Elite Cohesion, Regime Succession and Political Instability in Syria

Syria represents an anomaly at the end of the twentieth century: a minority-based authoritarian regime in an era of democratization, governing a predominately state-controlled economy as market orthodoxy is accepted internationally. In addition, the end of the Cold War left Damascus without a superpower sponsor; the winding-down of the Arab-Israeli conflict has robbed it of part of its raison d'étre; and the continuing poor health of its president, Hafiz al-Asad, makes the ill-defined succession question loom large.

 

What has maintained the Baathist regime in power given these enormous problems has been the high level of cohesion among the constituent elements of the state elite. This cohesion itself is a relatively new phenomenon, dating from the waning moments of Syria's civil war in the early 1980s. Broadly speaking, there are two segments of the Syrian state elite: Alawi military officers who largely control political power through their domination of the various security apparatuses, and the Sunni urban bourgeoisie who sit at the center of economic power.1 As with rentier states everywhere, the relationship between political and economic power has been particularly close in Syria. Put another way, the seemingly odd partnership between Alawi military officers and the Sunni bourgeoisie has in fact been a mutually beneficial one for nearly two decades.

 

However, elite cohesion in Syria is now being threatened by the increasingly divergent interests of the military officers and the merchants. This paper will argue that particular economic and political trends in Syria are working to fragment elite cohesion. The regime seems to know this, leading to foot dragging on key policies meant to "modernize" Syria. Yet, given the divergent interests of the elite coalition partners, it is unlikely that Syria will be able to completely avoid undertaking the very policies which may threaten regime survival.

 

Three issues are central in undermining elite cohesion in Syria. First, the nascent economic liberalization program is creating a new set of winners and losers, weakening the political support structure that has maintained the regime. Second, Damascus' ideological justification for authoritarian­ ism has ceased, prompting increased demands for political liberalization. Third, by committing itself to a regional peace, Damascus will likely have to restructure its relationship with Lebanon, losing or minimizing a key source of patronage for the Syrian regime.

 

All three of these tendencies work to the advantage of the Syrian bourgeoisie and against traditional Alawi interests, undermining their coalitional cohesion. Briefly summarized, the bourgeoisie has a greater interest in significant market reforms, real political liberalization, and a less constrained Lebanon.2 The Alawi military elite has an interest in limiting market reforms, in maintaining an authoritarian political system, and in continuing its domination of Lebanon. Regional peace will magnify the extant cleavages within the "military-merchant complex,"3 increasing the centrifugal forces which separate political from economic power in contemporary Syria.

 

 

 

ELITE COHESION

 

A fundamental debate in the study of Syrian politics revolves around understanding and conceptualizing the nature of the Syrian regime. Some analysts portray it as basically a minority-based regime consisting of - and benefiting - the Alawi community. The Alawi minority constitutes about 12 percent of the population. Sectarian in their origins (an ancient schism within Shii Islam), the Alawis are today best understood as an ethnic community. A historically underprivileged and oppressed rural group, the Alawis joined the army in disproportionate numbers during the colonial and nationalist periods as a means of social mobility. The military officers who led the 1963 Baathist coup in Syria were largely Alawi in origin, including Hafiz al-Asad.

 

For such scholars, the Alawi nature of the regime is the single most important fact in understanding its decisions: all key "power positions" in the state are held by fellow Alawis; development resources are given disproportionately to the Alawi heartland around Latakia in the northwest; and questions of war and peace are largely decided by their impact on the continuation of Alawi dominance in Syria.4 Such scholars tend to be pessimistic about the likelihood of Syria's signing a peace accord with Israel, arguing that such a momentous event may put the perpetuation of Alawi rule at risk.

 

Other analysts downplay the Alawi nature of the Syrian regime and instead point to group and class coalitions in explaining political decision-making in Damascus. Such scholars argue that focusing too heavily on the Alawi nature of the regime will tell one little about the ebb and flow of daily politics in Syria, nor will it be suggestive of variations in intra-Alawi decision -making.5  These scholars have examined the social roots of the Baath party and argue that - in the 1960s and 1970s, for example - the party represented the interests of rural peasants, urban public-sector workers, and minorities in general. State resource flows and decision-making, then, were directed disproportionately to the benefit of these groups.6

 

Using group and class interests as a tool to unlock the "nature" of the Syrian regime generally has greater utility in predicting political outcomes than does focusing on primordial identities. Only a focus on group interests could explain the persistent and widely noted support of the regime by non-Alawi rural communities, an outcome inexplicable to the primordialists in the absence of interest-based analyses. The reason for this support is quite simple: the rural sector has greatly benefited from Baathist policies during the past three decades.

 

The Syrian regime has transformed its social basis over the past 15 years. As indicated above, the social pillars of the Baath party in Syria - and, by extension, the regime - during the 1960s and 1970s were peasants who benefited from government land reform and other favorable rural policies, and urban public­ sector workers who benefited from the nationalization of industries. It was no coincidence that the regime favored these two groups, because the Baath movement itself formed largely in response to the power of large absentee landowners and the commercial elite. The regime undermined the power of the large landowners through policies favoring the peasantry and undermined the power of the commercial elite through policies favoring the public sector over the private. The success of these policies in mobilizing poorer segments of the Syrian population helps explain why this regime was able to prevent the historically dominant group in Syria - urban Sunni landowners and merchants - from successfully recapturing power.

