x Abu Dhabi, UAEThursday 18 January 2018

Damascus delays signing on dotted line for EU deal

As Europe prepares to finalise a partnership deal, Syria is appearing to be playing for time.

Representatives of Syria and the EU who were negotiating a partnership agreement.
Representatives of Syria and the EU who were negotiating a partnership agreement.

DAMASCUS // On a Sunday afternoon in Damascus 10 months ago, Syria and the European Union initialled a long-delayed partnership. Syria had pushed hard for the deal since 2004, but the EU had put it on ice, part of a US-led effort to isolate Damascus. So there was an air of satisfaction among Syrian officials when both sides put pen to paper, proof the association was back on track and Damascus truly was coming in from the diplomatic cold.

Speaking at the time, Abdullah al Dardari, the Syrian deputy prime minister for economic affairs, said he expected the next step of the deal - a full, formal and final signing - would happen by the spring of 2009. "This is the second time we have initialled the text and we hope we will not have to do it for a third time." Which makes it all the more curious that, with Europe planning to finalise the deal today, Syria has decided it does not want to sign on the dotted line. Instead, Damascus has indefinitely postponed the deal, saying it wants to review the details.

"Frankly I'm surprised at this change of mind," said a Syrian economist, on condition of anonymity because of the sensitive nature of his remarks. "I don't understand what's going on and I don't know anyone who does; we weren't expecting anything like this." The Syrian president, Bashar Assad, said he remains committed to partnership with EU. "It is a priority," he said on Thursday, after meeting with Tarja Halonen, the Finnish president. "But first we must cooperate in an efficient manner with Europe before the association agreement can be signed. It is a technical issue. Technical details can lead to disagreements."

The turnaround may be a matter of hard financial reality. There have been widespread concerns among businessmen here that the free trade elements of the agreement will hit Syrian companies hard. They will have to compete with European firms and produce to European standards, something industrialists fear will ruin manufacturing in the short term. Those concerns are not new. The Syrian economic team, led by the reform-minded Mr al Dardari, had made it clear the tie-up with Europe posed risks and offered advantages.

Back on that Sunday afternoon last December, when the terms and conditions of the deal were initialled, Mr al Dardari said the agreement was "beneficial to peace, security, stability and growth in the region", but he added a caveat. "When there is a window of opportunity to go ahead with this association agreement Syria will not hesitate to do so. As long as it is in Syria's interests." Under the deal's economic terms, Syria was obliged to undergo a series of tough reforms, including lifting subsidies and changing tax regimes. These were pushed through, with painful effect on the average working-class Syrian. While the wealthy minority was insulated from the effects, the majority of the population suffered as prices rose far beyond their already hard-pushed incomes could afford.

That these difficult steps have already been taken has further confused economic observers here. "We've done all of the difficult things to get into this agreement and to bring ourselves in line with the world economy, but have not yet had the benefits," said another Syrian analyst, also speaking on condition of anonymity. "We've had years to examine the details of this. In stopping now, we've had all of the pain and none of the gain."

The agreement qualifies Syria for extra EU aid, beyond the ?500 million (Dh2.75 billion) it has received since the late 1970s. It also gives Syrian exporters greater chances to sell their products directly to Europe. A continuing world economic crisis may also have played a role in the shift. Syria's economy has been affected and, while officially the effect has been limited, there have been suggestions the fallout has been wider and deeper than anticipated a year ago. Damascus may have decided its economy is too fragile to gamble on closer economic relations with the Europe, which is struggling to recover from its own recession.

The decision to put the deal on hold, however, seems certain to have a larger political element than the Syrian authorities admit. Part of that may hinge on rights clauses in the partnership. The Netherlands in particular had demanded a clause allowing for the suspension of the deal in the event of proven abuses by Damascus under an on-going crackdown against political dissidents. While that prospect could have given Syria pause for thought, it also was cause for anger at what was seen as European hypocrisy. Last week the Dutch were one of a handful of countries to vote against a UN war-crimes report highly critical of Israel's role in the Gaza war last winter.

The broader political environment, however, has shifted of late in Syria's favour, even if not decisively. In 2005, Damascus was under intense international pressure. Accused of involvement in the murder of Rafik Hariri, a former Lebanese prime minister, Syria was compelled to withdraw its troops from Lebanon. The White House, under George W Bush, imposed economic sanctions and, for a time, there was even talk of US-enforced regime change, as had just taken place in Iraq.

The EU agreement, drawn up before those crises, offered an exit from Syria's diplomatic cul-de-sac with the West. The White House, under Barack Obama, has reopened dialogue with Damascus and indicated it will take a more lenient line on enforcing sanctions. A dangerous falling out with Saudi Arabia has come to an end. Syria's influence in Lebanon is also apparently as profound as ever, despite an ostensibly hostile new government taking office there.

"It's all about politics," said a Syrian analyst with close ties to governmental officials, all of whom have remained tight-lipped on the subject of the postponement. "Syria - is gambling on the weakness of the EU; they want the deal as much as Syria does. If Syria holds out, it might get a better [financial aid] offer and, even if not, the fact it didn't sign when Europe wanted to shows Syria's ability to act independently."