The Difficulty Surrounding Reform within Syria and Morocco
By: Jim Lindley
December 7, 1998
Globalization - Boone/Henry
The road to economic liberalization of capital within the Middle East and
North Africa (MENA) is one fraught with difficulty. The difficulty often
arises from the entrenchment of political regimes which have long
controlled the governance of society and the economy. Such regimes are
oftentimes unwilling to replace state control with liberalizing policies
that might jeopardize the political power such regimes hold. However, the
expanding global economy dictates the necessity for change so that these
nations can effectively join the international market place. A tradition
of control by the political elite as ancient as the notion of "sultanism,"
lie at the very root of the difficulty of transition for many of these
nation-states.
"Part of the superficial attractiveness of machine bureaucracies is that
they do quite well in coping with hostile political environments. Power is
centralized in the administrative apex, and this arrangement provides clear
responsibility for administrative action and quick response to political
threats. A large, older administrative system must decentralize if it is
to deal with change effectively, but this will not happen unless it has
legitimacy and acceptance (i.e. unless the political environment is
sufficiently benign that the just-mentioned political defensive advantages
of Weberian systems are not perceived by the organization as vital to its
security) [Fathaly and Chackerian, 1983: 202-7]."
The ability to effectively control most aspects of society and the power
associated with near dictatorial structures are extremely difficult to
change. Indeed, rulers of the nations of the Arab world appear to prefer
"a system of administrative authority in which all power emanates from a
single political leader; and where the influence of others is derivative in
rough proportion to their perceived access to him or their share in his
largess." However, the world is changing and the necessity to reduce such
political power and open up the economic systems to foreign capital and
competition is bringing with it a proportion of structural change for these
nations. The modes of transition for the nations within this region are as
diverse as the nations themselves. The variation among these nations and a
multitude of differing external factors also impacts how far along the road
to economic liberalization these nations in the MENA region can be found.
The situation within Morocco and Syria exemplify the differing degree of
transition to greater economic liberalization found within this region of
the world.
These nations gained independence in the post-World War II world and
established authoritarian regimes. The government structure utilized
methods aimed at attaining and retaining all-encompassing control of the
economic sector. The utilization of patronage measures and clientelism to
consolidate the state’s control over the economic and political sectors
further complicates the structure of governance in these nations.
Additionally, the rent-structure of the economy resulted in the rise of a
political elite. These factors attest to the predatory nature of the state
within both of these countries in the period following their independence;
although, Morocco has undergone dramatic changes of its state-structure.
Morocco has instituted reform largely because of economic downturns and the
huge debt crisis it faced in the mid-1980s. The result for Morocco is an
increased degree of openness to foreign investment and the privatization of
its banking system. On the other hand, Syria is just beginning the
transition process. Syria has felt the impact of economic recession, as
well. Coupled with the fall of the Russian economy, which provided a
source of aid, and decreases in oil prices, Syria has become aware of its
precarious economic position and begun marginal changes. These countries
still have problems which must be faced if true incorporation to the global
capital markets is to become a reality.
The relative size of these two nations differ somewhat. The relative sizes
of these two nations can be best understood when compared with other
nations found in the region. Additionally, the total Gross Domestic
Product received expose the difference in revenues available (See Table 1).
TABLE 1:
Population 1995 GDP 1975 1985 1994 1995
(millions) $US Bill.
Morocco 26.6 Morocco 9 12.9 30.3 32.5
Algeria 28 Algeria 15.6 58 42.1 41.4
Tunisia 9 Tunisia 4.4 8.4 15.7 18
Egypt 57.8 Egypt 11.4 34.7 42.9 47.3
Palestine 2.5 Palestine 3.1 3.2
Jordan 4.2 Jordan 5 6
Syria 14.1 Syria 6.8 16.4 15 16.8
Turkey 61.1 Turkey 46.7 67.2 130.7 164.8
Source: World Development Indicators, World Bank: 1997.
