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WikiLeaks: 2006-04-19: 06DAMASCUS1782: Limited Economic Development Observed in Syria's Northeast

by WikiLeaks. 06DAMASCUS1782: April 19, 2006.

Posted: Sunday, February 19, 2012 at 03:16 PM UTC


Viewing cable 06DAMASCUS1782, LIMITED ECONOMIC DEVELOPMENT OBSERVED IN SYRIA'S

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Reference ID Created Released Classification Origin
06DAMASCUS1782 2006-04-19 14:00 2011-08-30 01:44 CONFIDENTIAL Embassy
Damascus
VZCZCXRO7862
OO RUEHAG RUEHBC RUEHDE RUEHKUK RUEHMOS
DE RUEHDM #1782/01 1091400
ZNY CCCCC ZZH
O 191400Z APR 06
FM AMEMBASSY DAMASCUS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8421
INFO RUEHEE/ARAB LEAGUE COLLECTIVE IMMEDIATE
RUCNMEM/EU MEMBER STATES COLLECTIVE IMMEDIATE
RUEHAK/AMEMBASSY ANKARA IMMEDIATE 4340
RUEHTV/AMEMBASSY TEL AVIV IMMEDIATE 0903
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RHMFISS/HQ USCENTCOM MACDILL AFB FL IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
C O N F I D E N T I A L SECTION 01 OF 03 DAMASCUS 001782 
 
SIPDIS 
 
SIPDIS 
 
ELA/NEA 
TREASURY FOR GLASER/SZUBIN/LEBENSON 
NSC FOR ABRAMS/DORAN/SINGH 
EB/ESC/TFS FOR SALOOM 
 
E.O. 12958: DECL: 04/19/2016 
TAGS: ECON ETRD ETTC SY
SUBJECT: LIMITED ECONOMIC DEVELOPMENT
OBSERVED IN SYRIA'S NORTHEAST 
 
REF: A. 05 DMS 5373 
 
     B. 05 DMS 6439 
     C. 05 DMS 5788 
 
Classified By: CDA Stephen Seche, reasons 1.4 b/d. 
 
 1. (C) Summary:  In conjunction with export license checks, 
econoffs visited Dayr ez Zawr (Dayr) and Qamishli, key cities 
close to Syria's border with Iraq.  Residents in these two 
areas have historically maintained stronger cultural, ethnic, 
familial, and economic ties to Iraq than to Syria's capital. 
Contacts in both cities discussed the region's limited 
infrastructure, lack of basic services, and isolation from 
the political and economic centers of Damascus and Aleppo, 
which all have contributed to lagging economic development. 
Many contacts expressed a lack of faith in the SARG's 
willingness or ability to positively influence private sector 
development in the region, or to combat high unemployment and 
low job creation rates.  Though Qamishli, unlike Dayr, has 
capitalized on remittances and tourism dollars, economic 
development in both cities remains limited.  Despite the lack 
of development, contacts in both Dayr and Qamishli still 
appear content with the economic status quo, in Dayr because 
of low economic expectations, and in Qamishli because the 
economic advancement of the growing Kurdish population has 
not yet threatened the minority Christians' economic 
dominance.  As general economic conditions in Syria worsen, 
however, the status quo in Dayr and Qamishli may become 
increasingly untenable.  End summary. 
 
------------------------------- 
Plans to Develop the Northeast? 
------------------------------- 
 
2. (C) Econoffs met with business contacts from the tourism, 
foodstuff manufacturing, and agricultural sectors during a 
four-day visit in early April to Dayr ez Zawr and Qamishli. 
These areas in Syria's northeast are two of the poorest in 
the country, and face significant development challenges - 
extreme poverty, illiteracy, high infant mortality rates, and 
above-average population growth - according to reports by the 
United Nations Development Program and Food and Agricultural 
Organization.  Despite a highly publicized trip by Deputy PM 
Abdullah Dardari to the northeast in October 2005 (ref A), as 
well as the region's prominence in the pending Tenth 
Five-Year Plan (ref B), contacts dismissed the SARG's plans 
for economic reform and development.  Private sector contacts 
with whom we spoke claimed that Dardari did not meet with 
them during his visit to Dayr, choosing instead to meet with 
Ba'ath Party members and the heads of state-owned companies. 
They therefore stated their belief that the upcoming Tenth 
Five-Year Plan - with its emphasis on private sector 
involvement - amounts to nothing more than rhetoric, and that 
new spending in the region most probably would enrich the 
same corrupt officials. 
 
--------------------------------------------- ----- 
Dayr az Zawr: Lagging Development, Poor Prospects 
--------------------------------------------- ----- 
 
3. (C) At the heart of Syria's oil-producing area, private 
sector contacts were uniformly pessimistic about the short to 
medium-term economic prospects for Dayr, estimating that its 
economy presently is at least ten years behind that of 
Damascus and Aleppo.  All complained of a lack of basic 
infrastructure, with almost daily electricity outages, poor 
roads and inadequate sewage and water systems making Dayr a 
difficult place to live and do business.  The absence of 
private banks and limited access to capital, the shortage of 
an educated workforce, with the first university - a 
satellite of Aleppo University - just opening this year, and 
the deficit in adequate health care services further depress 
the business climate, contacts opined.  Additionally, 
contacts stated that Dayr feels isolated from Damascus and 
Aleppo, and cut off from historic trading partners in Iraq 
with the border crossing of Al-Bukamal closed.  Finally, with 
production declining at the nearby Al-Furat oil fields at an 
estimated rate of 30,000 bpd annually (ref C), there is 
little evidence in the city of new oil company activity, and 
contacts had few expectations that any new investments would 
 
DAMASCUS 00001782  002 OF 003 
 
 
be brought on line.  As a result, contacts say, the private 
sector is weak, comprised of only five companies that employ 
more than 50 workers. 
 
