Syria hopes peace spurs economic reform

DAMASCUS, Syria - There's a new kind of light illuminating the streets of Damascus: the glow of billboards that have sprung up all over the capital in the past few months.

Backlighted billboards, mobile phones and a soon-to-open U.S. hamburger chain are the latest manifestations of Syrians' eagerness to move into the modern world of international trade and economic openness.

Many hope that a peace treaty with Israel will bring commercial opportunities and provide an impetus to the slow-moving economic reforms begun by the government in 1991.

"The economic situation will improve if there's peace in the region," said Ihsan Sankar, a businessman and former member of parliament. "Peace will encourage all those who'd like to invest in Syria."

The importance of a strong economy in a peaceful Middle East was stressed by Syrian Foreign Minister Farouk al-Sharaa in a speech a few months ago.

Al-Sharaa said peace means the transformation of military confrontation with Israel "into a political, intellectual, economic and trade confrontation."

In March, President Hafez Assad, apparently dissatisfied with the slow pace of reforms, appointed a new Cabinet made up mostly of technocrats. Modernizing the administration is one of its highest priorities, Assad's son and heir apparent, Bashar, told the Arabic daily al-Hayat in March.

Syria's march toward economic reforms began in 1990, when President Assad took his first big step in improving relations with the West: joining the U.S.-led coalition that fought Iraq in the Gulf War. A year later, he began loosening the economy by introducing Law No. 10.

At the time, Syria was still a socialist country and a protege of the Soviet Union. Visitors brought their own toilet paper; restaurateurs often depended on ingredients smuggled from neighboring Lebanon.

The law, recently changed to provide tax exemption for new projects for up to 13 years, enabled hundreds of Syrian businessmen to import machinery and raw materials.

It also has provided incentives, such as tax exemptions of up to nine years for approved projects and the waiving of customs duties on some imports.

Exporters are allowed to keep 75 percent of their profit in hard currency, but must use the money to import materials.

Slowly, supermarket shelves filled with Syrian-made paper products, diet soft drinks, peanut butter and potato chips - all selling at about one-third the price of imports.

Japanese and Korean cars began replacing lumbering American cars from the 1950s and '60s, and elegant boutiques, tasteful furniture stores and ethnic restaurants appeared.

Mobile phones came to Syria last month, covering 25 miles around Damascus and 25 miles around Aleppo, the second-largest city.

Though the $1,300 subscription fee and $22 monthly fee puts them out of range of most Syrians, the start was warmly welcomed by an upper crust seeking such symbols of modernity.

The biggest gripe now is that people cannot afford the newly available products. Wages haven't increased since 1994, and the average monthly pay is just $40. Unemployment is believed to be about 20 percent.

Still, Syrians' response to the new openness has been overwhelming.

When Imad Akkad and his friends opened a pizza place in Damascus in 1994, many of his customers didn't know what a pizza was. "And those who did were hungry for such places," said Akkad.

"The whole culture has since changed. Before, eating at a restaurant was not part of our culture. Now, it's become a must."

Similarly, when Monqeth Mallouhi brought the Yellow Pages to Syria about three years ago, "people used to ask me, `What are those Yellow Pages?' "

Many now know, thanks to advertising agencies, the Web site and Damascus' new billboards.

Fuad Jabri, owner of the Concorde billboard company, said he introduced his business by advertising on one of two radio stations that transmit from Lebanon but target Syrians. Syria's media are owned by the government, and few businesses advertise on its television station or in its papers.

Sankar said Law No. 10 is not enough, especially because it is shackled by antiquated agricultural, trade and investment laws. He said the new government should introduce more reforms.

Sankar, whose family plans to open a Fuddrucker's hamburger place soon, wants the private sector to have a greater role and all Syrians to feel they can compete.

One of the benefits of peace, he said, is the likely lifting of mandatory military-service laws that have kept many talented Syrians who don't want to serve in the army overseas.

How did he explain Syrians' taste for all things American, including ice cream, hamburgers and cheesecake, after so many years of Soviet fare?

"The Syrians never really liked Soviet products," said Sankar. "The Syrians have historically been known as excellent craftsmen. How could you expect them to be attracted to inferior products?"