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U.S. DEPARTMENT OF STATE
SYRIA: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





                              SYRIA

                   Key Economic Indicators  1/


                                     1992      1993      1994
                                             (est.)    (est.)

Income Production and Employment:  2/

Real GDP (1985 prices)              9,778    10,560    10,982
Real GDP Growth (pct.)                 10         8         4
GDP (at current prices)            33,124    35,774    37,205
By Sector:
  Agriculture                       1,870     2,020     2,100
  Energy/Water                      2,500     2,700     2,808
  Manufacturing                     3,015     3,256     3,386
  Construction                        240       259       270
  Rents                               N/A       N/A       N/A
  Financial Services                  407       440       458
  Other Services                      143       155       161
  Government/Health/Education       1,351     1,459     1,518
  Net Exports of Goods & Services   3,100       N/A       N/A
Real Per Capita GDP (1985 base)       752       782       784
Labor Force (000s)                  3,600     3,900     4,300
Unemployment Rate (est./pct.)           7         7         7

Income Production and Employment:  3/

Real GDP (1985 prices)              2,607     2,816     2,929
Real GDP Growth (pct.)                 10         8         4
GDP (at current prices)             8,833     9,540     9,921
By Sector:
  Agriculture                         499       539       560
  Energy/Water                        667       720       749
  Manufacturing                       804       868       903
  Construction                         64        69        72
  Rents                               N/A       N/A       N/A
  Financial Services                  108       117       122
  Other Services                       38        41        43
  Government/Health/Education         360       389       405
  Net Exports of Goods & Services   3,100       N/A       N/A
Real Per Capita GDP (1985 base)       201       208       209
Labor Force (000s)                  3,600     3,900     4,300
Unemployment Rate (est.)                7         7         7

Money and Prices:

Money supply (M2) (million SP)    182,125   191,322   191,322
Base Interest Rate  4/                  9         9         9
Personal Saving Rate                  4.8       4.8       4.8
Retail Inflation                     12.5      16.0       8.0
Wholesale Inflation                   9.6      12.0       6.0
Consumer Price Index                  486       564       609
Exchange Rate (USD/SP)
  Official                          11.20     11.20     11.20
  Blended                           26.60     26.60     26.60
  "Neighboring Country Rate"           42        42        42
  Offshore market                   46-52     47-52     49-52





Balance of Payments and Trade:  (USD millions)

Total Exports (FOB)                 3,100     3,400     3,600
  Exports to U.S.                    45.8     144.7     120.0
Total Imports (CIF)                 3,498     4,100     4,000
  Imports from U.S.                 214.0     267.2     300.0
Aid from U.S.                           0         0         0
Aid from Other Countries          1,753.0   1,358.0     701.9
External Public Debt               18,000    19,400       N/A
Debt Service Payments (paid)        1,399       N/A       N/A
Foreign Exchange Reserves             N/A       N/A       N/A
Gold Holding
  (millions of troy ounces)         0.833     0.833     0.833
Trade Balance                      -398.0    -700.0    -400.0
  Trade Balance with U.S.          -168.2    -122.5    -180.0


N/A--Not available.

1/ The Syrian Government has not published its 1993 statistics
as of the completion of this report.  Further, the government's
1992 economic statistics remain estimates.  All figures in the
preceding tables are estimates based on the government's 1992
estimates, other sources in the public domain, and the U.S.
Embassy's own calculations.
2/ Millions of U.S. dollars converted at the official rate of
11.2 Syrian pounds/ 1 U.S. dollar.
3/ Millions of U.S. dollars converted at the "Neighboring
Country" rate of 42 Syrian pounds /1 U.S. dollar.
4/ All banks in Syria are nationalized and interest rates are
set by law, ranging from two percent for financing of the
export and storage of barley to nine percent for certain
private sector loans.  Savings rates range from two percent on
public sector "current accounts and sight deposits" to nine
percent on "other investment bonds".  Most rates have not
changed in 10 years.