Generally, both countries’ population have been rising, although they are
still relatively small in comparison to other third world developing
countries. The data indicates an increase in Moroccan GDP since 1975. The
Syrian case has also risen in its GDP levels, but not as dramatically. The
greater proportion of GDP that Morocco collects alludes to the beneficial
results of its economic reform programs. Descriptions of each of these
countries and historical backgrounds provide further understanding of the
difference of reform measures and their effectiveness.
Following the declaration of independence of April 17, 1946, Syria went
through a period of rapid economic development and political upheaval. In
the period following Syria’s independence, the political scene was
embroiled in a number of coups. A military coup in 1954 concluded with
Arab nationalist and socialist elements attaining power. In the aftermath
of the Suez Crisis, Syria joined with Egypt in the creation of the United
Arab Republic. However, the UAR did not last, and Syria regained its
independence following another military coup in 1961, resulting in the
formation of the Syrian Arab Republic. The newly formed government
suffered instability and finally concluded with the takeover of the
National Council of the Revolutionary Command in 1963. This takeover was
largely engineered by members of the Ba’ath Party. Coups continued in
Syrian politics until President Hafez al-Assad attained power in 1971.
Presently, Syria’s political scene is marked by the continued rule of the
Ba’athist authoritarian regime under President Hafez al-Assad.
President Assad, currently in his fourth seven year term, is a member of
the Alami minority sect of Islam that represents roughly 11 percent of
Syria’s population, and is Syria’s longest-lasting modern leader. The
Presidential monarchy in Syria, similar to the French etatist model, is
vested with broad policy-making powers, and controls the civil and military
bureaucracies. The Presidential monarchy relies on oil and state
production rents to keep the bourgeoisie subservient and dependent on the
state through patronage. Moreover, the regime utilizes public policy
making to further its own interests over the other classes. The resultant
economic scene is plagued by corruption and tax evasion by the private
sector. Therefore, the Presidential monarchy must defend its public
sector to retain its revenues. President Assad’s policies regarding the
economy are aimed at limited economic liberalization for these very reasons.
Morocco its independence from status as a French protectorate in 1956.
The political scene following independence was subject to a number of
political coups. The political turmoil resulted in the formation of three
different constitutions. The current government structure in Morocco is a
constitutional monarchy under the rule of King Hassan II, the head of
State, and governed by Prime Minister Filali. The monarch (Commander of
the Faithful), in the Moroccan case, serves as the secular and religious
leader who is given sufficient powers to ensure control over the political
institutions functioning within the country. The monarch has the ability
to appoint and dismiss the prime minister and other government ministers
and presides over all important government bodies such as the Council of
Ministers, the Supreme Council of the Judiciary, the Supreme Council for
National Development and Planning, and the Supreme Council for Education.
The king also possesses a form of veto power over legislation.
The political regime in place was characterized as authoritarian
utilizing forms of patronage since 1958. The patrimonial rule kept the
opposing political parties pitted against one another and stemmed from the
royal family’s makhzan. After 1983, the IMF and World Bank imposed
measures for economic liberalization which were also meant to stifle
traditional forms of patronage. The makhzan’s purchase of Omnium
Nord-African (ONA) in 1980, provided the monarchy a new method by which to
maintain control over political and economic reform while meeting
international commitments, thereby extending the patronage of the monarchy.
The ONA was utilized to establish a solid foundation in the commercial
banking industry before starting to privatize and lift credit restrictions.
The end result was a policy of liberalization of financial capital and yet
providing the opportunity for this highly powerful conglomerate to
establish control over the liberated economy.