 

However, the composition of the regime today is not the same as it was 30 years ago. The dominant alliance today is what one prominent Syrian scholar refers to as the military-merchant complex.7 The first component of the alliance refers to the mostly Alawi officer corps that controls key positions of power in the regime, from the president to the head of military intelligence to the commander of the elite Republican Guards. In spite of their hold on political power for decades, the Alawi military officers have yet to produce a genuine Alawi capitalist class with which to translate political power into economic wealth. For this, the officers have turned to the once-reviled Sunni urban business elite, returning this class to power as a junior member of the coalition.

 

The rehabilitation of the entrepreneurial class in Syria began in the early 1980s, when the Damascus business community saved the regime from its Islamist opponents by not joining the anti-regime commercial strike that was in place in all other cities in Syria at the time. The new relationship was consolidated in the mid-l980s when Syria was compelled by its near-bankruptcy to adopt market reforms, further empowering the Syrian bourgeoisie. Today, political power in Syria is defined by the balancing game Asad plays between the bourgeoisie on the one hand and the Alawi military officers - the Alawi barons, as Hinnebusch calls them – on the other hand.8

 

This is not to suggest that the regime has completely abandoned its former partners. Every indication is that its rural constituencies still support the regime both because of the dramatic improvement in rural living standards over the past 30 years, and because they have benefited from the recent market reforms, which freed up agricultural prices.9 It is doubtful, however, that this support can be sustained indefinitely as public resources begin to once again favor the urban areas. Public­ sector workers have fared less well and represent the strongest opposition to the modest market reforms that have occurred. The public sector in Syria, as elsewhere in the third world, is a holdover from the import-substitution industrialization policies of the 1960s and is the first to suffer under marketization. The point, however, is that the social bases of the regime today are significantly different from what they were just two decades earlier.

 

 

 

ECONOMIC LIBERALIZATION AND ELITE DIVERGENCE

 

Whether there is an actual economic liberalization program in place in Syria is open to debate. The near financial collapse of the Syrian government in the mid-1980s prompted the regime to enact modest liberalization reforms.10 Supporters of the regime argue that the liberalization program continues, with more market reforms expected in the years to come.

 

They suggest that the regime has learned from the experiences in Eastern Europe that structural adjustment needs to proceed slowly in order to prevent the kinds of severe dislocations seen there. Instead, they point to China as a preferred model, where economic reforms were put in place over a period of two decades, enabling the regime to maintain political power during a gradual transition.

 

Conversely, regime detractors argue that there is no blueprint for economic liberalization. They suggest that whatever reforms were made were done in an ad hoc manner and in any case are finished. The centerpiece of the liberalization program, Law 10 of 1991- designed to repatriate some of the estimated $60 billion in Syrian savings held abroad, as well as to spur international investment - has not been followed up.

 

In any case, there are clearly growing frustrations within the business community over economic reform. While the regime has dragged its feet on this issue, it will have little choice but to adopt greater liberalization measures given the imperatives of the "new Middle East." At the same time, however, the two sides of the military-merchant complex have diametrically opposed interests in significant market reform.

 

 

 

TENSION IN THE BUSINESS COMMUNITY

 

By almost any measure Law 10 and related reforms have largely failed. With the exception of a minor investment by Nestle, no multinational corporation has invested in Syria under the provisions of Law 10. Moreover, only a relatively minor amount of Syrian capital has been repatriated, and most of what has come back has gone into the service and tourism sectors, not industry. Car-rental agencies have been the single biggest benefactor under Law 10. With the memory of earlier Baathist nationalizations, investors have largely stayed away. In the words of one Syrian lawyer, "Investment here is still not seen as secure, even under Law 10."11

 

More important than the limitations of Law 10 itself has been the absence of follow-up measures. Three areas in dire need of reform stand out for the lack of corrective policies: banking, currency and the stock market. Syria does not have a functioning banking system. The state-run Commercial Bank of Syria, with which all investors must deal, cannot make a timely transfer of capital from Aleppo to Damascus,12 much less handle the demands of sophisticated multinational corporations. Not only has the regime not permitted the development of a banking sector in Syria; it has been outspoken in saying it would not allow foreign or private banks to operate there. As one Syrian agricultural banker put it, "Law 10 worked for a while in attracting investment, but how can you really have an investment strategy when there is no real banking system in Syria?"13

 

The Syrian lira is an overvalued soft currency which is pegged at different levels by the regime depending on the activity in question. For example, while the open­ market exchange rate in 1996 hovered around 50 lira to the dollar, the official tiered rates were 11, 20 or 42 lira to the dollar. Such a situation produces at least two results. First, the overvaluing of the currency promotes the import of luxury items for the elite and discourages exports by producers. Second, it creates a situation where vast "legal corruption" can occur. The regime as an institution and "connected" individuals can make millions of dollars by manipulating the various exchange rates. As an example of the former, when a Syrian business exports an item, the government demands that all foreign-currency earnings come through the Commercial Bank. It then converts 25 percent of the hard currency into Syrian lira at 42 to the dollar (not the free market value of 50) before it passes the earnings to the exporter. As a result, the government legally skims off the top 16 percent of the quarter of the hard currency it converts to lira (the difference between 50 and 42 lira), or 4 percent of the total value of the sale. This is not an export tax imposed by the government; rather, it is currency manipulation done at the expense of the business exporter.

