The spring hopes that Syria’s leaders wasted in Hama

When I wanted to write about what next to expect in Syria after the funeral in 2000 of the late president Hafez al-Assad, I chose to go to the central city of Hama. As a student, I  had listened to the groaning water wheels here and indulged in plates full of Hama’s cheese-and-honey pudding, which slowly flows down stepped waterfalls of sweetness in shop windows. Later I had also seen the fresh rubble and fearful faces in 1982, shortly after the Syrian government responded to a Muslim brother rebellion by levelling much of the historic centre. I thought the city might be a good sounding board the reality of the “Damascus Spring” that everyone hoped for under the newly installed president, Bashar al-Assad.

Back then, the businessmen of Hama clearly hoped that something good might come of a change of leader. But if there ever was a Damascus Spring, it was soon over. I went back to Syria again to try to write follow-up stories in 2001, 2002 and 2003, criss-crossing Damascus with my reporter’s note book. Real change never materialised. Eventually, my Wall Street Journal editor just said: “Let’s just drop the Syria story, Hugh. It’s not happening. It’s not your fault. Syria hasn’t changed, so we just won’t write a story about it” (see here).

What strikes me re-reading those impressions now is how big a chance Bashar al-Assad and his entourage wasted when they took power. For sure, the businessman of Hama tempered any hopes with their bitter experiences. And there was no mistaking the sentiments of one of the mourners in the Assad family village (right), presaging the disturbing all-or-nothing mentality that is now back and destroying the country. But the Hama community leaders I met had truly been ready to work within the crazy system that was the Syrian economy, and were not asking for huge profits in return. I wonder how long it will now take to get back to the stability and elementary economic openness that Syria will need if it is to have any hope of returning to even this degree of normal life.

International:

Hope Rises at Scene of Syrian Repression

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Years After Late President

Crushed a Rebellion,

Hama’s Economy Stirs

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By Hugh Pope

Staff Reporter of The Wall Street Journal

HAMA, Syria — No Syrian city paid a higher price than Hama for the brutal excesses that punctuated the 30-year rule of late Syrian leader Hafez al-Assad.

Yet it is here, rising from a semi-desert lot outside the city, that the gleaming silos and Western production lines of a new factory symbolize Syrian hopes for an era of reform under Bashar al-Assad, his son and heir apparent.

What makes Syria’s newest vegetable oil plant extraordinary in a country of state-dominated economic backwardness is the fact that most of its $30 million, all-equity investment came from 4,000 ordinary citizens of Hama, including doctors, lawyers, spare-parts dealers and bazaar shopkeepers.

“It’s an old-fashioned kind of investment, I know. No Syrian bank would lend us money anyway,” says one of the project’s leaders, Izzat al-Habbal, a 72-year-old who trades in everything from plastics to coffee. “Now we’re asking government ministers to set up a stock market so we can trade our shares. But they still shake their heads and say `it’s too early yet’ ”

The Syrian economy, c. 2000

Nothing moves fast in Syria, let alone in Hama, 220 miles north of Damascus in the middle of this Arab country of 17 million people. The town is so conservative that youths from the Christian minority drive 100 miles to the next city for secret meetings with their girlfriends. Many women of the Sunni Moslem majority wear black cloths that cover their entire heads and faces.

It was also here in 1982 that Hafez al-Assad’s regime crushed a murderous Islamic fundamentalist uprising in a month of shelling and street battles. At least 10,000 civilians were killed in the crossfire, after which most of the city center was expropriated and bulldozed. Today, where the vaulted terraces of a medieval palace once stepped down to the Orontes River, a new five-star hotel stands like a fort. Still, nearly two decades after the conflict, big swathes of the center lie flattened, scarred with rubble-strewn hillocks and the bombed-out ruins of once-graceful stone mansions.

“We just want to forget about those events now,” says Nazih Arwani, 63, a short, rotund dealer in car parts and chief executive of the company setting up the new factory, the al-Ahliya Vegetable Oil Co.

