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Syrian
Arab Republic
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Following the breakup of the Ottoman Empire during World
War I, France administered Syria until its independence
in 1946. The country lacked political stability, however,
and experienced a series of military coups during its
first decades. Syria united with Egypt in February 1958
to form the United Arab Republic. In September 1961, the
two entities separated, and the Syrian Arab Republic was
reestablished. In November 1970, Hafiz al-ASAD, a member
of the Socialist Ba'th Party and the minority Alawite
sect, seized power in a bloodless coup and brought political
stability to the country. In the 1967 Arab-Israeli War,
Syria lost the Golan Heights to Israel. During the 1990s,
Syria and Israel held occasional peace talks over its
return. Following the death of President al-ASAD, his
son, Bashar al-ASAD, was approved as president by popular
referendum in July 2000. Syrian troops - stationed in
Lebanon since 1976 in an ostensible peacekeeping role
- were withdrawn in April 2005. During the July-August
2006 conflict between Israel and Hizballah, Syria placed
its military forces on alert but did not intervene directly
on behalf of its ally Hizballah.
The Syrian economy grew by an estimated 2.4% in real terms
in 2008 led by the petroleum and agricultural sectors,
which together account for about one-half of GDP. Higher
crude oil prices countered declining oil production and
led to higher budgetary and export receipts. Damascus
has implemented modest economic reforms in the past few
years, including cutting lending interest rates, opening
private banks, consolidating all of the multiple exchange
rates, raising prices on some subsidized items, most notably
gasoline and cement, and establishing the Damascus Stock
Exchange - which is set to begin operations in 2009. In
October 2007, for example, Damascus raised the price of
subsidized gasoline by 20%, then instituted a rationing
system in 2008. In addition, President ASAD signed legislative
decrees to encourage corporate ownership reform, and to
allow the Central Bank to issue Treasury bills and bonds
for government debt. Nevertheless, the economy remains
highly controlled by the government. Long-run economic
constraints include declining oil production, high unemployment
and inflation, rising budget deficits, and increasing
pressure on water supplies caused by heavy use in agriculture,
rapid population growth, industrial expansion, and water
pollution.
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