 

Likewise, individuals with connections to the regime can make a fortune playing the currency game. The most common ploy is to buy dollars at 42 to the dollar and then sell them at the going free market rate of 50. In some cases, offshore Syrian capital taken out of the country at 11 lira per dollar can be repatriated, with the right connections, at 42. In short, the currency market is in desperate need of reform in order to attract serious investment, but there is too much money being made by the regime and its supporters through currency­ rate manipulations to expect any reform soon.

 

Despite numerous calls for its implementation, there is no stock market in Syria. Without a stock market, business must rely on limited sources of capital for business expansion, instead of being able to tap into the considerable private funds of small and medium-sized investors. While the regime has accepted in principle the need for a stock market, it has not implemented the measure.

 

Law 10 was to be the first in a series of reforms that would make the private sector in Syria flourish. However, no significant reforms have followed since this law was enacted in 1991, lending credibility to those who argue that the regime has no intention of pushing further down the path of market reform. As the Syrian architect of a plan for privatization suggested, "Economic reform has come to a halt in Syria today. It is clear now that there were never any blueprints or plans for sustained economic liberalization. Only intentions, never plans.”14

 

The argument in this article makes sense of the regime's reluctance to undertake reforms it acknowledges to be necessary: to do so would greatly enhance the power of Syria's business community, split the dominant military-merchant coalition, and thus threaten political stability.

 

Such foot-dragging by the regime has caused consternation in the Syrian business community. Take the case of Hisham Yafi, the single most important investor in Syria under Law 10.¹⁵ Having made his fortune abroad, Yafi returned to Syria to invest $15 million of his own money to build a high-tech machine-tooling plant which produces high quality molds for plastics. Since the plant can easily be converted to make machine spare parts - a strategic asset in times of war or embargo - the regime views this plant as one of the great achievements of Law 10. Yet, numerous government "surprises" have undercut the industry. For example, Yafi maintains that he was assured under Law 10 that his taxes would consist of a 7-percent customs duty for imported metal to make the molds, and a top corporate tax of 63 percent (down from its previous high of 98 percent).

 

In actual fact, his company pays 20 percent in customs because of many add-on taxes. In addition, he must pay "rent" on his fully-owned machines and computers of about 4 percent of their worth each year.16 Capital raised for business expansion is taxed at between 1 and 3.75 percent, before it is even invested in anything. According to Yafi, “All of these various taxes were surprises to us. The straight corporate tax and the official customs duties were known to us under Law 10, but everything else was just sprung on us. We keep being told that ‘Law 10 does not exempt you from this.’”

 

The problems of investment do not end with unseen taxes. Getting government permission to build industries can be time consuming, as Yafi has found out in trying to build a metal recycling plant to reuse the large quantities of metal shavings and scrap produced in his plant. The authorities have been "processing" the request for over four years. Moreover, the frequent problems with the electrical grid in Damascus has forced Yafi to use gas generators to run his factory, at six times the cost.17 Most frustrating has been the refusal of public­ sector industries to buy his molds, in spite of their price and quality competitiveness. Distrust of the private sector by the public sector apparently remains a business reality.

 

The lack of government progress in addressing such economic inefficiencies has forced Yafi to consider packing his bags and taking his investment elsewhere. As Yafi puts it,

 

I do not fault the regime for slow movement toward a market economy. I do fault it for no movement. It is not that the government has just been late in taking measures - they have just not taken them. You've seen erosion even in the steps that they did take. There was an energy, a psychological build-up surrounding Law 10. Everyone was expecting more. The government has squandered that enthusiasm. It is all gone now.

 

Yafi is not alone in laying the blame for the failure of market reforms squarely at the government's feet. While some members of the politically co-opted sections of the private sector put the best face on the situation by arguing that the regime is just moving cautiously, a more common -and I believe correct- view is that the regime has little political interest in moving forward with economic reform. What is clear is that the expectations raised by the regime in the business community have not been met, leading to enhanced tension between the regime and the private sector.

 

 

 

EXPLAINING THE FAILURE OF ECONOMIC LIBERALIZATION

 

There are three principal reasons why economic liberalization has stagnated in Syria. First, there has been no ideological or conceptual change to accompany reform. Economic liberalization in Syria began in the mid-1980s as a pragmatic response to economic crisis. Thus, measures taken have had an ad hoc quality to them because they are meant to address specific problems in the economy, not to transform it.

 

Compare Syria's liberalization with that in Egypt, Jordan, Tunisia and other Middle Eastern states. In these countries the regimes made an ideological commitment to reform their economies. This kind of ideological or conceptual transformation is seen more dramatically elsewhere in the world, including Russia, Eastern Europe, Mexico, and Chile under Pinochet. Such an ideological change is often accompanied by a change in regime or, at the least, a change in the personnel responsible for economic policy. In Syria, there has been no dramatic personnel change in the regime to push liberalization, and those ministers and bureaucrats who do support reform have been unable to implement needed measures. In the words of one businessman:

 

The basic problem is that the same people who built the socialist edifice are the ones in charge of building a market economy. It just can't work. In Egypt, by contrast, I have some hope because those that built socialism there are not the same people now trying to make the conversion to a market economy. They have real capitalists, trained in the West, who are guiding the transition.18

 

The lack of a conceptual transformation by the political leadership has been accompanied by the lack of bureaucratic reform, a second reason for the failure of economic liberalization. In many parts of the developing world, bureaucracies are expanded in part for rational, administrative needs and in part as a means for the state to absorb labor and keep unemployment down. Syria has been no different in this regard. Thus, businessmen run into inefficiencies' run-arounds, and red tape much as they do in the Third World.

