Syrian stability under threat from high-level corruption

A culture of corruption, ranging from small scale police bribes to multimillion dollar tax frauds, continues to grip Syria, defying efforts to clean up the country and strangling the national economy.

Officials in Damascus said attempts to tackle business and governmental corruption have had little impact and that the problems remain endemic.

Mohammad Hussien, Syria’s minister of finance, released treasury figures showing tax evasion alone cost 200 billion Syrian pounds (Dh16bn) in the last financial year, equal to 12 per cent of national output and 40 per cent of the government’s entire budget.

The amount lost annually through unpaid taxes – already greater than the yearly national budget deficit – is expected to rise to 320bn Syrian pounds in the current financial year if current trends continue.

Although widespread low-level corruption, including small scale bribery and nepotism, is a significant issue, Syrian analysts said the real problem is caused by a handful of powerful individuals who use their power and influence to bypass laws and threaten others into adopting corrupt practices.

“The sums of money absorbed by corruption in Syria are very big,” said Elhossein Mohammed, dean of Damascus University’s faculty of law and a member of the ruling Baath Party. “Syria is no different from most countries, in that a small number of people hold a majority of financial power. This small minority is responsible for 80 per cent of corruption.

“The fight against corruption must start at the top of the chain and that means aiming at the big people. They have power, they have money, they often have strong international connections. You have to aim at the head of the snake, not the tail.”

Mr Mohammed said new legislation, as well as administrative and economic reforms, would be essential if progress is to be made. “New laws that are properly enforced would deal with 30 per cent of the problem very quickly,” he said. “We also need good, honest, loyal employees who are qualified for the position they hold, and these types of people should staff any anti-corruption bodies.”

Bashar Assad, the Syrian president, has spoken out publicly against corruption, highlighting the matter in his 2007 inauguration speech when he started a second seven-year term as leader. He called corruption an “impediment” to reform and admitted that advances in fighting it had been less than he had hoped for.

High-profile stands against corruption have been taken, including the March 2007 sacking of 50 officials from state-run firms and ministries. More recently top staff at one of the country’s leading medical institutions lost their jobs for the illegal reselling of cancer drugs.

And an MP and prominent businessman who was found to have paid taxes on a declared annual profit of five million pounds, when his real profit was 180m pounds, has been stripped of his parliamentary immunity. The authorities have vowed to take further action against him.

However, these successes are accompanied by setbacks. In 2005, a secret anti-corruption committee, answerable directly to the prime minister’s office, was scrapped because it was itself corrupt: when asked to draw up a list of dishonest government officials, it actually named judges and civil servants who had stood against corruption.

“I don’t see any sign that the situation in Syria with regard to corruption is getting any better,” said Abed Fadilah, a professor in Damascus University’s faculty of economics. “Corruption isn’t a matter of individuals, it’s an infrastructure and it’s something that expands day by day. When you want to stop corruption you cannot just deal with a corrupt person, you have to actually take apart the infrastructure of corruption.”

Prof Fadilah said there was a desire at the highest level of the Syrian administration to take a firm line against corruption, but that it was not a vision universally shared. “The campaign has stalled because some people inside the government do not want it to succeed. They want the corruption to continue.”

In a recent survey published by the state-owned Al Thawra newspaper, almost 100 per cent of Syrians questioned said they believed all of their official institutions to be inherently corrupt.

Transparency International, an anti-corruption watchdog, ranked Syria 138 out of 179 countries in its 2007 Corruption Perceptions Index. In the Middle East, only Iraq – which since the US-led invasion of 2003 has been hit by some of the biggest graft scandals in history – was considered more corrupt.

Such large scale corruption poses a threat to the state and could stir political unrest, Prof Fadilah said. “Corruption is dangerous because it has become a culture, a way of life for some people, and when that happens it can destroy a country.

“The most dangerous type of corruption is the institutionalised, professional corruption. It deforms the economy, it corrupts the moral climate.

“People accept corruption and that makes them corrupt. They’ll look at a corrupt man as being a successful man. Politically speaking, people will start to get frustrated with the situation.”

He urged the government to “work hard, with real will” to convince ordinary Syrians they were serious about addressing the issue.

Putting cash values on total corruption in Syria is not easy, but taking into account the billions of dollars stolen through tax evasion, the sums are enormous.

Qadri Jamil, a Syrian economics professor and anti-corruption campaigner, told the independent English-language magazine Syria Today that corruption could amount to as much as US$13bn (Dh47.7bn) annually – equivalent to 40 per cent of national output.

Salaries for government officials remain low and with rampant inflation there is a strong incentive for public servants to supplement pay packets with under-the-table money. Suhail al Hamdan, a Damascus-based economic consultant, said the answer was to increase wages.

He also insisted that tax evasion could be reduced if businessmen believed money handed to the government really was going to be spent on schools, hospitals and roads.

“One of the reasons for tax evasion is that the people who ought to pay the taxes are afraid that if they do actually give the money to government, it will then be stolen by corrupt figures in the government,” he said. “If they pay taxes, it will be stolen, so the logic is, why not steal it yourself?

Mr Hamdan said rife corruption was hamstringing the economy because hard, honest work was not rewarded. “There is no justice – there is no equivalence of opportunity, which means that people have no motive to work, no motive to try to improve,” he said. “It’s a very basic economic law, that if you want to get the best out of anything you need to give incentives.”

Corruption is also undermining efforts to increase external investment in Syria, a central part of government economic strategy in the face of falling revenues from oil sales.

“Foreign investors are put off from coming to Syria by the corruption,” Mr Hamdan said. “It’s not just foreign investors. Syrians with money to invest are taking it abroad because they are concerned about corruption.”

The United States has imposed sanctions on Syria after classifying it a “state sponsor of terrorism” for backing Hizbollah and Hamas in Lebanon and the Palestinian Territories, and for its role in opposing the American military presence in Iraq. Specific individuals accused of corruption, including Rami Makhulf, a powerful Syrian businessmen with strong connections to the authorities, have been targeted by the sanctions.

Such external pressures are working to undermine Syria’s faltering anti-corruption efforts, according to analysts here. With a feeling that it is under siege from powerful enemies, the government has concentrated efforts on facing these rather than internal matters, they said.

“Focus has shifted away from corruption because there are key figures who are corrupt and now is not the time to move key people out of their positions,” said one Syrian economic analyst on condition of anonymity because of the sensitive nature of the topic. “National unity is taking the priority. Because corruption happens in a network you also cannot just remove those key figures – you would risk creating a chaos because their whole network could crumble or they could use that network to make trouble.

“For these reasons, the fight against corruption must be waged carefully and taken one piece at a time.”

Suhail al Hamdan, a Syrian economic consultant, said the war against corruption must be fought and won.

“It will be positive in many ways,” he said. “People will start to believe there is some equality and that by working hard they will have a fair opportunity to succeed. That will be a huge benefit to the economy and if people believe they have a fair chance, that will make them believe in the future, for themselves and their country.”