Identifier
Created
Classification
Origin
06DAMASCUS639
2006-02-15 10:09:00
CONFIDENTIAL
Embassy Damascus
Cable title:  

ALEPPO,S INDUSTRIALISTS GENERALLY UPBEAT

Tags:  ECON ETRD ETTC SY 
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 7144
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C O N F I D E N T I A L SECTION 01 OF 02 DAMASCUS 000639 

SIPDIS

SIPDIS

NEA/ELA
NSC FOR ABRAMS/DORAN/SINGH
TREASURY FOR GLASER/LEBENSON
EB/ESC/TFS FOR SALOOM

E.O. 12958: DECL: 02/13/2016
TAGS: ECON ETRD ETTC SY
SUBJECT: ALEPPO,S INDUSTRIALISTS GENERALLY UPBEAT

REF: 05 DAMASCUS 6544

Classified By: CDA Stephen Seche for reasons 1.5 b/d.

C O N F I D E N T I A L SECTION 01 OF 02 DAMASCUS 000639

SIPDIS

SIPDIS

NEA/ELA
NSC FOR ABRAMS/DORAN/SINGH
TREASURY FOR GLASER/LEBENSON
EB/ESC/TFS FOR SALOOM

E.O. 12958: DECL: 02/13/2016
TAGS: ECON ETRD ETTC SY
SUBJECT: ALEPPO,S INDUSTRIALISTS GENERALLY UPBEAT

REF: 05 DAMASCUS 6544

Classified By: CDA Stephen Seche for reasons 1.5 b/d.


1. (C) Summary. During a recent visit to Syria,s second
city, Aleppo, we found the business community there to be
guardedly optimistic and pursuing expansion plans in a range
of existing and new business sectors. The Aleppines
attributed their less than critical assessments of the Bashar
al-Asad regime to: the reduction of obstacles to business and
contaminant corruption resulting from a reduced Baath Party
and secret police presence in daily life and business;
President Asad taking a personal interest in the city; and an
atmosphere of increased personal freedom. The optimism was
balanced by anger over on-going tax raids, the loss of
business resulting from the SARG confronting Lebanon, and the
potential return of economic instability. End summary.


2. (C) During a three-day visit to Syria,s industrial
capitol, Aleppo, a team from Embassy Damascus,
economic/commercial section met with a wide range of
manufacturers and business people from textiles, ready-made
garments (RMG),pharmaceuticals, industrial agriculture, and
tourism. All were actively pursuing expansion plans in spite
of expressing some concern about the current state of the
economy. All criticized the economic team surrounding
President Bashar al-Asad as ineffective, but did not blame
Asad himself for his government's failings. Our general
impression was that Aleppo enjoyed greater economic vitality
and the business community was more optimistic than their
Damascene counterparts. That could be due, in part, to the
timing of our visit, however, as even in the capital the
business climate has fluctuated with the international
situation and is arguably better now than it has been in
months.


3. (C) A number of contacts pointed out to us that relations
between Aleppo and the SARG have improved markedly since
Bashar al-Asad took over the presidency. Many remarked that
they feel Asad has reached out to the city in an effort to
mend the fences broken by his father. Whereas Hafez al-Asad

variously persecuted and ignored the city, never making an
official visit during his entire tenure, Bashar visits
regularly and is seen unexpectedly at restaurants or other
popular public areas with no apparent security detail.
Additionally, Asad has made a number of official visits to
Aleppo which our interlocutors credited with improving the
city,s basic infrastructure, including water and roads.


4. (C) Our interlocutors also gave Asad credit for shrinking
the presence of previously intrusive state entities like the
Baath Party and the security services. According to
businessmen in Aleppo, both entities had long been
significant obstacles to their enterprises with Baath Party
members able to claim preference in any business transaction
and security forces sowing corruption. With the overt
presence of both reportedly receding, businessmen claim to
feel increasingly emboldened to demand their rights in
business and to speak out publicly against corruption.
Emphasizing the reduced presence of the security services,
one businessman recited to us how he found a placard pasted
on the outside of his place of business one recent morning
that was calling for violent revolution. The businessman
said that even though he had nothing to do with the poster,
in previous years he would have faced an extended period of
incarceration simply because the building the offending
poster was glued to belonged to him. Further, everyone in
the building would have been arrested and interrogated by the
mukhabarat, according to him. Given the changed environment,
the businessman was, in this instance, able to simply tear
down and discarded the poster without suffering any unwanted
visits by state security officials.


5. (C) Balancing this optimism was bitter criticism over the
rapid devaluation of the Syrian Pound (SYP) this last fall
and the SARG,s failure for months to manage the decline
(reftel). Some manufacturers told us that the devaluation
had caused them to slow down and even suspend operations as
it was impossible for them to gauge the real value of the
currency. Additionally, there was both concern and deep
anger over tax raids that were occurring at various locations
around the city during our visit. Though not a new

DAMASCUS 00000639 002 OF 002


phenomenon, the extent of the raids and tactics used by the
SARG were alarming the manufacturing community. For the
first time in memory, the President of the Chamber of
Industry's factory was raided. The SARG was also offering
ten percent of unpaid taxes identified as a bounty for
informants, which one manufacturer told us had already
resulted in someone attempting to blackmail him.
Manufacturers also commented that the SARG,s current stand
off with the international community had caused some of their
foreign customers to seek guarantees before placing new
orders. This was in part the reason two manufacturers we
talked to are pursuing opening new factories in Egypt.


6. (C) Comment. Asad has built some good will with the
business community in Aleppo, but perhaps more important is
the increasing feeling of personal freedom in Aleppo's
business community. To keep business leaders from using
their new-found liberty to criticize President Asad, the
regime will have to deliver in a number of concrete ways.
One, the currency will have to remain stable, which could
prove difficult if or when Syria returns to the international
spotlight in a negative context. Second, export markets,
especially Europe, will have to remain open. Finally, the
SARG will have to find a way to meet the increasing budgetary
burden of maintaining its very generous diesel and
electricity subsidies that benefit Aleppo,s industrialists
to a greater extent than any other single group.
SECHE