 

However, in Syria the problem is compounded by the fact that its bureaucracy was built with Baathist ideology and its inherent distrust of the private sector. Quite apart from regime policy, there is an organizational interest within the bureaucracy to inhibit a smooth transition away from a public sector economy.

 

To give just one of numerous stories about bureaucratic behavior in Syria: one Syrian investor had received permission to import a ship full of cars after filing all the necessary Law 10 documentation. However, the bureaucracy found one reason after another to forestall delivery after permission to import had been given. Meanwhile, the cars sat on a dock in Italy waiting to be delivered. The investor ultimately gave up on the deal, losing $500,000 in the process.19

 

A third reason for the lack of progress toward privatization is that there is just too much money being made by important players from the market distortions caused by half-measures. Currency manipulation has already been mentioned above as a profitable enterprise for those with connections. The distortions caused by a tiered currency system would not occur with a floating currency, and such enormous (non-productive) profits would be eliminated. Other distortions create other opportunities for middlemen to get rich. For example, the problems encountered in importing goods create a market for those with wasta-connections - to be hired to cut through the red tape. Such individuals have no incentive for the system to be further liberalized.

 

All three of these explanations for aborted economic liberalization can be subsumed within a larger political context. There is currently no significant economic pressure on the regime for further market reform. Syria's economy is performing well enough at present to allow the regime to delay hard choices. More important, a serious program of market liberalization would threaten elite cohesion by privileging the interests of the Sunni merchants at the expense of the Alawi military officers. There is, then, no pressing political or economic reason for the regime to risk potential domestic upheaval with real privatization. However, the regime will likely have to make such a hard choice in the coming years.

 

 

 

PRESSURE FOR MORE LIBERALIZATION

 

At first glance, the Syrian economy has been performing relatively well in recent years. For example, its economic growth rate in the first half of the 1990s averaged 6 percent.20 On closer inspection, however, Syria's modest economic gains in the 1990s were due largely to the chronological coincidence of three short-term trends: oil, Gulf War payoffs and above-average rainfall for agriculture. None of these developments is likely to last.

 

Oil has been the savior of Syria's economy. Current production exceeds 500,000 barrels per day, leading to export revenues of approximately $2 billion annually. Oil alone accounts for over 60 percent of all of Syria's export earnings.21 However, the oil era in Syria appears to have been a short-term phenomenon: production levels are already in decline, and international oil companies are leaving.22 While the government has not published official estimates of crude-oil reserves, they are not believed to be significant - perhaps less than a decade's worth at current production rates. While oil currently accounts for nearly two-thirds of Syria's export earnings, the International Monetary Fund estimates that by 1999, oil will account for less than half and will decline in absolute value.23 The stagnation in the oil industry combined with the fact that Syria has one of the fastest-growing populations in the world means that, barring a significant improvement in economic output in other sectors, Syria's per capita GDP will stagnate or perhaps even decline in the years ahead.

 

Oil exports peaked at the same time that Syria was reaping a financial windfall for supporting the allied coalition in the Gulf War of 1991. After a decade of declining government assistance from the oil monarchies and the Soviet Union, Syria received nearly $3 billion in aid for its participation in Desert Storm, primarily from Gulf countries. While overall government transfers remain higher than they were in the late 1980s, Syria is not likely to receive such a windfall again.

 

Finally, the past few years have seen above-average rainfall in Syria, resulting in three straight years of exceptional harvests. Since agriculture represents about 30 percent of Syria's economy, such harvests were economically significant. However, given the erratic nature of rainfall in the Middle East, bountiful harvests cannot be relied upon to provide Syria with consistent earnings.

 

Thus, unrelated short-term coincidences gave Syria an economic cushion which it could not have anticipated and which will not likely recur. Barring significant new oil discoveries or an unexpected surge in private investment, Syria will likely be facing the same kind of financial crisis that it did in 1986. As in that period, there will be significant pressures to take the limited liberalization measures already enacted significantly further. Regime foot dragging on implementing significant economic reforms prior to its next fiscal crisis may be interpreted as recognition of the possible deleterious political consequences of such reforms.

 

The pressures to expand market reforms in Syria come from four sources. First, as the oil runs out, the regime will have to adopt far greater market reforms - either voluntarily or in exchange for desperately needed IMF loans. Syria will likely face the same dilemma that Jordan did in 1989: gaining access to international capital will depend upon regime adherence to structural adjustment, which in tum will prompt popular discontent. Jordan's answer was to link political liberalization with structural adjustment. Syria may well have to do likewise.

 

The business community represents a second source for market pressure. It is true that a number of privileged businessmen profit greatly from the current arrangements. However, the business class as a whole does not. Business communities often favor economic liberalization because they are the players most able and best situated to take advantage of the opportunities liberalization presents. Put bluntly, liberalization enables businessmen - more than anyone else - to make money, as profits come more through economic rationality than political considerations.24

 

A third and related force for greater economic liberalization in Syria is the international community, particularly Europe. At the margins of Europe's economic community are actors who seek a niche in its economy. Pressure is on these countries to build their economies in such a way as to complement European needs for the benefit of both sides. While the Syrian regime has thus far steadfastly ignored any "niche strategy" for connecting with Europe, the EU has not ignored Syria. In fact, the EU has recently prepared a report for the Syrian regime in an effort to convince it of the advantages of a broader economic relationship with Europe.25 The establishment of greater economic ties would inevitably lead to greater pressures to rationalize Syria's economy.

