DEPUTY PM DARDARI: REFORMER OR APOLOGIST?

C O N F I D E N T I A L SECTION 01 OF 02 DAMASCUS 005909 SIPDIS NEA/ELA NSC FOR ABRAMS/DORAN TREASURY FOR GLASER/LEBENSON EB/ESC/TFS FOR SALOOM E.O. 12958: DECL: 11/12/2015 TAGS: ECON EFIN EINV PGOV SY SUBJECT: DEPUTY PM DARDARI: REFORMER OR APOLOGIST? REF: A. REF A: DAMASCUS 5373 ¶B. REF B: DAMASCUS 5662 ¶C. REF C: DAMASCUS 4977 Classified By: CDA: Stephen Seche for Reasons 1.5 b/d ¶1. (C) Summary. After a two-week absence, Deputy PM Dardari spoke out last week to reassure the Syrian public that their government has a plan to deal with any possible sanctions the international community may impose on the country. His recent pronouncements (ref A, B) seem to fit more with a regime apologist than an economic reformer, but his defenders insist it is the cost of doing business with this regime. Whether Dardari,s motivation is simply personal advancement or a real desire to contribute to positive change by working within the system remains an open question. Irrespective of Dardari,s motivations, two things remain clear: his high-profile pronouncements help shore up public support for the regime, and he is viewed as an opponent by those within the regime who remain committed to the old socialist economic models at the core of Baath Party ideology. Many argue that whether Dardari will be able to maintain his position and influence within the SARG in coming weeks will depend on his ability to continue to reassure average Syrians that their government will defend their economic interests. End Summary. ¶2. (C) Deputy/PM for Economic Affairs Abdullah Dardari, the SARG public face for its economic reform efforts, has been a feature of the state-controlled media in Syria for months. He has effectively used his economic portfolio to co-opt domestic critics and to combat efforts to internationally isolate Syria (ref A). He has also worked to lessen the economic effect of the increasing political pressure on the regime (ref B). For the two-week period following the release of the Mehlis report and subsequent passage of UNSCR 1636, however, D/PM Dardari had been noticeably absent from the headlines. He re-emerged last week to forcefully discount rising public concern about the negative impact of potential new sanctions on Syria. In international and local media, Dardari was quoted as commenting that the Syrian economy is well-positioned to withstand economic sanctions; that sanctions would hurt Syria,s neighbors, like Lebanon and Iraq that are dependent on transshipment of goods through Syria more than they would Syria; that FDI would continue to pour into the country irrespective of sanctions; and that the SARG had created a committee to counter sanctions, which he chaired. ¶3. (c) Though Dardari,s statements last week were jarring insofar as they associated him with an increasingly recalcitrant regime, his defenders explain them as necessary. According to them, Dardari and other reformers like Minister for Economic Affairs, Dr. Amer Husni Lutfi, feel threatened and are desperate to show their utility to the regime. Commenting on Dardari,s recent conspicuous absence, independent economist Nabil Sukkar opined that Dardari may have felt, like him, co-opted by the nationalist upswing following UNSCR 1636. He pointed to what he viewed as the recent re-emergence of people like Minister of Expatriate Affairs Dr. Buthayna Shaaban, as proof that those opposing economic reform felt empowered by current events. Dr. Abdul Rahman Attar, head of one of the leading Sunni business families in Damascus, told us that he recently consulted with D/PM Dardari about the current situation. Dardari told Attar that his own position within the government had recently deteriorated to such an extent that Dardari felt obliged to go to President Asad to ask that Asad clarify to the other cabinet members that D/PM Dardari remained in charge of all economic issues within the government. According to Attar, Finance Minister Hussein and others had recently countermanded Dardari directives and refused to implement agreed-upon reforms. ¶4. (C) Abdel Kader Husrieh, architect of the SARG,s monetary policy reforms, likewise defends Dardari on the grounds that the ends justify the means. According to Husrieh,s line of reasoning, Dardari,s actions to lessen pressure on the regime are necessary for him to maintain his influence with President Asad. By doing so Dardari incrementally advances the cause of economic reform. Husrieh believes Dardari,s continued presence in the government allows reformers such as himself to undertake efforts to loosen the regime,s control over all economic activity. Husrieh believes that without Dardari, the only economic advice President Asad would hear would come from the unreconstructed socialists. ¶5. (C) Husrieh asserts that President Asad,s continued commitment to economic liberalization is in part do to Dardari,s ability up till now to quiet the markets and reassure the public. As proof of this, Husrieh points to the exchange rate, which has shown much less volatility than expected following recent developments. Husrieh argues that the SARG lacks the monetary tools to effectively combat the pressures on its currency so it must be trust in the SARG,s economic message as presented by D/PM Dardari that inspires the average Syrian to hold onto pounds and not seek the safety of a hard currency. Though the SARG,s package of reforms, which Dardari announced in August (ref C) have worked till now to contain the volatility of the pound, that may be starting to change (septel). ¶6. (C) Dardari,s detractors, on the other hand, claim his actions are little more than a smoke screen that allows a corrupt regime to maintain the semblance of reform while continuing to economically exploit the nation. According to them, Dardari is more interested in managing a media message than he is in advancing real reform. In this more cynical view of Dardari, he is motivated largely by his strong desire for personal self-aggrandizement. These contacts insist that Dardari,s reform rhetoric is a mask that hides the true nature of a regime which exploits every business interest for its own advantage. The system is fundamentally corrupt, they argue, and Dardari,s maneuvering on the margins lacks real value. For them, Dardari skews the debate on economic reform and makes less clear the choices facing the nation. ¶7. (C) Comment. There is no doubt that D/PM Dardari has played an important role in the economic reforms the SARG has implemented thus far. But all unbiased observers agree that those reforms have been halting and painfully slow. Still, there does seem to be a clear consensus within the business and economic community that Syria is better off with Dardari in charge of its economic policy than the alternative. However, whether Dardari can maintain his position within a regime that feels increasingly embattled remains to be seen. The other question, which only Abdullah Dardari can answer, is at what point does a very public association with an increasingly autocratic government rob an ostensible economic reformer of his credibility? SECHE