy, including banking, insurance, electricity, and heavy industry. Red tape and corruption hamper almost all economic activity. "We are not there; reform is stalling," says Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development & Investment in Damascus.

The government's failure to follow through on an early promise to permit commercial banks to operate in Syria is symbolic of its struggles. Sukkar says the presence of real banks would force Syrian companies to upgrade their old-fashioned accounting and management practices. While five Arab and Lebanese banks have been tapped as joint-venture partners with Syrian interests, when they will actually be able to start doing business remains a mystery.

Syrian business only has recourse to capital from the creaky public sector banks and the 15 or so black-market finance houses that operate openly in Damascus. Political sources say the government itself trades through these institutions. Confidence in the currency is shaky: Since the war began on Mar. 19, the government has spent some $120 million defending the Syrian pound, according to one source.

Figures close to the regime enjoy lucrative two franchises. For instance, one of Syria's new mobile telecom companies, Syriatel, is controlled by Assad's first cousin, Rami Makhlouf. "If you are not used to working in this environment, it will be difficult for you," says Samer Debs, president of the Damascus Chamber of Industry.

It would be wrong to say that Syria's economy is collapsing. Instead, it is in slow decline. Per-capita gross domestic product is only $1,000 and has been falling. Unemployment has reached an estimated 20%, and doctors and professors say that the free health and education systems are unable to cope with demand. With top surgeons paid only $300 per month by the government, they are increasingly doing private business. One businessman reports sending his children to colleges in the U.S. and other Arab countries to avoid being hit up for donations by poorly paid Syrian professors.

The loss of business with Iraq, which supplied Syria with oil at sharply discounted prices and accounted for an estimated $2 billion per year in trade, will also hurt. Syria may be forced to cut its own oil exports, its key earner, by about 40%, because it needs its oil to supply its own domestic market. Moreover, Damascus has grown accustomed to reaping financial rewards, mainly from gulf Arab countries, for foreign policy stances such as joining in the coalition to oust Iraq from Kuwait in 1991. Where it will obtain such assistance is a big question. Kuwait and Saudi Arabia seem unlikely candidates. Only France and the European Union remain friendly, but they are unlikely to provide massive amounts of aid.

Some Syrian optimists think that the U.S. could help Assad out of this dilemma. A peace deal with Jerusalem that handed back the Golan Heights seized by Israel in 1967, for instance, would greatly change the political equation. Then Assad would no longer have a justification for supporting radical Palestinian groups or Hezbollah. He would also be freer to pursue reform. Kilo, the Syrian writer, thinks Assad is waiting for signs the U.S. is ready to help.

But other observers think distrust is too great on both sides for this scenario to prevail. Instead, the Syrians may well continue to resist American pressure, hoping that the situation in Iraq will deteriorate sufficiently to discourage the U.S. from other adventures. Despite their protests, Syrians may be pleased at all the attention from America, figuring that Washington won't launch a war. "The current U.S. criticism may be only feeding their exaggerated sense of self-importance," says a diplomat in Damascus. "What drives them crazy is when you ignore them."

The Syrians are playing a dangerous game. Of course, the obituary of the Assad regime, father and son, has been written many times before. Still, the younger Assad has yet to prove that he has his father's deft touch at maintaining loyalty and navigating Middle Eastern politics. For now, the tide of history is running against him.

By Stanley Reed in Damascus

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