March 16, 2000
Money In The Bank
Stable ties with Israel could benefit hurting Syrian economy
In addition to wanting to get back the Golan Heights, Syrian President Hafez Assad also is hoping that normalized relations with Israel will help improve the faltering Syrian economy -- and Israeli officials already are preparing for that.
"We are mapping the Syrian economy to see what kind of trade avenues could be opened," said Reuven Horesh, director general of Israel's Ministry of Industry and Trade.
In an interview during a United States visit, Horesh said it was too soon to discuss the nature of that trade, but that "there are commodities they could export."
He noted that Syria is "economically isolated" because it does not want to be dependent on Iraq and Iran to its north.
"The only way to ease that is to open up the south," and that means trade with Israel, said Horesh.
Normalized relations with Israel also could open Syria to trade and aid from the West, and removal from the U.S. list of terrorist nations.
Syria's economy is among the most stagnant in the region, with unemployment at 30 percent in some communities. Analysts believe it has contracted in the last two years, and that a widespread drought and declining oil sales this year compounded the problem.
There is concern, too, that Syria may not have enough food to feed its 16 million citizens, according to a recent study released by the Truman Research Institute at the Hebrew University.
The study attributed Syria's economic problems to its failure to implement privatization and its opposition to reforms. It said a law passed in 1991 to encourage foreign investment had failed to do so, and that those who did invest were withdrawing.
Syria's foreign debt is $21 billion -- much of it owed to Russia -- compared to its $17 billion GNP. Per capita income is only about $1,000.
And the study found an almost complete lack of a banking system. "You can't imagine how backward the country is," said the study's author Gil Feiler.
Horesh said he is aware that Syria is "suffering a severe economic toll because of its isolation by Israel, which is a major player economically." Horesh believes "Assad is looking at the Golan Heights issues as an internal political issue. If he gets it back, it will be a boost to his very fragile regime."
Horesh, who was in the U.S. to attend the World Trade Organization meeting in Seattle, said he does not believe a peace treaty with Syria will mean that much insofar as Israel's relations with the rest of the Arab world.
"I don't see a change until the Israeli-Palestinian situation is resolved," he said. "I then see frozen ties melted and the peace dividend start to be paid."
Trade between Israel and Jordan is expected to benefit from such an accord. It has been hovering at the $27 million level, compared with $2.5 billion in trade now being conducted between Israel and the Palestinian Authority. Trade between Israel and Egypt amounts to no more than a few million dollars, said Horesh, despite their peace agreement signed two decades ago.
"We, in our ministry, are talking to anyone who wants to talk to us -- enemy states, those we have peace with," said Horesh. "We believe the way to help the peace is to enhance economic ties. Money talks."
In striving to improve Israel's economy, Ran Cohen, minister of Industry and Trade, said he was concerned about "the very wide economic gap with our neighbors. We would not like to replace the military conflict between Israel, the Arab countries and the Palestinians with an economic conflict. Their per capital income is at the $1,000 or $1,400 level [Israel's is $16,400], so I want to meet with the ministers of industry and trade in Egypt, Syria and Jordan to help them strengthen their economies."
He noted that already Israel is working with the Palestinians to build nine industrial zones -- eight in the West Bank and one in the Gaza Strip bordering Israel, Gaza and Egypt. Cohen said the latter will be a full high-tech industrial park and is expected to be built in the near future.
"I and my partner, the minister of industry of the Palestinian Authority, are leading a steering committee of Israelis and Palestinians," he said. "In two to three weeks, we will complete the work of how these industrial parks will be built. They will create 50,000 new jobs for Palestinians and tens of thousands of new jobs for Israelis."
Cohen noted that the Palestinians could have built the industrial parks on their own, but chose instead "to build it with me and my government.
In this way, we will be helping ourselves and our neighbors, and strengthening the political line of peace through the economic line."
Stewart Ain is a staff writer with The Jewish Week
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