The scene would have been unthinkable before last month: Syria's Foreign Minister Asaad Al Shibani – a founding member of the country's former Al Qaeda branch Jabhat Al Nusra – engaging with world leaders at Davos, where he exchanged light-hearted moments on stage with British former prime minister Tony Blair.
Syria, a country long cut off from foreign investment and under heavy sanctions from the US and the EU, is no longer a pariah among global economic powers. The lure of an open economy promised by Syria’s new transitional government and the prospect of postwar reconstruction are attracting international investors.
“Syria's economic resources are diverse and we have a lot of sectors – industry, tourism … of course, the economy in the future will be open and will open the road for foreign investment,” Mr Al Shibani told the World Economic Forum in Switzerland.
Overseas businesses want to ensure they have a foothold when sanctions that have been in place for decades are lifted. The US has already eased restrictions on certain transactions with the Syrian government, a move seen as a first step towards alleviating western sanctions. "The same people who were ignoring us are now reaching out,” Hania Aita, a Syrian industrialist, told The National.
Delegations of Chinese businesspeople have been seen negotiating with Syrian counterparts in Damascus cafes, while the streets of the capital are teeming with foreign NGO workers and diplomats. The US dollar, whose mere mention could once lead to arrest as the regime of former president Bashar Al Assad attempted to stamp out its use, is freely offered by exchange merchants who now swamp the city. Pringles, Mars and other western snacks are on display at every street corner.
Syrian business figures and industrialists are optimistic. Many told The National their interactions with the new authorities have been positive.
“There is a big difference in the way the new government treats us now compared to the previous regime,” added Ms Aita, saying she had been consulted regardless of wasta, or status. “They listen to us. Equally, I’m a woman, I don’t wear a hijab and they treat me respectfully.”
France and Germany have said their support for Syria will depend on political developments under the new government, namely the inclusion of minorities and gender equality. The transitional administration is led by Islamists from Hayat Tahrir Al Sham (HTS), a group formerly associated with Al Qaeda but which broke ties and rebranded itself as moderate.
“It’s dialogue now – it used to be a monologue,” said Thaer Laham, former chief executive of Syrian conglomerate Souria Holding, who has met Syria's new de facto leader Ahmad Al Shara.
The government has said attracting foreign investment is a top priority. It has also pledged to privatise some state-owned companies, saying most under the old regime were unprofitable. “Clearly, everyone is hopeful,” Mr Laham said. "All the signs indicate they believe in the private sector and a free market, and that we can look forward."
Mammoth challenges
But Herculean challenges lie ahead. Beyond catchy statements aimed at the international community, it has yet to be established how the problems facing the Syrian economy will be tackled.
“What does a free market mean?” said Jihad Yazigi, editor and publisher of online publication The Syria Report. "If it means completely halting state intervention, including subsidies for bread, this could have a devastating impact on a population where 90 per cent live below the poverty line."
Syria cannot afford more poverty in the wake of the fall of Mr Al Assad. Salaries in the public sector are already inflated but amount to a mere $20 a month, a figure the new government has promised to increase by 300 per cent, without saying how this rise will be funded.
“If the free market means stopping protection for agriculture, this could decrease local production,” Mr Yazigi said. "If it means a complete opening to external trade, it means that the local market might be flooded with Turkish products."
Syrian businesses cannot compete with counterparts with a strong economy such as Turkey if domestic players are not given time to get back on their feet, experts said.
“Before Assad’s fall, products were scarce ... now the middle-class are happy to find kiwis and cheap appliances in supermarkets, but at what cost to the competitiveness of the economy?” economist Samir Aita said.
The social cost of reform could be massive in the absence of adequate public protection, which the new administration cannot easily replicate from its model in Idlib, where HTS ran a rebel administration before December as the Assad regime held power in Damascus.
“Welfare in Idlib [under HTS] relied mainly on international organisations which used to cater for the needs of the displaced people, the majority of the population,” Mr Aita said. "This can’t be extended to the whole of Syria because there are no NGOs able to address a 90 per cent poverty rate."
Economy of cronies
The focus on the free market also ignores other structural problems, observers say. Syria's economy became paralysed under the Assad regime by a handful of cronies close to power, a set-up the new Syrian leadership must dismantle, Mr Yazigi said.
Doing business in the old Syria meant being at the mercy of the regime and risking replacement by a company with ties to power that had probably profited from the country's 13-year civil war. Tycoons such as Mohammad Hamsho, Samer Foz and Yasser Hussein Ibrahim – all close associates of Mr Al Assad – took control of the most profitable sectors including telecoms, construction, property and hospitality. They have had sanctions imposed by the US and EU for engaging in corrupt deals, and enriching themselves at the expense of the Syrian population. All have now fled Syria.
“The business environment was nefarious,” Mr Laham said. He recalled that Souria Holding was removed suddenly from an ambitious contract to build and run two skyscrapers. One day police evicted the staff from their offices without warning. Mr Laham said the project is still idle and the company lost $40 million.
To dissect Syria's stagnant economy and uncover assets Mr Al Assad's henchmen have left behind, the new administration has frozen all company accounts until ownership can be proven, which will not be an easy task. There is a saying that Syria is the only country where taxi drivers are billionaires – this is because warlords registered their companies under the names of their employees rather than their own.
Other questions remain: what should be done with the companies these cronies have expropriated or created? Where are the shareholders?
A major pitfall could be the danger of replacing one clique with another, with cronyism also widespread in the former HTS refuge of Idlib and the country's rebel-held north-east.
“Cronyism will be fought and reduced compared to Mr Al Assad’s regime,” Mr Yazigi said. “But we shouldn’t be under any illusions. In regions dominated by HTS – and the Kurds in the north-east – you consistently find a few very powerful and influential men who derive their wealth from their ties to those in power.”