1.  General Policy Framework

    In the past year, the Syrian government, except for
tightening exchange rate controls, has acted to reduce
administrative barriers to U.S. exports.  The private sector,
responding to these and other reforms, has increased its
imports beyond those of the public sector; however, increases
of U.S. exports to Syria have lagged behind those of other
countries, probably due to continued U.S. Government foreign
policy sanctions and remaining Syria administrative and legal
barriers to trade.  As a reward for participation in the Gulf
War, Arab Gulf states have contributed large, but declining
amounts of aid, to Syria over the past three years.  These
allocations, over USD 1.7 billion in 1992, and USD 1.3 billion
in 1993, have gone to rehabilitate Syria's telecommunications
and electrical power generation sectors.

    Prospects for Syrian private sector investment and imports
continue to improve, spurred by economic reforms, including an
investment encouragement law.  Recent liberalization actions of
the Syrian government permit private exporters to retain some
foreign exchange export earnings to finance permitted imports
for manufacturing inputs, as well as other listed products. 
The rate of retention depends on the type of products exported:
75 percent of industrial export earnings, 100 percent of
agricultural sales.  Although retaining a monopoly on
"strategic" imports, such as wheat and flour, the Government
continued to expand the list of permitted imports during 1994,
including items, such as sugar and rice, formerly reserved for
public sector importing agencies.  During 1993 the government
attempted to interdict many of the goods imported for the
"unofficial market" and succeeded briefly in reducing supplies.
Ultimately it discontinued the activity because of inadequate
resources to enforce the interdict and the strong public demand
for such goods.  Responding to the demand, the government began
expanding the list of importable goods.

    The United States imposed trade controls in 1979 as a
response to Syria's involvement with terrorism.  The U.S.
Government expanded sanctions against Syria in 1986, following
Syria's implication in the attempted bombing of an Israeli
airliner at London Heathrow Airport.  Among the affected items
are aircraft, aircraft parts, and computers of U.S. origin or
containing U.S. origin components and technologies.  The
Syrians have sought alternate suppliers of these products. 
Under the 1986 sanctions, Syria is ineligible for the Export
Enhancement Program (EEP) and the Commodity Credit Corporation
(CCC) Program in all agricultural products, rendering U.S.
wheat uncompetitive in the Syrian market.  The Syrian-U.S.
Bilateral Aviation Agreement expired in 1987 and has not been
renewed.  Finally, the EXIM Bank and OPIC suspended their
programs in Syria, further disadvantaging U.S. exporters in
meeting competition from other suppliers.  

    The Syrian government uses its annual budget as its
principle tool for managing the economy.  Through 1992, the
Syrian government's ability to raise official prices on many
consumer items (effectively reducing subsidies), improve tax
collections, and increase transfers from state enterprises,
while reducing commitments of Syrian resources to capital
expenditures, enabled it to reduce budget deficits, leading to
a balanced budget in 1992.  However, the last two annual
budgets have been in deficit, due the cost of maintaining
Syria's large military establishment (both domestically and in
Lebanon) and its recently reduced, but still heavy,
subsidization of basic commodities and social services.  

    Given Syria's anachronistic and nationalized financial
system and its inability to access international capital
markets, monetary policy remains a passive tool used almost
exclusively to cover fiscal deficits.  All four of the
country's commercial banks are nationalized.  Interest rates
are fixed by law.  Most rates have not changed in the last
several years, even though current real interest rates are
negative, which exerts additional inflationary pressures in the
economy.


2.  Exchange Rate Policies

    The Syrian government continues to maintain a multiple
exchange rate system.  The official exchange rate remains 
fixed at Syrian pounds 11.20 to USD 1 for the government,
certain public sector transactions and valuations for some
customs tariff rates.  A second exchange rate, called the
"Blended Rate", SP 26.6 to USD 1, can be used by the U.N. and
diplomatic missions.  A third rate, the "Neighboring Country"
rate, SP 42 to USD 1, applies to most state enterprise imports
except certain basic commodities and military/security items. 
Recently, a foreign oil company signed an exploration contract
allowing it to transact contract-related business at the
"Neighboring Country" rate, a first for the oil sector. 
Outside Syria, a thriving offshore market for Syrian pounds
operates in Lebanon, Jordan, and the Arab Gulf countries. 
During 1994, the value of the Syrian pound fluctuated between
SP 49 and 51 to the dollar in these locations. 