4. (C) Contacts further expressed an overall lack of faith in 
the SARG's ability to improve the business climate and 
indicate that they do not intend to take on new investment 
risk in Dayr or the region until the SARG takes tangible 
steps to improve the investment climate.  Although as much as 
60 percent of the region's workforce is employed in 
agriculture, 70 percent of the farmland is still rain-fed 
despite previous SARG announcements that it is beginning 
ambitious irrigation projects.  Contacts complained that 
there also has been no progress to date on a three-year old 
project to upgrade the city's sewage system, and large cement 
cylinders still line the roads obstructing traffic on the 
major thoroughfares.  Unemployment and underemployment are 
chronic, contacts complained, and the number of new public 
sector jobs created each year is not enough to satisfy demand 
among new entrants or the currently employed who regularly 
hold two or three additional jobs to supplement their income. 
 One private businessman who owns a construction tools 
company laid the blame for the region's stunted development 
squarely on the government, contending that official 
corruption combined with a persistent shortage of resources 
continuously undermines progress. 
 
--------------------------------------------- ----- 
Qamishli: Sectarian Divisions, Support from Abroad 
--------------------------------------------- ----- 
 
5. (C) Like contacts in Dayr, Assyrian and Armenian 
businessmen in Qamishli stated that they feel removed from 
Damascus, that the regime has little influence over Qamishli, 
and that the area has naturally stronger economic ties to 
Iraq than Damascus.  (Comment: Evidence of this sentiment 
could be witnessed in the streets of Qamishli, which 
displayed considerably less regime-based propaganda than 
those in Damascus.  End comment.)  Additionally, contacts say 
that Qamishli has been neglected by the regime, citing 
desperately needed agricultural irrigation projects as an 
example.  Nevertheless, contacts indicated that economic 
development in the city is less contingent on regime 
assistance or intervention, because remittances and 
expatriate tourist dollars from Sweden, Germany, Canada, and 
the U.S. have allowed several groups of ethnically-based 
investors to pool their money to fund private investment 
projects like tourism complexes and agricultural production 
facilities. 
 
6. (C) Agriculture and tourism are pillars of Qamishli's 
economy.  According to one contact, Hassake governorate (in 
which Qamishli is located) ranks third in the country in 
number of visitors each year, and one contact in Qamishli's 
tourism sector said that approximately 50 percent of the 
city's annual economic activity (about $188 million/year) 
comes from expatriate tourism.  Nevertheless, outside of 
expatriate-funded initiatives, overall private sector growth 
in Qamishli is limited to a few large enterprises - plastic 
production, transportation, oxygen/nitrate facilities, and 
agricultural processing - that employ no more than 250 
people.  According to contacts, salaries in Qamishli are 
cyclical, unstable, and primarily dependent on summer tourism 
and agricultural production.  One source said that the 
economy in Qamishli is consumer-based, with 30 percent of its 
residents funding the consumption of the other 70 percent. 
While one would expect that Qamishli's geographic proximity 
to Iraq would strengthen cross-border trade ties, sources say 
that for now trade is well below pre-war levels. 
 
7. (C) The sectarian divisions among three groups ) 
Christians, Kurds, and Arabs - in the residential and 
industrial areas of Qamishli are apparent.  Furthermore, 
contacts in Qamishli believe that a demographic shift in the 
region is underway.  As Christians (currently 20 percent of 
Qamishli's population) continue to emigrate, the Kurdish 
community is moving in and becoming increasingly influential. 
 Assyrian and Armenian business contacts contend that in the 
past two years Kurdish demand for real estate (as well as 
their willingness to pay significantly more than the asking 
 
DAMASCUS 00001782  003 OF 003 
 
 
price for property) has resulted in a spike in property 
prices.  One Assyrian business owner stated that in one year 
his office in the commercial district of Qamishli has more 
than doubled in value, while an Armenian contact shared a 
rumor that money for Kurdish investment in Qamishli is coming 
from Kurdish ties in Iraq.  Our Assyrian and Armenian 
business contacts implied that the Kurds, who have 
traditionally filled low-skilled labor jobs in Qamishli, are 
tolerated because they are perceived to have a strong work 
ethic (unlike their Arab counterparts). 
 
8. (C) Comment: Officers came away with three main 
observations from the trip to Dayr and Qamishli.  First, the 
SARG's economic reforms - highly touted in the capital - have 
had little impact in the Northeast and there is a general 
lack of faith in the SARG's ability to develop the stagnant 
economy and control the region's poverty, unemployment and 
population growth.  Second, historical, economic, and family 
ties link the region more closely to Iraq and Turkey than to 
Damascus.  Third, the sectarian divide among Christians, 
Kurds, and Arabs is palpable in Qamishli and deeping with 
exponential growth in the Kurdish population.  Contacts in 
Dayr appeared frustrated yet resigned to this status quo due 
generally to their low economic expectations.  The Christians 
in Qamishli, the most affluent of the ethnic/sectarian 
groups, did not yet seem unduly threatened by the Kurdish 
population explosion, possibly because their primacy has not 
yet been impacted.  However, as the economy continues to 
worsen, the status quo in both cities will come under 
increasing strain. 
SECHE

 


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