Syrian Arab Republic
Al-Jumhuriyah al-'Arabiyah as-Suriyah
LOCATION AND SIZE.
Syria, a Middle Eastern country, is located on the east coast of the Mediterranean Sea. It is bounded by Turkey to the north, by Iraq to the east and southeast, by Jordan to the south, and by Lebanon and Israel to the southwest. Syria has an area of 185,180 square kilometers (71,500 square miles), including 1,295 square kilometers (500 square miles) of territory in the Golan Heights captured by Israel in the Six Day War of 1967. There are 2,253 kilometers (1,400 miles) of boundary length, with a coastline of 193 kilometers (120 miles). The area occupied by Syria is slightly larger than the state of North Dakota. The capital city, Damascus, is located on the Barada River in southwest Syria. Other major cities, Latakia and Aleppo, are situated on the Mediterranean coast in the west and in northern Syria, respectively.
The population of Syria was estimated at 16,305,659 in July 2000, an increase of 3.4 percent from the 1990 population of 12,116,000. In addition, there are about 38,200 people living in the Israeli-controlled Golan Heights (excluding nearly 20,000 Israeli settlers). Syria has one of the highest population growth rates in the world. Over the last decade, however, Syria's population growth rate has gradually decreased from 3.30 percent in 1990 to approximately 2.58 percent in 2000. Despite the steady decline in its growth rate, the population is expected to reach 20.9 million by the year 2010.
Syrians are divided along profound ethnic and sectarian (groups divided by politics, language, and religion) cleavages. Arabs constitute the major ethnic group with 90.3 percent, while other minority groups such as Kurds, Armenians, Turcomans, and Assyrians make up the remaining 9.7 percent of the population. Sectarian divisions include Sunni Muslims (about 74 percent), Alawites (an extreme Shi'ite subsect), Druze (a secret Middle-Eastern sect and doctrine combining different Islamic, Jewish, and Christian elements), and other Muslim sects (about 16 percent). The Christian population in Syria is small (about 10 percent), and Jews number only a few thousand.
Syria's population is overwhelmingly young, with 41 percent below the age of 15 and only 3 percent older than 65. The urban-rural population ratio has been reversed over the last decade in favor of the urban population, which increased at a rate of 4.1 percent from 49.4 percent in 1988 to 53.5 in 1998. Because of this trend, major cities like Damascus, Latakia, and Aleppo have become the main venue of rural emigration within the country.
The Syrian industrial sector contributed 22 percent of the GDP in 1997 and 20 percent of the labor force in 1996. State-owned organizations dominate heavy industry. Mining and quarrying (mostly oil) generates about 28 percent of gross industrial output, followed by the agro-food and chemical industries. The textiles and clothing industry comes next, and accounts for about 12 percent of industrial output.
Petroleum is Syria's chief mineral product. Most of the petroleum comes from fields in the northeastern part of the country. Phosphate rock is another important source of income. Phosphate, which is used to make fertilizer, is mined in the Palmyra area of central Syria. The principal limestone quarries are located north and west of Damascus, near the city of Aleppo. Marl is used in the cement industry with quarries near Damascus, Aleppo, and Rastan. Sandstone suitable for glass manufacture is mined in the Palmyra Mountains. The country's other mineral products include asphalt, gypsum, natural gas, and table salt.
Most of Syria's oil fields are located on the Euphrates Graben, which runs across the northeastern region of the country. The discovery of large crude fields in the mid-1980s boosted the role that oil plays in the Syrian economy. Since this time, output has expanded rapidly and reached a peak of 604,000 barrels per day in 1996. Production has been falling in recent years, because many fields discovered in the 1960s reached maturity. According to the International Energy Agency (IEA), as of 2000, Syria's production was about 520,000 barrels per day, of which some 325,000 barrels per day have been exported, accounting for some 65 percent of export revenue. Because of Syria's old, small, and dispersed oil fields, the EIU Country Report claims that the decline in Syrian oil production will continue in 2001, and most observers agree that the decline will continue for years to come.
