Halting steps on path to a tiger economy

Dr Nabil Sukkar, they say, has the ear of the President. Dr Sukkar, virtual creator of Syria's economic reform programme, humbly denies the claim, insisting he has never met President Hafez al-Assad. But there is no doubt where he stands on the future of his country, and the need to avoid a post-war Middle East economy dominated by Israel. "We should not be part of this American-Israeli plan - we should have our own plan for the region," he says. "We should have our own economic grouping - Syria, Lebanon and Iraq after Saddam goes, and an alliance with the Gulf, because we need private investment."

Around Dr Sukkar's fifth- floor suite of offices in al-Fardos Street, in the centre of Damascus, computers hum.Files and photocopies are produced in seconds for the former World Bank economist whose report on Syrian economic reform in the late 1980s, funded by the Lebanese Prime Minister, Rafiq Hariri, touched off the transition from centrally planned socialism to a mixed economy. The bureaucracy of the old East European-style ministries - "the need for a hundred signatures on a piece of paper," as Dr Sukkar puts it - has been banished from his consultancy bureau.

"Syria has to reform the economy, whether or not we're at war with Israel," Dr Sukkar says. "In the mind of the leadership, I think that the peace process and economic reform were linked. And there was a fear that too quick a reform might be seen by outsiders as a weakness, because people might be arguing about reform and subsequent unemployment. The leadership did not want this while it was negotiating with the Americans. At the same time, he [President Assad] wanted a very strong domestic front while he was negotiating with the Americans and the Israelis. And there was a realisation that, once there is a peace, we are going to open up. Last April, when it seemed we were about to have a deal with the Israelis, there was a feeling we would have to have a competing economy."

In an article three years ago, Dr Sukkar summed up the problems Syria faced in the late 1980s, when a reform of the nationalised economy, forced on the authorities by a foreign-exchange crisis, was made irreversible by the subsequent collapse of East European communism. The problem for Dr Sukkar is that the last congress of the ruling Baath party - an institution steeped in all the iron-clad socialism of fraternal delegations and petty- bourgeois-peasant unity - was held in 1985, when it favoured an even larger public-sector economy. He winces slightly at the memory. "The congress should be held every five years but it hasn't been held since 1985," he says. "So there is no new official thinking within the party to tackle the future economy. This is what is missing. We need another party congress, because thinking in the party is already moving towards accepting a market system. We are ready for a more objective debate."

He wants a thorough banking reform, a unification of exchange rates, a separation of the Syrian Central Bank from the ministry of economy - steps which will not harm the regime. But Dr Sukkar understands the danger of going too far. "I wanted to maintain the socialist umbrella because I wanted a revolution of the existing economic system rather than a different system. If I had said 10 years ago that I wanted to turn Syria into a Korea, it would have been rejected immediately."

In 1991, Syria encouraged private-sector investment from abroad. Private joint-stock companies were formed. There were tax exemptions for exporters. One strength of Syrian economic reform, according to Dr Sukkar, is that it was not imposed by the World Bank or the IMF in return for political concessions. But the reform of the public sector has not been followed through.

"The problem is we don't know what's the next step; we don't have a total framework. Nothing has been announced, there is no agreement within the system. We don't know what is the new thinking of the Baath party. There is no reconciliation between the ideology and the new changes taking place in the world."

President Assad, Dr Sukkar says, "has followed a step-by-step approach, creating new thinking through the media. He tries to create consensus and thus he creates facts on the ground."

Economic reform, Dr Sukkar feels, would be easier if the country did not feel threatened. "The United States has been using Israel as a tool to maintain peace in the region, creating alliances like that between Israel and Turkey. If these threats are removed, we'll make a more peaceful transition from central planning to market economy."