Minister Says Economic Crisis 'Worst' in Syria Recent History

Facing its worst economic crisis, Syria is banking on boosting self-sufficiency to overcome sanctions, Economy Minister Mohammed Nidal al-Shaar told Agence France Presse in an exclusive interview Thursday.

"This is not an easy crisis. It's the worst in our recent history because it is immediately affecting the Syrian citizen -- it's affecting the street, it's affecting factories, it's affecting the business community," Shaar said.

"It's affecting everyone and this is definitely not fair at all."

The United States and European Union have imposed strict economic sanctions on Syria, where the United Nations estimates more than 3,500 people have been killed since March as the regime cracks down on a popular revolt.

Syria also failed to meet a Saturday deadline by the Arab League, which suspended Damascus' membership earlier this month, to end the bloodshed or face sanctions.

The Arab League is scheduled to meet Saturday to discuss economic measures against Syria, a move that could sound the death knell for the country's economy which depends on its Arab neighbors for half of its exports and a quarter of its imports.

While the 54-year-old trade and economy minister is bracing for such a scenario, he doubts the potential sanctions will be implemented by all Arab states.

"If that is to happen, it will be very unfortunate because the damage will be to all sides," Shaar said.

"We don't expect all Arab countries to yield or participate in sanctions," he added. "In fact, we are almost certain that some Arab countries will not participate."

In a recent interview with Saudi economic daily Al-Iktisadiya, the Arab League's assistant secretary general for economic affairs Mohammed Twaijiri announced a string of measures likely to tighten the noose around Syria's already reeling economy.

The measures include will bank transfers, freezing of assets and suspension of Syria from the Greater Arab Free Trade Area (GAFTA), according to Twaijiri.

But neighboring Lebanon was the first to announce it would not endorse any sanctions by the Arab League against Syria, a statement the country's foreign minister made shortly before leaving for Cairo for the meeting Thursday.

But as sanctions close in on the regime of Bashar al-Assad, Shaar is adamant Syria can look inwards for a way out.

"What we need today is to make ourselves more efficient in our self-sufficiency by distributing more efficiently our resources and factors of production, by better management of our trade and factories," he said.

"In summary... (to) return to inside Syria."

The minister, who holds a Ph.D. in economics from the George Washington University, said the agriculture and food sectors, neglected in recent years, should be revived along with local factories that shut down a result of a free trade agreement with Turkey.

"It is very important to us today to have a labor plan, to get our employees back to work," Shaar said. "This is our job as a government, regardless of the crisis."

Syria will not however return to the autarky of the 1980s, when the economy was ruled by the stringent policies of the socialist Baath Party.

"We are leaving the private sector, which accounts for 73 percent of our economy, to work with flexibility and to manage its own business," said Shaar.

Syria began a "spring" of economic liberalization 10 years ago, allowing privatization and foreign investment to begin to flow into the country.

Shaar, who built his career largely in Syria's private sector, also remains optimistic on local currency, which has fallen from 50 Syrian pounds to a dollar to 55 pounds to a dollar in the past month.

Exports however are expected to drop by 20 percent and imports by some 30 to 40 percent.

"The fact that imports have gone down more than exports is not bad, and the ... devaluation of our local currency will be good for exportation," he said.

"If your imports are much higher than your exports then there is a problem, but this is not the case.

"So we are still safe."