    Exchange controls are strict.  Syrian currency may not be
exported, although it may be imported physically.  Almost all
exchange transfers must be by letter of credit opened at the
Commercial Bank of Syria.  Outward private capital transfers
are prohibited, unless approved by the Prime Minister or
transacted under the new investment law noted below.  Prior to
1987, Syrian law required private exporters to surrender
100 percent of foreign exchange earnings to the Central Bank at
the official rate.  Now, private exporters may retain 75 to 100
percent of their export earnings in foreign exchange to finance
imports of inputs and other items designated on a short list of
basic commodities, surrendering the balance to the Commercial
Bank of Syria, generally, at the "Neighboring Country" rate. 
Since 1991, the Commercial Bank of Syria may convert cash,
travellers checks and personal remittances at the "Neighboring
Country" rate.


3.  Structural Policies

    By law, the Ministry of Supply controls prices on virtually
all products imported or locally produced, although enforcement
in most sectors is spotty.  The ministry also sets profit
margin ceilings, generally up to 20 percent, on private
sector imports.  Local currency prices are computed at the
SP 42 to USD 1 rate.  In the agricultural sector, production
of strategic crops (cotton, wheat) is controlled through a
system of procurement prices and subsidies for many inputs,
including seeds, fuel, and fertilizers.  Farmers may retain a
portion of production, but the balance must be sold to the
Government at official procurement prices.  Since 1989, the
Government has increased farm gate prices to encourage
production and to enable state marketing boards to purchase
larger quantities of locally produced commodities.  In 1994,
the local price of wheat was 25 percent above the world price
computed at the free market rate. 

    With the surge of private industrial investment, especially
in textile and clothing manufacturing, private sector capital
goods imports exceeded the public sector's in 1993.  However,
public sector demand remains significant.  Contracts are
awarded through the official tender system.  These are open to
international competition with no restrictions, other than
language pertaining to the Arab League boycott of Israel and
the requirement to post a bid bond.  Syrian public sector
entities will accept positive statements of origin to deal with
the boycott issue.

    Syria's tariff system is highly escalated, reaching
200 percent for passenger cars.  Income taxes are highly
progressive.  Marginal rates in upper brackets are 64  
percent.  Salaried employees also pay a graduated wage tax,
reaching 17 percent.  Tax evasion is widespread.


4.  Debt Management Policies

    Syrian authorities have been unwilling to provide data on
non-civilian debt, as well as accumulated obligations under
bilateral clearing arrangements.  Guaranteed civilian debt is
officially estimated at approximately USD 3.4 billion.  The
diplomatic community estimates Syria's total external public
debt at about USD 18 billion dollars.  Very little Syrian
commercial debt is held by U.S. companies, but sovereign debt
is about USD 250 million.  

    In 1992, the government established various committees to
negotiate settlements of supplier credit claims against public
sector importing agencies.  However, progress has been slow. 
Debt to the former Soviet Union and Iran (both clearing account
arrangements) is estimated to be more than USD 12 billion.  The
government has had some recent success in settling with
bilateral creditors, while refusing to deal with the Paris Club
as a group.  Syria suspended payments to the Russian Republic
in 1992, but is negotiating a settlement.  The government
remains badly in arrears on payments to official export credit
agencies and bilateral donors, including the U.S. Agency for
International Development.  Syria has been in violation of the
Brooke Amendment since 1985.  Syria resumed payments to the
World Bank in 1992, and, except for a brief interval in 1993,
has been making payments to the World Bank sufficient to
prevent increases in its arrears.  


5.  Significant Barriers to U.S. Exports

    Any product legally imported into Syria requires an import
license, which is issued by the Ministry of Economy and Foreign
Trade according to a policy aimed at conserving foreign
exchange and promoting local production.  Strict standards on
labeling and product specifications are non-discriminatory and
fairly enforced.  Customs procedures are cumbersome and tedious
because of complex regulations.  In addition, duty rates are
extremely high.  Tariff exchange rates depend on the type of
good.  

    Government procurement procedures pose special problems. 
Although foreign exchange constraints have eased, many public
sector companies continue to favor barter arrangements which
can be unattractive to US suppliers.  In addition, problems
remain in the prompt return of performance bonds.  