 

Finally, a peace agreement with Israel - which, ipso facto, means a regional peace -  would put substantial pressure on the regime to liberalize. Such a peace would include normal economic ties, which mean trade and competition with Israeli companies. The restrictions currently placed on Syrian business would be disastrous. In the words of one Syrian businessman, if there is peace without economic reform in Syria, the Israelis "will wipe us off the face of the earth."26 Both by political requirement (normalization of trade with Israel) and economic imperative (in order to compete), a peace agreement will compel Syria to loosen its grip on its own private sector. In addition, a regional peace will propel Lebanon's free-market economy upward, lending more incentive for Syria to do the same.

 

Given the looming financial crisis and the significant domestic and regional pressures to liberalize in the coming decade, Syria will have little choice but to do so. The economic status quo is untenable. The political ramifications of such economic changes will be significant, and will likely impair the military-merchant alliance. The elite cohesion, so central to Syria's political stability, may well suffer as a result of these changes. At the risk of oversimplification, the military will likely resist economic liberalization, while the merchants will embrace it. The military officers have not done well in the capitalist economy, instead making their fortunes through more direct political control of economic activity. By allowing significantly greater freedom to market forces (and, by extension, civil society), such officers will lose the very thing that has kept them in power and in wealth. The sons of Alawi officers may have the confidence to compete with the Sunni bourgeoisie in a market environment, but it is clearly not in their interest to try.

 

On the other hand, the Sunni bourgeoisie generally sees greater marketization as a means to translate its existing economic influence into greater political power. In sum, the issue of significantly greater economic liberalization in the years ahead will directly pit the interests of political and economic power in Syria against each other. While this conflict could play out in many different and unpredictable ways, it would clearly impact elite cohesion in Syria and raise the possibility of significant political instability.

 

 

 

POLITICAL LIBERALIZATION?

 

While economic liberalization represents by far the greatest threat to elite cohesion and regime stability in Syria, it is not the only source of potential tension. Pressures to modify the authoritarian regime structure in Syria are already evident and will likely grow stronger in the coming decade. As with market reforms, the question of political liberalization divides the regime.

 

The pressure for political liberalization in Syria can be seen coming from five sources. First, economic liberalization itself will create pressures for political opening, whether or not the market reforms succeed. Given the political requirements that sustain market economies, any successful transition to the market must ultimately include political liberalization. As Volker Perthes puts it, "There is little doubt that the emergence of a more complex and pluralistic economic system necessitates some form of parallel political adjustment.”27 In fact, Asad himself has publicly acknowledged the necessary relationship between economic and political pluralism.28 At base, privatization of the economy means that society has an increasing percentage of total resources in its hands, while the state's share of resources declines. The very means of upholding authoritarian structures weaken. Over time, the argument holds, political authoritarianism is not compatible with modern capitalism. Empirical evidence supporting this conclusion is extensive: from the newly industrialized countries of East Asia to the southern cone of South America, authoritarian political structures have given way to democratic ones as capitalism has prospered.

 

If the Syrian economic marketization program deepens, then pressures for the liberalization of the "political market" likely will not be far behind. Ironically, in the short term, economic liberalization may even enhance authoritarian rule, as it creates a greater amount of patronage resources for the regime to employ on its own behalf. Steven Heydemann has argued persuasively that the Syrian regime is in a stronger political position after limited economic reform for exactly this reason.29 That said, the larger point is clear: political reform follows economic liberalization.

 

What is ironic in the Syrian case is that pressures for political opening may well follow unsuccessful market reforms. As oil production declines, the regime will once again face economic crisis, as it did when it was compelled to initiate market reforms a decade ago. As was the case with Law 10, such a crisis may force the regime to once again approach its own society to construct a new "bargain," a social contract that would perhaps have as its foundation greater political participation by society in exchange for enduring economic hardship and restructuring. In other words, given the likelihood of severe economic crisis in Syria in the coming years, some form of "democratization" may be necessary to buy social peace. It was exactly this scenario that prompted political openings in the Arab world in the 1980s, including in Jordan, Egypt, Algeria, and North Yemen. Syria may be next on the list of reluctant, crisis-induced, "top-down" political liberalizers.

 

A second and related source of pressure for greater political inclusion is the larger business community in Syria, both within and outside the regime structure. The business community there, as elsewhere, seeks to translate its economic power into political power. This is true both for  businessmen currently excluded from political power and those who are the junior members of the military-merchant alliance in Syria. Diplomatically framed calls for greater transparency and accountability in governance invariably come from either Syrian intellectuals or entrepreneurs. In fact, businessmen have used the significant attention paid to civil society (mujtama madani) in the Arab world in the past decade to legitimize both their autonomous activities and their calls for greater inclusion in the political process. While pressures from the business community up to this point have concentrated more on economic than on political reform, ultimately the two cannot be easily separated.

 

However, one needs to be careful in portraying the business community as a force for democracy in Syria. While it is accurate to say business endorses greater pluralism and accountability, it may be agnostic when it comes to actual democracy. Democracy, with its attendant inclusion of all social classes in the political process, would devalue the privileged position of the bourgeoisie. Thus, the business community is walking a fine political line, endorsing political liberalization as long as it does not go too far.

