EU Agreement with Syria

Still Reaching Out

While the USA is keeping up the pressure on Syria, Europe is still working to intensify relations, with the EU partnership agreement. Following the elections in Lebanon, the last hurdle is coming up: the approval of all 25 of the EU's foreign ministers

While the USA is keeping up the pressure on Syria, Europe is still working to intensify relations, with the EU partnership agreement. Following the elections in Lebanon, the last hurdle is coming up: the approval of all 25 of the EUs' foreign ministers. Manuela Römer reports from Damascus

photo: Larissa Bender
Will the partnership agreement with the EU put an end to high import duties for new cars in Syria?

​​Going by the motto "dialogue instead of pressure", the European Union has decided to include Syria as the last negotiating partner among the 11 associated Mediterranean countries. Umma Edwin, the foreign policy speaker of the European Commission in Brussels, confirmed: "The EU is not threatening to dissolve the agreement. The UN Resolution 1559 is not a prerequisite for signing the agreement."

However, Syria is definitely expected to withdraw its troops from Lebanon, as EU member of parliament Veronique de Keyser made clear on her recent visit to Damascus. She noted that the EU will also pay close attention to the planned parliamentary elections in Lebanon.

The head of the EU Commission's delegation to Damascus, Frank Hesske, also regards the Syrians' relationship toward Lebanon as the last major obstacle. "The signing of this agreement will send a political signal. It means that we are moving closer to Syria. Of course, this signal has to be seen in a broader political context. Here Syria’s policy toward Lebanon is definitely a problem."

Advantages for both sides

The agreement includes a wide range of components, and will bring advantages for both sides, in terms of politics, security and social policy, culture, education and economics.

For the Europeans, the political part of the agreement promises not only the upholding of human rights and the prohibition of weapons of mass destruction, but above all the possibility of stopping illegal immigration to the EU. According to Hesske, Syria is a hub for illegal immigration in the Near and Middle East.

In turn, Syria can profit from EU financial aid, or in the educational sphere. For example, the EU has already made a major commitment toward training Syria's future managers by founding the Higher Institute of Business Administration (HIBA) in Damascus.

Economic cooperation is a central factor. There are plans to create a Euro-Mediterranean free trade zone by the year 2010. Automobiles are one example: previously, Syrians had to pay duties of 225% to import a new car. These duties will be reduced to 150% in the first three years after the signing of the agreement, and will be eliminated entirely after nine more years.

Though this is good news for Syrian consumers, it will initially place a burden on the economy, as the president of Syria's Chamber of Commerce, Rateb Shallah, and Frank Hesske from the EU Commission agree. The country still lacks the ability to offer cheap, high-quality products that can compete on the international market, in contrast to neighboring countries such as Jordan, Turkey and Lebanon.

"The economy is in dire straits. For the past 6 – 7 years growth rates have been falling constantly. If nothing is done, soon there will be zero growth, while the population continues to grow very dynamically. This could have very disturbing consequences, among other things for the social stability of the country," says Hesske.

This is contradicted by Rateb Shallah: "I don't agree that economic growth is on the decline. We aren't in bad shape. But that also means that there is more opportunity for development than in other places."

The EU is already Syria's main trading partner. More than half its exports go to Europe, which in turn provides almost a third of its imports. One goal of the agreement is to promote direct investments, which have remained at a low level so far. The German-Arab Chamber of Commerce in Damascus confirmed that there are no direct investments whatsoever from Germany.

German-Syrian economic relations

In principle, however, Syria is a potentially interesting business partner for German companies. For example, the Berlin planning office Plabis GmbH submitted a proposal for a new railway to connect the western coast with the eastern part of the country. "If we get the contract, that will mean a transfer of technology to Syria," says manager Heinz Hauder.

The vice president of the Magdeburg Chamber of Commerce, Gerhard Bertram, speaks of a planned beltway around Damascus, an attempt to solve the capital’s traffic problems with German assistance.

"Companies in Saxony-Anhalt want to work together with Syrians who studied here, in the former GDR, to get projects going." There is even a private German-Syrian University in planning.

Even unpleasant experiences are not frightening off German entrepreneurs. The Hamburg company Peco built a textile firm in Lattakia, and is still waiting for the performance guarantee of 17 million dollars to be paid back.

Behind it all is a personal dispute between the former minister-president and the former minister of industry. Manager Manfred Breuer is optimistic: "The Court of Arbitration of the International Chamber of Commerce in Paris will decide in our favor, because we are in the right. Besides, we have made an offer for two new, smaller projects, and the Syrians have already awarded us the contract."

The agreement could provide incentives to put long-overdue reforms into effect. For Rateb Shallah these would include increased legal security, the establishment of a stock exchange and insurance, and the privatization of the public sector.

This is not yet on the agenda, Shallah says, because the public sector is having problems, and these must be kept from affecting the private economy. However, in principle the Syrian government is no longer willing to cover the losses of the public sector.

On the whole, the agreement will help to develop Syria's potential, or so Rateb Shallah hopes: "Syria is like a young woman who is still at the university. The men haven't started making marriage proposals yet because they know the young woman must finish her studies first. It is the same way with Syria. Potential investors know that Syria must first do its homework and get rid of remnants of backwardness. But then Syria will be much more attractive than its neighbors."

In the end, Frank Hesske hopes, the focus will be on the people: "Our ultimate goal is to bring populations closer together. This agreement is not a matter for bureaucrats and politicians – at least I hope not. It is meant to give people the certainty that they have better personal and professional opportunities. The people should profit, not just the economy."

Manuela Römer

© 2005

Translation from German: Isabel Cole

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