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Syrian economic reform so far has been incremental and gradual, with privatization still more an idea than a definitive project. The government has addressed the lack of a modern financial sector by changing the legal and regulatory environment. In 2001, Damascus legalized private banking and in 2003 licensed three private banks. A stock market is also planned.
With almost 60 percent of its population under the age of 20, economic growth is important in social as well as monetary terms. Oil production has leveled off, but recent agreements, including the allocation of exploration concessions to US oil companies, allowing increased foreign investment in the petroleum sector and may boost production in two to three years.
As a sign of its determination to modernize the structure of the economy, Syria submitted a request to the World Trade Organization in 2001 to begin the accession process. Membership necessarily means a raft of changes in the current trade rules. The government is also intent on signing an Association Agreement with the European Union and that too will entail significant trade liberalization.
Although 65 percent of the country’s overseas earnings come from oil sales, Syria is putting great efforts into modernizing its agriculture with a dual purpose in mind. First is to make the country self-sufficient in food and secondly to export the surplus, thus earning money not spending it.
Of Syria’s 72,000 square miles, roughly one-third is arable, with 80 percent of cultivated areas until recently dependent on rainfall for water. With sustained capital investment, infrastructure development, subsidies and price supports, Syria has gone from a net importer of many agricultural products to an exporter of cotton, fruits, vegetables, and other foodstuffs. The turnaround was helped by huge new irrigation systems in northern and northeastern parts of the country, part of a plan to increase irrigated farmland by 38 percent over the next decade.
Agriculture accounts for 29 percent of GDP, against 22 percent for industry. The rest is made up by services. Apart from the oil sector, the main industries are textiles, food processing, beverages, tobacco and phosphate rock mining.
Oil production is about 530,000 barrels per day and the known reserves are comparatively small. However, there is a promising future for the burgeoning natural gas industry. International energy companies are developing the reserves, both for domestic use and export. The US firm ConocoPhillips completed a large natural gas gathering and production facility in late 2000 and will continue to operate the plant until December 2005.
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