Morocco is a middle-income economy that depends mainly on services,
agriculture, and the mineral industries. In 1995, the services sector
comprised 52.5% of the total Gross Domestic Product (GDP), industry
comprised 33.2%, and agriculture comprised 14.3%. Morocco’s agricultural
sector is mainly devoted to the production of cereals such as wheat,
barley, corn, and oats which are mainly used for domestic consumption, but
overall Morocco is a net importer of cereals. Modern farms also produce
citrus and vegetable crops for export. The agricultural sector is contains
a substantial share in livestock raising, fishing, and forestry. The
manufacturing sector of the economy includes the production of foodstuffs,
chemicals, metal products, and construction materials, accounting for
approximately 19.2 percent of GDP in 1995. The natural resources found
here also include a large supply of minerals, especially phosphates and
phosphate derivatives that account for over a quarter of Moroccan exports.
Morocco also imports a substantial amount of oil, machinery and
transportation equipment (See Table 2).
TABLE 2:
Trade: Morocco 1980 1985 1994 1995
$US Millions
Imports 4160 3850 7188 8563
Total Exports 2490 2170 4013 4802
Ex. Fuels/Min/Met 1128 686 563
Source: World Development Indicators, World Bank: 1997.
Syria’s is a middle-income developing country whose economy is divided
between a large agricultural, industrial, and expanding energy sector. In
1985, the World Bank estimated that agriculture comprised 21 percent of
total GDP, industry comprised 21.9 percent, and the services sector
comprised the remaining 57.1 percent. However, the World Bank provides no
estimates for the current period. Cotton production had been the main
staple of the Syrian economy as a cash crop since ancient times until the
introduction of petroleum export. Cotton continues to be an important
component of the agricultural sector along with other products such as
tobacco, wheat, and fruits. (See Table 3)
TABLE 3:
Trade: Syria 1980 1985 1994 1995
$US Millions
Imports 4120 3970 5467 4616
Total Exports 2110 1640 3547 3970
Ex. Fuels/Min/Met 1648 1235 1013 **
Source: World Development Indicators, World Bank: 1997.
** The figures in bold are estimates based on the decreasing prices of oil
during the late 1980's and the percentage of oil exports from total
exports.
Syria’s geography limits agricultural production to approximately one-third
of its area. Agricultural production is largely financed by the Syrian
government. After redirecting its economic development priorities in 1989,
Syria has gone from a net importer of agricultural products to an exporter.
Syria’s oil resources are small in comparison to many of the other Arab
oil-producing countries, however; the petroleum industry provides
substantial revenues for the regime. In 1989, petroleum production helped
Syria achieve a trade surplus and accounts for three-quarters of the
country’s export income. An IMF estimate states that government oil
revenues accounted for 45 percent of total revenues in the period between
1996 and 1997.
Morocco has increased its total volume of exports as well as its volume of
imports. A far better measure of how open these economies are to trade is
the combination of total exports plus imports as a proportion of total GDP.
The following table also displays another important factor, the openness
to investment. The data does not provide very much insight for the
Moroccan case, except a small rise in the openness to trade from 1994 to
1995. Syria on the other hand has increased its openness to trade by an
amount close to double by 1994 and then falling back. (See Table 4)
TABLE 4:
Openness to Trade
Openness to Investment
Total Exports + Imports / GDP
Total Exports + Imports / FDI
1985 1994 1995 1994 1995
Morocco 0.467 0.37 0.411 20.3 46.1
Algeria 0.39 0.431 1009
Tunisia 0.536 0.716 0.743 26 50.7
Egypt 0.212 0.318 0.321 10.9 25.4
Palestine 0.416 0.461
Jordan 0.704 0.801 1602 127.1
Syria 0.342 0.601 0.511 63 132.1
Turkey 0.287 0.317 0.348 68.1 64.8
***************************************************************************
"There are going to be times when we can't wait for somebody. Now,
you're either on the bus or off the bus. If you're on the bus, and you get
left behind, then you'll find it again. If you're off the bus in the first
place - then it won't make a damn."
Ken Kesey
***************************************************************************
James D. Lindley, Jr
MPAff Candidate - LBJ School of Public Affairs
MA Candidate - Center for Middle Eastern Studies
University of Texas at Austin