SYRIA JOINS THE UNOFFICIAL DEVELOPING NATIONS GROUP AT

UNCLAS DAMASCUS 000598

SIPDIS

SENSITIVE
SIPDIS

NEA/ELA
NSC - EABRAMS/MSINGH
TREASURY FOR GLASER/LEBENSON
EB/ESC/TFS FOR SALOOM

E.O. 12958: N/A
TAGS: ECON ETRD ECIN SY
SUBJECT: SYRIA JOINS THE UNOFFICIAL DEVELOPING NATIONS GROUP AT
THE WTO

NOT FOR INTERNET OR WEBGRAM DISTRIBUTION


1. (SBU) Summary: On February 6, the SARG announced that it had
joined the unofficial developing nations group at the WTO, the
latest in an ongoing campaign to portray the SARG as
strengthening international economic relationships. Syria is
receiving $1.6 million USD in pre-WTO accession assistance from
the UNDP, as well as technical assistance from the European
Commission under the MEDA Program (financial instrument of the
Euro-Mediterranean Partnership) and Institutional and Sector
Modernization Facility Program (ISMF) to achieve Association
Agreement requirements and implement institutional reforms.
However, Syria's latest WTO-related announcement appears more
politically motivated than reflecting any real commitment to
liberalize its economy by complying with accession requirements.
End summary.


2. (U) Local press reports on February 6 stated that Syria has
joined the unofficial developing nations group at the WTO, and
reiterated Syria's desire to join the WTO and highlighted the
SARG's commitment to economic reform and trade liberalization.
Furthermore, the articles in state-controlled media implied that
Syria's accession to the WTO is a natural step on the country's
path of economic success, and pointed to Syria's participation in
GAFTA, the unsigned EU-Syrian Association Agreement, and pending
free trade agreements with Iran and Turkey.


3. (SBU) On December 10, immediately preceding the first of Prime
Minister for Economic Affairs Abdullah Dardari's repeated public
comments concerning Syria's pending WTO accession request, the
SARG and the UNDP signed an agreement to institute a $1.6 million
project that will assist Syria in achieving its pre-WTO accession
requirements. According to one UNDP economist, the
organization's support to the SARG thus far has been limited,
citing a seminar for SARG ministers to discuss the challenges of
WTO pre-accession, a two-day workshop on corruption, and the
distribution of training kits to the Ministry of Economy and
Trade that focus on economic liberalization. These initial
activities will feed into a larger one-year project that will
focus on restructuring Syria's legal framework, namely revising
Syria's competition laws and amending Investment Law Number 10 to
improve investment incentives and establish standardized criteria
by which investment projects are approved. UNDP contacts
cautioned the SARG that UNDP assistance would not guarantee
accession to the WTO, and told the SARG that it would need to be
serious about deepening economic reform and policy implementation
in order to achieve WTO membership.


4. (SBU) Though the European Commission does not have a specific
project or technical assistance program to assist the SARG with
its WTO accession goals, the Europeans are supportive of the SARG
at a technical level under the auspices of helping it comply with
reform requirements for the EU Association Agreement. Contacts
at the EU mission in Damascus have called the Association
Agreement an "excellent framework" that provides the SARG with
economic and trade guidelines that are in-line with WTO accession
requirements. EU programs have focused primarily on the Ministry
of Finance and the Customs Department, with technical experts
providing advice on tax and fiscal reform, public expenditures,
and customs administration. The European Commission is currently
finalizing its latest Country Strategy Paper (under the MEDA
Program) that will provide assistance to help Syria achieve the
objectives of the Association Agreement. Additionally, the EU's
ISMF is evaluating the SARG's five-year economic plan to identify
where improvements in Syria's trade legislation can be made. Our
EU interlocutors believe that despite Syria's tenuous political
situation, the EU should continue technical assistance to
encourage the SARG to reform its economy.


5. (SBU) Comment: The SARG's recent decision to join the
unofficial developing nations group at the WTO builds on
Dardari's previous statements asserting that "trade diplomacy"
with other countries will help Syria gain support in its attempt
to become a member of the WTO. The SARG's actual commitment,
however, to comply with WTO accession criteria is questionable at
best. For example, though the SARG has trumpeted its special
committee to monitor the country's progress in achieving WTO
accession requirements, contacts at UNDP said that the task force
has never met and suffers from high turnover. The announcement
of Syria's membership in the unofficial developing nations group
at the WTO is most clearly seen as another example of the SARG
attempting to convince Syrians that the regime is neither
economically nor politically isolated.