Syria's new constitution has not weakened Baath Party's grip on power


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Legal changes two months ago were supposed to loosen the Baath Party's stranglehold on power. Instead, its grip remains firm. Phil Sands, Foreign Correspondent, reports

DAMASCUS // Promising rule of law, democracy and an end to the Baath Party's monopoly on power, Syria's new constitution has been heralded by regime officials as proof of real political change.

But two months after the new legal code was formally introduced in response to protests calling for reform, a Baathist official has acknowledged the party's grip remains undiminished. Lawyers say nothing has changed in the daily operations of ineffectual justice courts or to rein in the security services.

One of the key elements of President Bashar Al Assad's reform programme was scrapping the previous constitution's Article 8, under which the Baath Party was guaranteed political control of the country as "leader of state and society".

The latest constitution pledges multiparty democracy. To that end, about half a dozen new parties and more than 7,000 candidates have been approved by an interior ministry-led committee to contest the May 7 parliamentary elections.

However, doing away with Article 8 has done little, if anything, to weaken the Baath Party's institutional hold on the country it has ruled for decades, and party members anticipate a victory in next week's ballot will further enshrine its leading role.

"Now on the ground the Baath Party is ruling. It ruled between 1963 and 1973 without the need for Article 8 and [without Article 8], it is still ruling today," said a prominent Baath party official, speaking on condition of anonymity,

"The Baath party didn't give up its authority yet, and if the other sides want power they will have to take it from us in the elections or by force [of arms]," he said. "The Baath Party is still here. Let's see who wins the elections."

Technically the new constitution became active the moment it was approved in a national referendum on February 27. Officials put turnout then at 57.4 per cent, with opposition groups boycotting the vote in protest against on-going military operations against areas involved in the uprising.

Activists widely criticised the new constitution for further concentrating powers in the president's hands and giving him immunity from prosecution for any criminal act committed in office.

While all future Syrian presidents will be limited to a maximum of two seven-year terms of office, clauses allow for an unlimited extension if new elections cannot be held.

Mr Al Assad, whose second seven-year term of office will expire in 2014, is legally eligible for a subsequent 14 years - plus a possible extension - as Syria's leader because the constitution is not retroactive.

Umran Zaubie, a lawyer and Baath Party member, said the new legal framework would bring about profound changes to Syria's political system and assure "freedom, democracy and human rights", but that it was unrealistic to expect an immediate shift.

"The new constitution won't be implemented on the ground overnight, there is a line in the constitution that says all laws will have to be changed [to comply] within three years," he said.

"Real implementation in a political sense will begin after the [7 May] parliamentary elections, although a start has already been made, it will take time for it all to happen. It's absurd to say, 'there will be a new constitution tomorrow so everything will change tomorrow', it is not a small matter."

Mr Zaubie said he expected the Baath Party to remain a strong presence in Syrian life.

"There are three million Baath Party members, and there are maybe half a million in the opposition, if we are being generous with their numbers," he said. "That half a million wants to cancel the three million but it cannot, that is undemocratic. Let the real parties stand up in the elections and flex their muscles."

As with the constitutional referendum, opposition groups are boycotting the 7 May parliamentary election, refusing to field candidates or vote.

Anwar Al Bunni, a human-rights advocate and lawyer often found representing clients in Damascus' justice palace, said there had been "no change" in the way the legal system operated since the new constitution went into force.

"Anywhere else a new constitution would mean new guidelines for lawyers and courts, updated legal texts and documents, new instructions for judges, a review of work practices and procedures," he said. "In Syria we have none of that, it's all exactly the same as it was before, nothing has changed, not one thing, it's business as usual."

Mr Al Bunni, who last year completed a five-year prison sentence for political dissent, said legal codes were still being ignored as a matter of routine by the authorities.

"Under the new constitution the attorney general alone gives permission for arrests and to extend the period of detention for those being held and I can assure you that is not happening," he said.

"We are still ruled by the Baath Party and there is still gang rule, not rule of law."

Rights monitors say more than 25,000 political prisoners remain in detention, many held for months without charge.

Other lawyers involved in cases of detained opposition activists similarly described the legal system as an irrelevance, with real power held by more than a dozen branches of the secret police and security services.

"I went to the attorney general to ask about some arrests, to see the warrants only he can issue and he just said 'you've come to the wrong man'," recounted one lawyer.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

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Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

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T20 World Cup Qualifier A, Muscat

Friday, February 18: 10am - Oman v Nepal, Canada v Philippines; 2pm - Ireland v UAE, Germany v Bahrain

Saturday, February 19: 10am - Oman v Canada, Nepal v Philippines; 2pm - UAE v Germany, Ireland v Bahrain

Monday, February 21: 10am - Ireland v Germany, UAE v Bahrain; 2pm - Nepal v Canada, Oman v Philippines

Tuesday, February 22: 2pm – semi-finals

Thursday, February 24: 2pm – final

UAE squad: Ahmed Raza (captain), Muhammad Waseem, Chirag Suri, Vriitya Aravind, Rohan Mustafa, Kashif Daud, Zahoor Khan, Alishan Sharafu, Raja Akifullah, Karthik Meiyappan, Junaid Siddique, Basil Hameed, Zafar Farid, Mohammed Boota, Mohammed Usman, Rahul Bhatia

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