The investors in Hama’s vegetable plant started their crusade in 1991, when Hafez al-Assad’s government passed landmark legislation known as Law No. 10 to facilitate private investment. “We got together and asked ourselves, what can we do to help our town? We decided, the first priority is transport,” says Mr. al-Habbal, who also heads the city’s chamber of commerce.

The merchants created one of Syria’s first private companies not dominated by one individual. Al-Ahliya Transport and its new, air-conditioned buses were a runaway success, leaving the tatty state bus stations and their old coaches limping behind. Dividends of 20% a year paid off the initial investment, and stockholders shares have doubled in value.

Dividends, titles and even the new patronage opportunities were only part of the motivation of the old Hama families who led that project and then started planning the vegetable oil plant. Members of the board draw no salary, for instance. There are no stock options, and nobody owns more than 1% of the company. The only non-local involvement is from Dubai-based Arab Authority for Agricultural Development, which has taken a 40% equity stake in the project.

“This is done by people like my father, who have known each other since forever,” says Nabil Maatouk, a 27-year-old member of a local Christian family that imports Volvo-Scania truck parts and bottles a local cola brand for sale all over Syria. “They all have their own businesses in town. They’re at a stage in their lives that they want to do good.”

But Law No. 10 was vague, and doing good quickly ran up against the bad old kind of barrier that hobbles all Syrian private business. After a tax holiday for the first five years of operation, al-Ahliya Transport was suddenly faced with the usual tax of 56% of profits. The company slashed dividends and reinvestment. The merchants of Hama knew better than anyone that, as in much of the Middle East, the tax system is a vicious circle. Rates are high because businessmen hide their profits, and businessmen hide profits because taxes are unfairly high. Taxmen can be bribed, of course, but only up to a point: In Syria, their pay includes a bonus share of taxes collected.

Such chicanery, for once, wasn’t an option. The Hama merchants were now collectively answerable to a wide circle of their fellow citizens. “We went again and again to the [former] prime minister to complain that our joint stock company was different, pure and honest, and that the government should cut our tax bill. Once he had four ministers in the room. They all said `you’re so right’ and promised to look into it,” Mr. Arwani says. “Each time, they would come back to us later and say `sorry, but the law doesn’t allow it.’ ”

Then power shifted in Damascus. In 1994, President al-Assad’s eldest son and flamboyant heir apparent, Basil, died in a car crash. His next son, Bashar, a London-trained eye doctor, stepped up as crown prince. President al-Assad hadn’t visited Hama since the early 1970s, but Bashar paid a first visit to Hama in 1996. He passed by the ugly scars in the town center, where 100-foot-high water wheels that survived the 1982 devastation still turn slowly on their ancient wooden axles, filling the air with a deep and mournful groaning.

“I asked him, give us back our city center. And the very next day, Hafez al-Assad ordered the city hall to draw up a plan to give it back,” Mr. al-Habbal says. “Of course, being bureaucrats, the city hall didn’t do anything for years.

But now we’re talking about the return of 2,300 undeveloped plots in the next few months. It’s a new era. We’re not building up empty hopes.”

The breakthrough came in March this year, when Hafez al-Assad appointed a government with a new prime minister and several new ministers apparently close to Bashar al-Assad. To the delight of the Hama businessmen, the new government cut taxes on profits of the new joint-stock companies to 25%. It also changed legislation to allow tax holidays to be extended for qualified projects like the vegetable oil factory.

Messrs. Arwani, al-Habbal and their fellow pioneers believe things can only get better. A few days before Hafez al-Assad’s death earlier this month, they attended an all-Syria meeting of local chambers of commerce, where a quarter of the new Cabinet came to hear their concerns. They reckon they’ll soon be able to hand the factory over to professional management and move on to their next project to mobilize the untapped, privately held wealth of Hama.

The Wall Street Journal, 19 June 2000.