    Current bid bond forms stipulate that the guarantee becomes
null and void if the tender is not awarded upon its expiry
date, without need for any other procedure.  Some government
tenders include a clause allowing the bidder to cancel his bid
at six-month intervals, provided a written notice is received
within a stipulated time frame.  If such a clause is not
included in the tender, it can often be negotiated.  Tenders
for wheat and flour stipulate that bids are invalidated after
one month, if no contract is signed.
 
    Syria participates in the Arab League boycott of Israel. 
Many Syrian government tenders contain language unacceptable
under U.S. anti-boycott laws.  Public sector agencies
reportedly accept positive certification from U.S. companies in
response to tender application questions.  Once interested
parties obtain tender documents, they would be well advised to
obtain competent advice regarding the anti-boycott regulations
before proceeding.  One source of such advice is the U.S.
Department of Commerce Office of Anti-boycott Compliance
(telephone advice line (202) 482-2381).

    Given the centralized structure of the economy, specific
"buy national" laws do not exist.  Strategic goods, military
equipment, wheat, sugar, and items not produced locally or in
sufficient quantities are procured by public sector importing
agencies from the international market, provided foreign
exchange is allocated by the Supreme Economic Council.

    The government requires its approval for all foreign
investments and theoretically encourages joint-ventures with
itself.  Concessions and services must be explicitly
negotiated.  The number and position of foreign employees in a
company are usually negotiated when the contract or agreement
is signed.  Land ownership laws are complex.  In principle,
only Syrians may own land.  The right to repatriation of
capital is legally recognized.  The new investment law
provides for tax holidays and exemptions on duties, as well as
guarantees for the remission of profits.  However, the law
requires that repatriated foreign exchange be generated from
export company operations.  Despite the new legislation, poor
infrastructure, lack of financial services, and complex foreign
exchange regulations, including Law No. 24, which makes it a
criminal act to conduct unauthorized foreign exchange
transactions, continue to pose serious barriers.

    Government monopolies in banking, insurance,
telecommunications, and other public sector service industries
preclude foreign investment.  Motion pictures are distributed
by a government agency and subject to censorship.

    Petroleum exploration and oil service companies operating
in Syria are required to convert their local currency
expenditures at the over-valued official exchange rate with the
exception noted in Paragraph 6. (See below.)  Despite cost
recovery schemes, this requirement has inflated company
operating costs, exposing them to greater risk and contributed
to the departure of two more foreign petroleum exploration
companies in 1994.


6.  Export Subsidy Policies

    Export financing and subsidies are not available to either
the public or the private sectors.  In fact, some exports are
subject to special taxes.  Recent government decisions allowing
private firms to transact exports and imports at the 
"Neighboring Country" rate, instead of the unfavorable official
rate, have encouraged private trade through official channels. 
Similar concessions to public sector companies to complete
export transactions have enhanced the foreign exchange position
of these companies. 


7.  Protection of U.S. Intellectual Property

    Syria's legal system recognizes and facilitates the
transfer of property rights, including intellectual property
rights.  There is, however, no copyright protection.  Syria is
a member of the Paris Union for the International Protection of
Industrial Property.  Prior registration of intellectual
property is required to bring infringement suits.  

    Due to the unsophisticated industrial structure and
existing limits on private industry, there are few major
infringement problems.  Local courts would likely give
plaintiffs fair hearings, but any financial awards would be in
Syrian pounds.  Requests for payment in foreign exchange would
probably be delayed indefinitely.

    Most books printed in Syria are in Arabic and by Arab
authors.  The publishing industry is not well developed. 
Despite the lack of legal protection, major commercial
infringements do not appear to be a problem.  There are,
however, individual entrepreneurs who copy records, cassettes,
and videos, and sell them.  In any event, enforcement and the
associated litigation would be, if not impossible, extremely
costly compared to any positive benefits which might result.

    The U.S. motion picture industry estimates the home video
market in Syria is 100 percent pirated.  The industry is also
concerned with unauthorized hotel video performances, which are
said to be common.  However, only a few hotels have internal
video systems.


