... and 10 years from now, we will all be left wondering which company supplied that crucial piece of military-civilian hardware that allowed Syria to be every country's equal, as we just got done wondering about Iraq and Iran 10 years ago ...
stratfor.com
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U.S. and European Interests Could Clash Over Syria
2 May 2002
Summary
The European Union is expanding bilateral relations with Syria. Closer ties, especially in the realm of trade, will give European firms a competitive advantage in the long run over U.S. companies hoping to do business in the region, and they could become a source of friction between the United State and Europe.
Analysis
As part of a joint development program, the European Commission will lend Syria 30 million euros (about $27 million) to help develop and reform the its health sector. Also, the European Investment Bank will loan Damascus another 100 million euros (about $90 million) to reform regional hospitals, according to the online news site The Syria Report May 2.
The deal is intended to help Syria's efforts to reform its economy. It is also aimed at expanding the European Union's economic cooperation with Syria and advancing efforts to lock down the entire Mediterranean market. Closer trade ties with Syria, however, will give a competitive advantage to European firms expanding into the Levant and may become a source of friction between Europe and the United States in the coming decade.
The United States and Europe are finding it more difficult to agree on strategic issues, especially concerning the Middle East. Though Washington has diplomatic ties with Syria, future relations are not assured. As it has done with Iran or Libya, the United States may try to isolate Damascus in the future and will look to Europe to support the endeavor. But Europe is now laying the foundation for broad economic cooperation with Syria and isn't likely to back any U.S. effort to isolate the Levant state.
Europe is betting that Syria's transition to a more open economy will present several economic opportunities. Right now the country's economy is still largely in the hands of the state and allows for only limited foreign investment. Cold War debts, estimated at $22 billion, and the loss of its former Soviet sponsor have left Damascus with little room for maneuver. At the same time, widespread unemployment and an annual population growth rate of 2.5 percent is increasing the pressure for growth in the economy.
Structural readjustment, however, cannot occur until Syrian President Bashar Assad's regime secures support from enough groups to counter opposition from the old guard left over from the late President Hafez Assad's government, which still controls much of the nation's economy. The president has backed several proposals for reform, including the easing of exchange controls, and encouraged foreign investment. The health care loans are intended both to build confidence and assist Assad's political maneuvers by backing popular reforms.
While European firms are establishing contacts and allies in Syria and European banks are doling out loans, Washington is considering additional sanctions against Damascus. It lists Syria as a state sponsor of terrorism and has imposed controls for U.S. exports and restrictions on trade financing.
Few U.S. firms do business in Syria, which has minimal trade ties with the United States. The U.S. Congress is also weighing a bill, labeled the Syrian Accountability Act, that calls for a stiffer sanctions regime that would limit where Syrian officials can travel in the United States and prohibit U.S. businesses from operating or investing in the country.
Yet at the same time, Washington has shown some interest in rebuilding cooperation with Damascus. Syria is reportedly supplying intelligence to the United States in its war against terrorism, and several U.S. officials have visited Syria in the last six months, including Secretary of State Colin Powell. The contradictory signals indicate a larger dilemma: Washington has yet to settle on an overall strategy for dealing with Syria.
America's waffling has left the field wide open for Europe, which is ardently working to lock down Syria as an economic partner. In 1995 the EU launched the Euro-Mediterranean Partnership, an initiative to expand bilateral ties between the union and southern and eastern Mediterranean states.
The plan is to establish a region-wide free trade zone in 10 to 12 years, using association agreements as the first step. Brussels is now trying to finalize such deals with both Syria and Lebanon, which is controlled in part by Damascus. So far neither country has inked the agreements, yet both are enjoying increased economic cooperation as part of the negotiating effort.
European firms are already moving, albeit slowly, into the Syrian private sector. And under the auspices of the Euro-Med initiative, Europe is also offering to help finance reform in other sectors including banking, education, finance, manufacturing and telecommunications.
The contrast between Washington and Brussels in their relationship with Damascus is sharp. Since Washington has yet to make up its mind, there is a chance it could back off the threats of punitive sanctions and instead follow the EU's lead with economic engagement.
But even were it to do so, U.S. companies would be at a disadvantage, having to compete with European and firms from other Arab states already well established in the Levant. And should Washington follow through with the stricter sanctions regime, it may find itself in direct conflict with a Europe vested in Syria's economic future.
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