Intense exploitation in the late 1980s and early 1990s saw oil production rise rapidly, fuelling economic growth, but at a cost. Fields were damaged as groundwater seeped into reservoirs and reservoir pressure fell, requiring injection projects to maintain pressure. Additionally, harsh government terms caused many foreign oil firms to leave the country. Investors have complained about the restrictive terms for exploration and development in the Syrian oil sector. In fact, international observers have forecasted that Syria will revert to being a net importer of oil within a few years as production declines and domestic consumption rises, unless new, substantial, and financially viable reserves are soon found. Syria exports Syrian Light, a blend of light and sweet crude oils produced from the Deir ez-Zour and Ash Sham fields. The country also exports fuel oil and other products. Syria is a member of OAPEC (Organization of Arab Petroleum Exporting Countries), but not OPEC (Organization of Petroleum Exporting Countries).
The oil exploitation of the 1980s attracted international interest to the Syrian oil sector, and several consortiums (companies formed to undertake an enterprise beyond the resources of any one member) were formed. Companies such as Agip, Bay Oil, Chevron, Conoco, Marc Rich, Shell, Elf, Total, and Veba are the most prominent involved in the sector. The largest of these is the Shell consortium made up of Pecten, Shell, and Deminex. In 1985 the Shell consortium entered a joint venture with the Syrian Petroleum Company (SPC) to create the Al-Furat Petroleum Company. This joint venture produces about two-thirds of Syria's oil output. All Syrian oil, including that produced by foreign companies, is sold on a monthly basis by the state-owned marketing company Sytrol. Since January 1994, Sytrol has had a clause in its term contracts prohibiting customers from re-selling Syrian crudes without written permission from Sytrol. This is intended to curb spot trading in Syrian crudes, especially sales to Israel. The unfavorable contract terms for exploration, development, and poor exploration results have only left 3 (Elf, Shell, and Deminex) out of the 14 companies that were operating in the country in 1991.
Syria's 2 oil refineries are located at Banias and Homs. Total production from these refineries was 242,140 barrels per day in 2001. Syria is planning to construct a third refinery, with an initial capacity of 60,000 barrels per day, at Deir ez-Zour to supply products to the eastern part of the country. The country's major oil export terminals are at Banias and Tartous on the Mediterranean, with a small tanker terminal at Latakia. Tartous is connected through a pipeline to the Banias terminal. The Syrian Company for Oil Transport (SCOT) operates all 3 terminals and is in charge of Syria's pipelines.
Syria's proven natural gas reserves are estimated at 8.5 trillion cubic feet (Tcf). Most (73 percent) of these reserves are owned by SPC, including about 3.6 Tcf in the Palmyra area, 1.6 Tcf at the al-Furat fields, 1.2 Tcf at Suwaidiyah, 0.8 Tcf at Jibsah, 0.7 Tcf at Deir ez-Zour, and the remainder at al-Hol, al-Ghona, and Marqada. In 1998, Syria produced about 208 billion cubic feet of natural gas, a 5-fold increase over the previous decade. As part of a strategy to substitute natural gas for oil in power generation to free up as much oil as possible for export, Syria plans to increase this production even further in the coming years. According to the EIU Country Report of 2000, Syria produced about 460 million cubic feet per day of gas, but this will nearly double by 2005 to 850 million cubic feet per day, as new gas sources are extracted.
SPC has been working to increase Syria's gas production through several projects. The Palmyra area in central Syria is the site of much of this activity, including the development of the Al Arak gas field, which came on stream at the end of 1995. In October 1997 the Syrian government announced the discovery of a large new gas field in the Abi Rabah area of the Palmyra region. One of the main problems for the gas sector is the location of gas in the northeast regions of the country, while the population centers are in the southwest. According to EIU reports, in July 2000 a step to ease the disparity was taken with the announcement that a Dutch company, A Halk Pijpleidingen, had been awarded a contract to construct a US$46 million pipeline from newly developed gas fields in the Palmyra area to the city of Aleppo. The 124-mile pipeline will be used to supply gas to a 1,000 megawatt power station in the city, constructed by Mitsubishi Heavy Industries of Japan. Bids are being measured to build a gas pipeline from Homs to the Mediterranean port of Banias.
