Economic Liberalisation as an Irreversible Trend during the Bashar Regime: The Socioeconomic Fuel of the Syrian Crisis

Introduction

This chapter examines Bashar's lurch to the market-driven economic order starting in the year 2000. Neoliberal reforms were wide-ranging and included lifting of price controls and tariffs, amending investment reform law, unifying the exchange rate, removing subsidies, and opening up trade and capital accounts. The Bashar regime aimed not only to transform the economy from a state-controlled to a market- oriented one, but also to serve the class-based interests of the state bourgeoisie. The natural next step for that class was to break free from the fetters of state control and to transform itself from a state capitalist class, which controls the means of production through its control of the state, into a private capitalist class that owns the means of production. While on fieldwork, the standard cliche that I heard from state officials in response to my critique that market liberalisation has not paid off was that the move toward the free market was irreversible. The grip of neoliberal ideology on the imagination of ruling class and its cronies acted like a sedating drug: while working people became poorer, the authorities hallucinated that conditions were rosy. Nevertheless, this irreversible move would eventually prove disastrous.

What was the evidence that the free market recipe floundered? In this chapter, I provide data and technical information compiled from fieldwork to substantiate the contention that private-sector-led investment following economic liberalisation was neither employment-generating nor developmental. Much of the free-reforms hid behind the laws liberalising investment. My investigation on the ground and discussions showed that industrial establishments under investment reform laws were minimal in comparison to other economic endeavours. The staff interviewed at the Syrian Investment Agency and the Ministry of Industry in 2007 were most helpful in explaining to me that under Law No. 10, namely, commercial-type of investment activities took root.

Apart from the ideological strength of neoliberalism, the other issue one notices clearly is the divide between the interest of the local industrial class and the merchant class. Industrialists were hurt by dwindling state credit and loss of protection from unfair competition as a result of lifting the tariff barrier on imports. Merchants were contended because of the privileges of laissez faire imports, free flow of capital, and the fixed and consolidated exchange rate. They were most happy with the lifting of price controls. These conclusions were echoed by state officials from the Syrian Ministry of Industry and Ministry of Economy and Trade, who confirmed that the private sector boosted commercial investment over manufacturing. For instance, Al-Za'tari (former Resident Representative of the United Nations) from UNDP-Syria expressed that Syria has been transformed from a state-planned economy into a FIRE (Finance, Insurance and Real Estate) economy. The late Al-Zaim (a foremost scholar of Syria's economy) also linked the change in the investment pattern to the change in the class interests of the social class responsible for investment.

This chapter also examines the economic, social, and environmental sources of the social unrest. With a rising Gini index and increasing discrepancy between wages and profits, it is evident that the laissez-faire reforms were neither pro-poor nor egalitarian, any rhetoric of 'opportunity' to the contrary. Certain segments of society benefited at the expense of others. Crucially, the political revolt had agrarian roots: the farmers' disaffection as a result of the severe droughts in 2006-10 and the regime's austerity measures toward the agricultural sector. These, along with socially-irresponsible investment policies, aggravated social hardships that partially contributed to the political uprising in 2011.