 

A third source of pressure for greater political inclusion will come from the Sunni majority following the death of Hafiz al-Asad. In fact, the issue of political liberalization may come to a head sooner rather than later, even before that of real market reform, simply because of the timing of Asad's death. As the demographically, economically and historically dominant group in Syria, the Sunnis - or at least some Sunnis speaking on the group's behalf- will likely use the discourse of democratic opening to prevent the reestablishment of a non-Sunni, minority regime. This is logical, as the Alawis at 12 percent of the population could not maintain power in a democratic Syria. Thus, during succession one would expect to see otherwise unlikely democrats using democratic language as a mask to attack Alawi minority rule. Such a movement would likely be joined by more believable democrats in civil society. Which group prevails in this would-be alliance depends on how the succession struggle plays out. In any case, the succession struggle will clearly provide pressure for greater political inclusion.

 

Fourth, in the realm of ideology, the justification for authoritarian rule ended during the 1991 Madrid Conference when the Syrian-Israeli question was transformed from an existential conflict to a border dispute. Baathist authoritarianism has always been justified by its defenders, in part, as a necessary response to Zionism, uniquely capable of mobilizing enough resources to protect the Arab homeland against Israeli aggression. No other issue has shaped modem Syria the way its conflict with Israel has, so the ideology of anti-Zionism and its concomitant justification of authoritarian rule have some historical basis. Peace with Israel is not only ideologically difficult but raises questions about the regime's own raison d'étre. When regional peace comes to the Middle East, a wider base of support will be necessary, at the very least. It is conceivable that a "coalition of the whole" - i.e., democratization - will be a result of such a crisis of political legitimacy.

 

Finally, one of the key lessons from the transitions in Eastern Europe in 1989 was that authoritarian regimes can no longer keep their subjects ignorant of the wider world in the information age. East Germans were very much aware of the standard of living and political freedoms of their counterparts in West Germany. The Communist regime could build a wall to slow the flow of people, but no wall can slow the flow of information. Syria is in a similar position today. Virtually all of its neighbors are democratic or democratizing (Israel, Turkey, Lebanon, Jordan) and have higher standards of living. While Baathist rule has been very good at modernizing a backward agricultural sector and creating a more equitable distribution of wealth, Syria has fallen behind its neighbors in virtually every economic category. For years, Syrians remained surprisingly ignorant of what their neighbors were doing. This situation is now changing, as Syria has been compelled by technology to open up to the larger world. The "international demonstration effect" of democracy may not be decisive in Syria, but it clearly has already had an impact and will continue to work against continued authoritarianism.

 

While it is clear that pressures for political liberalization in Syria exist and will likely grow, the more significant issue concerns how such calls will impact elite cohesion and regime stability. How will the regime respond to such calls? Political inclusion may tum out to be the most fractious issue facing the regime in the coming decade, as it poses the greatest threat to its cohesion. Returning to the military-merchant model, one can see more clearly how the question of political liberalization may divide the regime. The Sunni commercial partner in the alliance embraces political reform for two reasons.

 

First, the business community has a self-interest in greater political freedom as this group is the best situated to take advantage of reform. More important, political inclusion would allow this group to shift the power balance to its favor. Currently, economic power is subservient to political-military power in Syria; political liberalization would likely put greater political authority in the hands of the economic power. Thus, for the bourgeoisie in the military-merchant complex, there is little downside to political liberalization.

 

For the Alawi officers the situation is more complex. It appears that a number of the (particularly older) officers strongly oppose any relaxation of authoritarian rule. For these men, political liberalization is seen as suicidal, certainly politically and possibly literally. For a minority regime to allow an embittered majority back into political power would only invite retribution against the Alawi community. Hardline military officers will certainly hold out for continued and direct Alawi domination of the Syrian state.

 

Other, more strategically thoughtful Alawis recognize that permanent Alawi rule of Syria is impossible. They seek to find ways which preserve the gains made by the Alawi community over the past three decades without further antagonizing the Sunni majority. For these Alawis, a strong Sunni regime that will protect Alawi rights and at the same time enjoy a higher level of political legitimacy in the country is the ideal. As one scholar paradoxically observed to me, "the best guarantee for Alawis is a strong Sunni government."30 Manipulating this transition would be tricky; while they recognize that continued Alawi domination is dangerous in the long run for the Alawis themselves, so would be too much Sunni participation in the political process. A smooth transition to friendly Sunni rule while maintaining the type of authoritarian regime that could protect Alawis would be the goal. However, once the principle of moving away from straight Alawi rule has been accepted, controlling the process (in the post-Asad era) would not be easy. Too much political liberalization is just as dangerous for these Alawis as too little.

 

Thus, while the regime will have to deal with demands for greater political liberalization, especially following the death of Asad, it will be split in its interests over this issue. Sunni merchants will embrace greater political inclusion, some Alawi officers will completely reject any demand for liberalization, and other Alawis will want to take a middle ground. As with economic liberalization, demands for increased political freedom in the coming decade will pose a threat to elite cohesion in Syria, and therefore to regime stability.