8.  Worker Rights

    a.  The Right of Association

    The 1973 Constitution provides for the right of the
"popular sectors" of society to form trade unions.  Although
the General Federation of Trade Unions (GFTU) is purportedly an
independent popular organization, in practice the government
uses it as a framework for controlling nearly all aspects of
union activity.  According to GFTU officials, the secretaries
general of the eight professional unions, some of whom are not
Ba'th Party members, are also each elected by their respective
union's membership.

    The Syrian government contends that there is in practice
trade union pluralism.  However, workers are not free to form
labor unions independent of the government-prescribed
structure.  Legislation is still pending which would grant the
right of any trade union to be governed by its own by-laws
without requiring that union rules correspond to those of the
GFTU.

    Strikes are not prohibited (except in the agricultural
sector), but in practice they are effectively discouraged. 
There were no reported strikes in 1994, as was also the case in
1993 and 1992.  There is at least one person who has been in
detention for 13 years for involvement in a strike in 1980.  He
was tried only at the end of 1992.  Some members of the Syrian
Engineers' Association who were arrested because of the strike
action in 1980, along with Doctors' Association members
arrested at the same time reportedly remain in detention.

    As with other organizations dominated by the Ba'th Party,
the GFTU is charged with providing opinions on legislation,
devising rules for workers, and organizing labor.  The elected
president of the GFTU is a senior member of the ruling Ba'th
Party and a member of the party's highest body, its regional
command.  With his deputy, he participates in all meetings of
the cabinet's ministerial committees on economic affairs. 
While the unions are used primarily to transmit instructions
and information to the labor force from the Syrian leadership,
elected union leaders also act as a conduit through which
workers' dissatisfaction is transmitted to the leadership.  The
GFTU is affiliated with the International Confederation of Arab
Trade Unions.

    In June 1992, the U.S. Trade Representative suspended
Syria's duty-free privileges under the U.S. Generalized System
of Preferences (GSP) due to its worker rights practices.  The
Syrian government has not made sufficient legislative and
practical changes to prompt a reconsideration of the suspension.

    b.  The Right to Organize and Bargain Collectively

    In the public sector, unions do not normally bargain
collectively on wage issues, but union representatives
participate with the representatives of the employers and the
respective ministry to establish sectoral minimum wages
according to legally prescribed cost-of-living levels.  Workers
serve on the board of directors of public enterprises, and
union representation is always included on the boards.  Unions
also monitor and enforce compliance with the labor law.  

    In the private sector, unions are active in monitoring
compliance with the laws and ensuring workers' health and
safety.  Under the law, unions may engage in negotiations for
collective contracts with employers.  The International Labor
Organization's Committee of Experts (COE) noted Syria's
continuing resistance to revising a section of the labor code
which allows the Minister of Labor and Social Affairs to refuse
to approve a collective bargaining agreement and to annul any
clause likely to harm the economic interests of the country. 
Unions have the right to litigate contracts with employers and
the right to litigate in defense of their own interests or
those of their members (individually or collectively) in cases
involving labor relations.  Union organizations may also claim
a right to arbitration.  In practice, due to the relatively
small size of Syrian private sector enterprises, labor disputes
are generally settled informally.  Social pressure to be seen
as fair and generous are powerful factors in determining
owners' treatment of workers.

    Workers are protected by law from anti-union
discrimination, and there were no reports that it was
practiced.  (See also Section 6.E).

    There is no union representation in Syria's seven free
trade zones, and firms in the zones are exempt from Syrian laws
and regulations governing the hiring and firing of workers,
although some provisions concerning occupational health and
safety, hours of work and sick and annual leave do apply.

    c.  Prohibition of Forced or Compulsory Labor

    There is no Syrian law banning forced or compulsory labor;
such practices may be imposed in punishment, usually in
connection with prison sentences for criminal offences, under
the Economic Penal Code, the Penal Code, the Agricultural Labor
Code and the Press Act.  There were no reports of forced or
compulsory labor involving children or foreign or domestic
workers.

    d.  Minimum Age for Employment of Children

    The minimum age in the predominant public sector is
fourteen, though it is higher in certain industries.  The
minimum age varies more widely in the private sector.  The
absolute minimum age is 12, with parental permission required
for children under age 16 to work.  Children are forbidden to
work at night.  The Ministry of Social Affairs and Labor is
responsible for enforcing minimum age requirements, but the
number of labor investigators is not adequate.