Given the small size of Syria's gas fields, most of the large oil companies have shown little interest in the market, given the complex government bureaucracy that they must navigate. One of the exceptions is Conoco, the only U.S. oil company operating in Syria. Another is Elf of France, with whom Syria Petroleum Company signed a US$430 million service agreement in November 1998 to utilize associated gas in the Deir ez-Zour oil fields. Elf and Conoco each hold a 50 percent interest in the project, with Conoco as the lead operator. In March 2000 the 2 companies awarded Houston-based Kvaerner ENC a US$160-million contract to engineer, procure, and construct the infrastructure for the project. The Deir ez-Zour gas development work will include the construction of a gas gathering system and processing plant, and a 155-mile pipeline that will connect the system to the national grid near Palmyra that serves western Syria. When completed in late 2001, gas output from 22 fields should be about 280 million cubic feet per day. According to the EIU Country Report, Syria is planning to supply 3 million cubic meters per day of gas to Lebanon via a 107-mile pipeline that will run from the Syrian city of Homs to northern Lebanon. Elf announced that it is also considering joining the US$175-million pipeline project that would supply power stations in Lebanon with natural gas from Syria.
Manufacturing accounts for about 6 percent of the value of Syria's production. The main industries are cement, glass, food processing, iron and steel, leather goods, brassware, fertilizers, and textiles. Cotton fabrics, wool, and nylon are Syria's most important manufactures. The textile industry is in Aleppo, Damascus, Homs, and Hamah. Natural silk is produced at Latakia. Technical engineering industries, most of which are in Damascus, are active in producing cement, glass panes, bottles, utensils, pharmaceuticals, plywood, and batteries. The food processing industry produces salt, vegetable oils, cotton cake, canned fruit and vegetables, tobacco, and a variety of dairy products. While manufactured goods made up 10 percent of total Syrian exports in 1998, the well-established textile industry contributed another 10 percent of export earnings and employed one-third of the industrial workforce.
Syrian manufacturing industries grew substantially in the 1960s. The government encouraged industrialization by raising tariffs on imported consumer goods and providing tax exemptions and credit for domestic industries. Therefore, most of the traditional handmade manufactures (damask steel, swords and blades, brass and copper work, wood engravings, gold and silver ornaments, mother-of-pearl inlays, silk brocades) have dramatically decreased since the introduction of industrial processing. Private sector participation in manufacturing has taken off in the 1990s, with the total capital investment in the industrial private sector growing from US$273 million in 1991 to US$735 million in 1995. Of the 1.1 million workers in manufacturing, more than 75 percent are now employed in the private or mixed sectors. While private sector involvement has been limited to the textile, food processing, leather, paper, and chemical industries, the government started to open heavy industry to private investment in areas where the public sector is unable to meet increasing demand.
Syria's rich history attracts large numbers of tourists. Artifacts from the ancient Mesopotamian civilization, castles from the crusaders, and many other diverse historical sites appeal to world travelers. The United Nations Educational, Scientific, and Cultural Organization has declared Damascus and Aleppo world heritage sites because these date to the early development of civilization, well before the Greek and Roman empires.