 

 

 

LEBANON IN DOMESTIC SYRIAN POLITICS

 

For Syria, Lebanon is simultaneously a foreign and a domestic policy issue: there is no clear division between geostrategic concerns and internal power considerations. Syria clearly has strategic interests in Lebanon, particularly with regard to its struggle with Israel, which has largely been waged by proxy in Lebanon. At the same time, Lebanon has been used by the Syrian regime as a significant source of patronage with which to reward loyalists of the regime. Much of the smuggling that goes on in Lebanon can be explained as a means by which Damascus pays off (by turning a blind eye) some of the key Syrian military commanders who control smuggling routes in Lebanon. Approximately 30,000 Syrian troops are currently stationed in Lebanon.

 

Regional peace and the implementation of the Taif accords will force the restructuring of Syria's relationship with Lebanon. The issue of withdrawing from Lebanon will likely split the constituent elements of the regime. Alawi military officers who gain the most in political support from the patronage system in Lebanon will likely oppose radically altering the status quo there, while the merchant elite would be divided over the issue.

 

The political role of Lebanon in domestic Syrian politics has two main features. First, as noted above, it is a source of regime patronage. Lebanon is one of the smuggling capitals of the world, and Syrian military officers are, at the very least, in close geographic proximity to these illicit activities. It is widely believed that such officers benefit personally from the smuggling, either by being involved in the operations themselves, or by being paid off by the smugglers not to intervene in their affairs. Either way, key Syrian military officers get rich by the current Syrian intervention in Lebanon. In tum, these officers pay back the regime in Damascus through their loyalty.

 

In recent years, however, the smuggling of consumer goods has been decreased, in part because it was hurting the economic interests of many Syrian merchants. They could not compete with the price of smuggled goods and complained to the government, which acted to curtail smuggling activities.31 It seems, then, that Damascus balances on a fine line, allowing enough smuggling to go on to reward loyal military commanders, but not so much that it can be disruptive to the domestic Syrian economy.

 

Lebanon plays a second role in domestic Syrian politics. By having a politically controlled but openly capitalist market next door, the Syrian regime reduces the pressure from its own capitalist class to liberalize. In effect, Damascus can tell its merchants that if they find the Syrian economy too restrictive, then there is always Lebanon to invest in. Lebanon acts as a political-economic release valve to take pressure off the Alawi military officers from the only class that can influence them significantly: the merchants. In a sense, Lebanon represents "backdoor" economic liberalization for Syria. While the business communities in most countries have only their own regimes to pressure politically to adopt market reforms, the business community in Syria is free to play the open market, as long as they do it next door.

 

Because Lebanon is virtually a colony of Syria, there are no significant restrictions on Syrian commercial elites in Lebanon. Lebanon may explain, in part, why the Syrian business community has not yet applied more pressure on Damascus to adopt serious economic reforms.

 

 

 

ELITE COHESION AND THE QUESTION OF LEBANON

 

The question of Lebanon poses dangers to elite cohesion in Syria. Arab-Israeli peace will likely result in increased regional and international pressure on Syria to withdraw its troops from Lebanon in accordance with the Taif accords. The Alawi military officers who represent political power in Syria have little to gain and much to lose from withdrawing. Their primary interest in Lebanon revolves around maintaining control in order to maintain patronage resources. Without Lebanon, the regime would need to find a replacement source of patronage for loyal military officers. Under any circumstances, it would be very difficult to find such a "cash cow."32 As a whole, these officers are not interested in the economic potential of Lebanon per se, but rather its political resources. Withdrawal may encourage greater economic activity, but its political payoff would clearly be negative in this respect. Alawi military officers will likely oppose Syrian withdrawal from Lebanon.

 

The military opposition will likely be joined by some in the merchant class. It is clear that some merchants have benefited economically from Syria's political control of Lebanon. For example, the merchants who are closely tied to Syrian commanders in Lebanon and who bring smuggled commercial items to the market would lose their profitable business given the withdrawal of Syrian troops. Others cannot compete with their Lebanese counterparts and view ultimate Syrian domination in Lebanon as their best guarantor of economic well-being.

 

However, it is clear that most of the influential members of the business community will not view Syrian withdrawal negatively. In fact, many view a freer Lebanon as in their own economic interest. Such confidence was expressed to me in this way:

 

Beirut is our Hong Kong. It has always been to a degree, but now it is on Syrian terms, not us on their terms. In the past Syria was afraid of Lebanon. But no more. If anything, that situation has been reversed. Even if the army withdraws, this does not mean all the other things that connect us - influence, smuggling, deal-making, etc. - will suddenly stop. It is a cash cow, and things will go on in one form or another no matter what. These arrangements - our connections - will not cease with peace. The kids of the elite have lots of business in Lebanon, and now they are saying "let's do these things in Damascus as well." And even some of the [Alawi] military officers are telling their own merchants that Syria needs to be the focus of economic modernization and investment, not just Lebanon.33

 

As with the pressures for economic and political liberalization, the issue of Lebanon has the potential to strain elite cohesion in Syria. While Syria has faced serious political instability since Asad took power in 1970, it has never been as a result of elite division. Rather, elite cohesion in the face of domestic turmoil has been the key to regime maintenance.

 

 

 

SUCCESSION SCENARIOS

 

I have argued thus far that long-term trends in Syria endanger elite cohesion and pose serious risks to political stability. The risk of political instability will be significantly greater if elite cohesion is threatened at the time of Hafiz al-Asad's death. The succession issue is the great question mark in Syrian politics today. Asad, 67, has had serious health problems for over a decade; rumors of his impending death touched off a power struggle in 1984. The Syrian regime is far more stable today than it was in 1984, in part because the conspirators, including the president's brother Rifaat, were subsequently removed from their positions.