    e.  Acceptable Conditions of Work

    As mandated in the constitution, the government
legislatively establishes minimum and maximum wage limits in
the public sector and sets limits on maximum allowable overtime
for public sector employees.  The minimum wage does not enable
a worker and his family to survive, and, as a result, many
workers take additional jobs, open businesses, or rely on
extended families for support.  There is no single minimum wage
in the private sector for permanent employees.  According to
the 1959 Labor Law, minimum wage levels in the private sector
are set by sector and are fixed by the Minister of Social
Affairs and Labor.  Recommendations are put to him by a
committee, including representatives of both the Ministries of
Industry and Economy, as well as representatives of the
employers' association and the employees' unions.  Following
substantial cuts in government subsidies of foodstuffs in
April, the government raised public sector minimum wages to $50
per month.  Shortly thereafter, the Minister of Labor decreed
an average private sector minimum wage of $44 per month.  In
practice, private sector monthly minimums are not less than
that in the public sector.  In both the public and private
sector, the Ministry of Social Affairs and Labor is responsible
for enforcing minimum wage levels.

    The Syrian labor law extensively regulates conditions of
work.  There are regulations that severely limit the ability of
an employer to fire an employee without due cause, an issue
that the employer may take to a labor committee.  Labor
committees are composed of representatives of the municipality,
the Ministry of Social Affairs and Labor, and the union, as
well as a judge and the employer.  In the majority of cases,
such labor committees have decided in favor of the employee. 
Workers, once hired, can not easily be fired.  In practice,
workers also have exercised their right to contest even planned
dismissals in the labor committees.  One exception in the
heavily regulated labor field relates to day laborers.  They
are not subject to minimum wage regulations and receive
compensation only for job-related injuries.  Small private
firms and businesses commonly employ day laborers in order to
avoid the costs of permanent employees who are well protected
even against firing.

    The statutory workweek consists of six 6-hour days,
although in certain fields in which workers are not
continuously busy, a 9-hour day is permitted.  Labor laws also
mandate a full 24-hour rest day per week.  Public laws mandate
safety standards in all sectors, and managers are expected to
implement them fully.  A draft legislative decree is pending
with the president of the council of ministers to provide
compensatory rest for those who have to work on the weekly rest
day, thus bringing the law into conformity with the
international labor code.  The ILO has also noted that a
provision of the labor code allowing workers to be kept at the
workplace for up to 11 hours per day could lead to abuse.  In
practice, the public sector is in conformity with the schedule
noted above.  There were no reports of private sector employees
having to work as many as 11 hours per day.  A special
department of the Social Security Establishment works at the
provincial level with inspectors at the Ministries of Health
and Labor to ensure compliance with safety standards.  In
practice, workers have occasionally taken employers to
judicially-empowered labor committees to win improvements in
working conditions that affect their health.

    Foreign workers theoretically receive the same benefits but
are often reluctant to press claims because employees' work and
residence permits may be withdrawn at any time.  Moreover, many
work illegally and are not covered by the government system. 
Some foreigners are employed illegally as domestic servants in
Syria.  Residence permits are legally granted only to diplomats
who employ servants, but some senior officials are also able to
acquire the necessary permits.

    f.  Rights in Sectors with U.S. Investment

    There is no direct U.S. investment, other than oil
exploration and development, in Syria.  US firms are required
to comply with Syrian labor law.



  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
                                                                
              Category                          Amount          

Petroleum                                              (1)
Total Manufacturing                                     0
  Food & Kindred Products                   0
  Chemicals and Allied Products             0
  Metals, Primary & Fabricated              0
  Machinery, except Electrical              0
  Electric & Electronic Equipment           0
  Transportation Equipment                  0
  Other Manufacturing                       0
Wholesale Trade                                         0
Banking                                                 0
Finance/Insurance/Real Estate                           0
Services                                                0
Other Industries                                       (1)
TOTAL ALL INDUSTRIES                                  355     

(1) Suppressed to avoid disclosing data of individual companies

Source: U.S. Department of Commerce, Bureau of Economic
Analysis

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