With such a rich cultural heritage and a Mediterranean coastline, Syria's tourism sector shows great potential, and the number of tourists who visit the country each year is on the rise. Since the Gulf War in 1990-91, an average of about 900,000 visitors have visited Syria each year. But regional instability after 1996 has hindered the tourist sector, evidenced by the drop in tourists to 400,000 in 1999 from 2.5 million in 1998. In the same time span, tourism revenue declined from US$1.3 billion in 1998 to US$712 million in 1999. Arab tourists continue to visit Syria in increasing numbers, enjoying the improved luxuries offered by the sector. According to the EIU Country Report, capacity at the luxury end of the market is about 8,000 beds in the five-star hotels, with occupancy estimated at 80 percent during the summer season of 2000.
There are a number of problems in the tourism sector, including a lack of marketing activities on an international level, the low number of airline carriers to Syria, and the lack of a nationally coordinated policy for the development of tourism. The hazy divisions between public and private sectors and the non-existence of large centers for tourist entertainment and cultural activities are other major weaknesses inhibiting growth. The most important challenge that the tourism industry faces is the lack of big investments in this vital economic sector. To encourage private sector and foreign investment in Syrian tourism projects, the government has made several aggressive decisions since 1986. Incentives include tax exemptions on all tourism-based projects. All imports needed to build tourism installations, if these imports do not exceed 50 percent of total investment, are tax exempt. There is also a 7-year corporate tax exemption, after which taxes are paid at 50 percent of the normal rate.
The Syrian financial system has been run by the state since nationalization in the 1960s. The banking functions have been designed to cater to the financial requirements of the public sector. Because loans to the private sector are unknown, private businesses must finance projects with cash or through external loans. The Central Bank of Syria and the Commercial Bank of Syria are 2 of the 5 government-owned banks that deal in hard currency. Although previously only foreigners were allowed to open accounts with foreign currency in the Commercial Bank of Syria, beginning in September 1996 the government allowed Syrians to deposit foreign currency at government banks without disclosing the source of such currency, and plans to allow citizens to possess foreign currency. The new decision eliminates provisions in an old currency law that prevented Syrians from dealing in hard currency. The new decree allows hard currency to be transferred abroad provided it is used for education expenses, payments of books, medical treatment, newspaper subscriptions, and other non-commercial transactions. Changing money at rates other than official rates remains illegal and all transfers in and out of the country must be declared.
The EIU reports that the current banking system is in urgent need of reform. The system is criticized by business leaders for being inefficient and offering only basic services. There are, for example, no ATMs, checks, or credit cards in Syria. Commercial loans are hard to obtain without using political party or government connections or traditional patronage relations (a system of relations in which government or any other sectarian, tribal domineering authority distributes the sources at its expense to its supporters as rewards). The new Syrian government has acknowledged the need for reform of the financial system and these new moves show that progress is being made. Some modernization efforts have been initiated with the computerization of the Central Bank and other commercial banks.
The government has also announced that foreign banks will be allowed to open branches in Syria for the first time. Banks with at least US$11 million in capital will be permitted to operate in the country's free zones (an area where goods may be landed, handled, manufactured, reconfigured, and re-exported without the intervention of the customs authorities) to finance commercial and industrial activity. In August 2000 3 Lebanese banks were issued licenses while some non-Arab international banks expressed their wishes to enter the full international market rather than be restricted to the small free zones. The United Nations Industrial Development Organization (UNIDO) has estimated that Syria would gain US$8 billion in foreign investment if it allowed the establishment of private banks, opened a stock market, and unified exchange rates .
Syria has no territories or colonies.
Syrian Pound (S£). One Syrian pound equals 100 piasters. There are coins of 25 and 50 piasters and 1 Syrian pound. There are notes of 1, 5, 10, 25, 50, 100, and 500 Syrian pounds.
Petroleum, textiles, manufactured goods, fruits and vegetables, raw cotton, live sheep, phosphates.
Machinery and equipment, foodstuffs/animals, metal and metal products, textiles, chemicals.
GROSS DOMESTIC PRODUCT:
US$50.9 billion (2000 est.).
BALANCE OF TRADE:
Exports: US$4.8 billion (f.o.b., 2000). Imports: US$3.5 billion (f.o.b., 2000).