 

Of particular concern to many Syrians is that Asad has not put in place a credible mechanism for succession. There are two possible reasons for his inaction. First, a constitutional process of succession does exist, which Asad is perhaps comfortable with. More likely, Asad is grooming his son Bashar to succeed him in a non-constitutional fashion (by law, Bashar is too young to be president). The more divided the elite is when Asad dies, the more likely that the succession struggle will be bloody. Conversely, the more united the elite is when Asad dies, the more likely that the transition will be relatively smooth, maintaining the basic structures of power.

 

 

 

THE SADAT SCENARIO

 

In response to concerns over succession in Egypt late in his tenure, Gama! Abdel Nasser appointed Anwar Sadat vice-president. While Sadat had the credentials of being one of the "Free Officers" who staged the 1952 coup that overthrew the Egyptian monarchy, he was widely viewed as a weak politician. His appointment was seen as a means by which Nasser could eliminate fears about a palace coup led by his vice-president. Upon Nasser's death in September 1970, Sadat became the president of Egypt as required constitutionally. He was widely seen as a caretaker president who would preside over the struggle between the "real" contenders for power, including the odds-on favorite, Ali Sabri. To the surprise of most observers, the "weak" Sadat proved more able than his opponents and put the powers invested in the presidency to good use in disposing of them.

 

A similar scenario is the most likely outcome of a succession struggle in Syria. Upon the death of Asad, one of the serving vice-presidents, probably Abd al-Halim Khaddam, would assume the presidency, with the full support of those around him. Khaddam is a Sunni Muslim who was a childhood friend of Asad and an early supporter of the Baath party. Like his Alawi counterparts, Khaddam grew up in poverty in a rural town along the coast of the Mediterranean. While Khaddam has clearly been part of the inner circle of power (the jamaa), he would be viewed by many as a transitional figure, while the "heavyweights" - like Ali Duba, Hikmat al-Shihabi, Mustafa Tlas, Ali Mahmud Hasan, and even Rifaat al-Asad- battled it out for real power. Since Khaddam is neither Alawi nor from the army, he would not be viewed by many as a viable contender.

 

However, like Sadat, Khaddam would likely be able to survive any challenge once ensconced in power. As a Sunni, he would be more acceptable to large segments of the Syrian population than any Alawi president would be. And as a quintessential inside member of the regime, he would gain the support of many Alawis who view a strong Sunni presidency as their best bet for continued prosperity. Socially, Khaddam has made the right political moves: he is married to an Alawi woman and is tied through the marriage of his son to the old Syrian bourgeoisie. In other words, Khaddam would represent the continuation of the present regime with some needed cosmetic changes, and, as a result, would gain support from inside the regime structure and from outside it. He could use the vast powers of the presidency to effectively dismiss those contenders who do not accept his rule.

 

 

 

THE RULE-BY-COMMITTEE SCENARIO

 

A second scenario for succession is the formation of a ruling committee or command council to run Syrian affairs. Such a committee would likely be made up of the most prominent power brokers today, including some combination of the following individuals: Abd al-Halim Khaddam, current vice-president; Hikmat al-Shihabi, current chief of staff of the army; Mustafa Tlas, current minister of defense; Ali Duba, current head of Military Intelligence; Ali Mahmud Hasan, current head of the Republican Guard; and Adnan Makhluf, former head of the Republican Guard.

 

Of these prominent individuals, three are Sunni (Khaddam, Shihabi, Tlas) and three are Alawi (Duba, Hasan, Makhluf); all are trusted members of the regime's inner circle. Rule by committee must be seen as a transitional arrangement in the immediate aftermath of Asad's death, lasting for some number of months or even a year or two. Over the longer term, it cannot be viewed as stable. One of two outcomes is possible from this arrangement: either one man emerges as the new president, with or without the consent of his fellow committee members, leaving the basic fabric of the regime unchanged; or no consensus is reached and a power struggle erupts among contenders with no clear and early victor. If this second outcome occurs, the possibility of serious internal strife and even a bloodbath becomes real.

 

 

 

THE TURKISH MODEL

 

Upon the death of Asad, it is possible that the Syrian army will formally step in and take provisional power in Damascus. This is particularly likely if the powers that be cannot agree to a successor and violence is seen as imminent. This could happen in any case as a play for power by Hikmat al-Shihabi, the army chief of staff.34 The Syrian army, which is not as respected a national symbol as its counterpart in Turkey, is nonetheless a reasonably cohesive unit. It may be surprising for a military whose officer corps is predominately Alawi and whose enlisted ranks are predominately non-Alawi, but the Syrian army has had remarkably few incidents of dissension in the past 20 years.35 The lack of dissension becomes more remarkable in light of the panoply of opponents the Syrian army has fought in this period: Israel, the PLO, Christian militias in Lebanon, Iraq and Islamists in Syria.

 

The Turkish model has two elements to it. It includes not only an assumption of power by the army, but also a gradual withdrawal to the barracks by the army as a constitutional civilian regime is put in place by the retreating officers. It is for this reason that this scenario is favored by elements of civil society in Syria. It promises not only order in the transition away from Asad, but also a reasonably constitutional and pluralistic political future.