Abstract
Engagement with Syria has emerged as a high priority for US President
Obama’s administration, as
evidenced by the flurry of diplomatic
activity since the new president took office in January. We expect
these
efforts to bear some fruit, not least because of the poor state of the Syrian
economy. The prospect of
improved trade ties and the likelihood of
increased inward investment will act as a major incentive.
However despite
the more conciliatory tone from Washington, the US renewed sanctions against
Syria on
May 8, saying it continued to pose a threat to US interests.
The path to peace will not be easy for Syria, as illustrated in its spiky
relationship with Israel. Binyamin
Netanyahu, Israel' s prime minister, had
declared himself hostile to the return of the Golan Heights to
Syria
– one of Damascus' s key demands of the regional peace process –
but on May 20 said that Israel
was ready to engage in talks with Syria
without preconditions. For its part, on May 12, Syria reiterated
willingness to resume talks but, in a reversal of sentiment on May 15, said
Israel was no “partner for
peace”.
There are also still
plenty of questions hanging over Syria' s commitment to the US vision of peace:
its
support of Iran, Hamas and Hizbullah is popular at home, and there is
some suggestion that Syria has
concealed the extent of its nuclear
research facilities. Washington has also called on Syria to take action
against al-Qaeda fighters entering Iraq from its territory.
The Syrian
economy is under attack on several fronts in 2009, and we are forecasting a
slump in real
GDP growth to just 1.4%, down from an estimated 4.1% in
2007. Conditions will remain tough in 2010,
when we see growth rising only
slightly to 1.8%, before recovering further to 2.6% in 2011. A poor
growth
outlook, twin deficits on the fiscal and current accounts and a lack of inward
investment are likely
to exert downside pressure on the currency during
our forecast period.
This quarter, we have introduced a significant new
aspect to BMI' s Defence Reports, which is the City
Terrorism Rating (CTR).
This assesses the risk of a terrorist attack. The CTR takes into account
the
overall BMI Terrorism Rating for the country in question. It also
incorporates the ' prevalence' of
terrorism, which recognises the frequency
of attacks, and whether the city is a target for terrorists. The
CTR also
recognises the ' threat' of terrorism in terms of the likely numbers of victims
and the ability of
groups to launch sustained campaigns. In Syria we
assess the CTR for Damascus at 90.0, rating equal
second with Dubai and
Abu Dhabi behind Tripoli among the Middle East Region’s 23 rated
cities.
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