Hafez Al-Assad - Economy

Economy

Assad called his domestic reforms as a corrective movement, and achieved substantial results. Assad tried to modernize Syria's agricultural and industrial sectors. One of Assad's main achievements was the completion of the Tabqa Dam on the Euphrates River in 1974. It is one of the biggest dams in the world, and its reservoir was called Lake Assad. The reservoir increased the irrigation of arable land, provided electricity, and encouraged industrial and technical development in Syria. Many peasants and workers received increased financial incomes, social security, and improved health and education services. The urban middle classes, who had been hurt by the Jadid regime's policy, obtained new economic opportunities.

By 1977, it become apparent that despite some successes, Assad's political reforms had largely failed. This was partly due to Assad's miscalculations or mistakes, and partly to factors he could not control or change quickly. Chronic socio-economic difficulties remained and new ones appeared. Inefficiency, mismanagement, and corruption in the government, public, and private sectors, illiteracy, poor education, particularly in rural areas, the increasing emigration of professionals, inflation, a growing trade deficit, a high cost of living and shortages of consumer goods were among the problems Syria faced. The financial burden of Syria's involvement in Lebanon since 1976 contributed to worsening economic problems and encouraged corruption and the black market. The emerging class of entrepreneurs and brokers became involved with senior military officers— including Assad's brother Rifaat—in the smuggling of contraband goods from Lebanon, which affected government revenues and spread corruption among senior governmental officials.

In the early 1980s, Syria's economy worsened and by mid-1984 the food crisis was so serious that the press was full of complaints. Assad's government sought solution and argued that food shortages could be avoided with careful economic planning. In August the food crisis continued despite the government measures. Syria lacked sugar, bread, flour, wood, iron, and construction equipment, which resulted in soaring prices, long queues, and rampant black marketereering. Smuggling of goods from Lebanon was a common occurrence. Assad's government tried to combat the smuggling, but encountered problems due to the involvement of Assad's brother Rif'at in the illegal business. In July 1984, the regime formed an anti-smuggling squad to control the Lebanon-Syria borders, which proved effective. The Defense Detachment commanded by Rif'at al-Assad played a leading role in the smuggling, and imported $400,000 worth of goods a day. The anti-smuggling squads seized $3.8 million worth of goods in its first week.

In the early 1990s, Syrian economy grew between 5%–7%, exports increased, the balance of trade improved and inflation remained moderate at 15% – 18%, and oil exports increased. In May 1991, Assad's government liberalized the Syrian economy, which stimulated domestic and foreign private investment. Most of the foreign investors were Arab states of the Persian Gulf, as Western countries still had political and economic issues with Syria. The Gulf states invested in infrastructure and development projects. However, because of the Ba'ath Party's socialist ideology, Assad's government refused to privatize state-owned companies.

In the mid 1990s, Syria entered another economic crisis due to a recession. In the late 1990s, Syria's economic growth was around 1.5%, which was insufficient as the population growth was between 3% and 3.5%, causing the GDP per capita to be negative. Another symptom of the crisis was statism in foreign trade. Syria's economic crisis occurred at a time of recession in world markets. A drop in the price of oil in 1998 caused a major blow to Syria's economy, but when the oil price rose in 1999, the Syrian economy experienced a partial recovery. In 1999, one of the worst droughts in a century caused further economic woes. It caused a drop of 25%–30% in crop yields compared with 1997 and 1998. Assad's government implemented emergency measures that included loans and compensation to farmers and distribution of fodder free charge in order to save sheep and cattle. However, those steps were limited and had no measurable effect on the economy.

Assad's government tried to decrease to population growth, which caused economic problems, but this was only marginal successful. One sign of the economic stagnation was Syria's lack of progress in talks with the EU on the signing of an association agreement. The main cause of this failure was the difficulty of Syria meeting EU demands to open the economy and introduce reforms. Marc Pierini, head of the EU delegation in Damascus, said that if the Syrian economy was not modernized it could not benefit from closer ties to the EU. Nevertheless, Assad's government gave civil servants a 20% pay increase on the anniversary of the "Correction Revolution" which brought Assad to power. The foreign press criticized Syria's reluctance to liberalize its economy. Assad's government refused to modernize the bank system, allow private banks, and open a stock exchange.