Cold Wind of Change in Eastern Europe Sends a Chill Through Damascus Regime : Syria: The nation has no hard cash. And the Kremlin has already said that purse strings will be tighter, especially for arms.

Through periods of drought and permanent inefficiency, the Syrian economy has hobbled along on the proceeds of oil exports and the crutch of soft credit and barter trade with the Soviet Bloc. The crutch has begun to wobble.

The Damascus government has no hard cash. Its oil earnings are spent on imported wheat. And when the leaders of Comecon, the Soviet-dominated East European economic union, sat down in Bulgaria in January and tentatively embraced a free-market system with hard-currency payments, the echo resounded here.

“The effect won’t be immediate, because the East Bloc is still not certain how to reach its goals,” said a Damascus-based Western diplomat. “I’d say the direction of trade won’t change in the near term, but the level will drop.”

Added another: “The East Europeans will now be looking for foreign exchange to build there own economies. They’ll find none here.”

The tumultuous changes in Eastern Europe were bound to send political and economic shock waves through Damascus, long the Soviet Union’s prime client in the Middle East. Even before the Iron Curtain parted, however, Syria had been put on notice that Soviet purse strings would be tightened, particularly on military shipments.

Soviet Ambassador Alexander Zotov insisted recently that Damascus and Moscow will maintain their “special relationship,” but the arms component of Soviet exports has already built a Syrian debt estimated at up to $15 billion--which the Syrians have been unable to repay.

Meanwhile, Syrian reliance on Eastern Europe in other areas may be affected by political changes. The East Germans, for instance, have trained the Syrian security forces, as they have for socialist countries in other regions.

Furthermore, as the leading hard-liner against Israel, Damascus shares the concern of other Arab governments over developing ties between Jerusalem and the capitals of Eastern Europe. Only Romania had retained diplomatic relations with Israel after the 1967 Arab-Israeli War, but Hungary and Czechoslovakia have resumed ties, and Poland is expected to follow suit.

Bilateral trade between Damascus and East European countries has been sustained under the socialist umbrella--Syria is officially a socialist state--through exchanges of European consumer and industrial goods for Syrian raw materials, primarily phosphates and cotton. The Soviet Union, East Germany, Romania and Czechoslovakia are major trading partners, although France leads the list with its large wheat exports.

In the estimation of several diplomats here, the barter agreements have brought Syria a stream of shoddy goods with poor inventories of spare parts. “Last fall, their fleet of East Bloc buses became so decrepit that the government authorized purchases of spares from any source,” one diplomat noted.

Now, if the East European industries retool to produce higher-quality exports, the Syrians may be priced out of the market and may have to look elsewhere for trading partners.

The Arab nations, busily forming economic unions from which Damascus so far has been excluded, would be the natural choice, but many of them have long-established trade ties with the West. And other than oil, for which there’s little demand in the Middle East, Syria can offer only second-rate products in small lots. And it has no money.

“You’ve got to buy something to sell something in the real world,” a foreign economic analyst observed. “With Comecon, neither side had good products, but the East Europeans offered credit. Those credit facilities are probably going to change.”

Its Arab neighbors have already cut off financial aid to Syria under the 1978 Baghdad Pact, which provided funds for the so-called confrontation states with Israel. Diminishing Arab oil revenues over the past decade were a factor, but so was Syrian support for non-Arab Iran in its long war with Iraq. Damascus has received no Arab aid since December, 1988, diplomats said.

Although American oil companies--Unocal, Marathon, Occidental Petroleum and others--are active in exploratory work here, most U.S. businesses are prohibited from trade with the Damascus government because it provides sanctuary for armed groups identified by U.S. authorities as terrorists.

Oil exports sustain what otherwise is a dismal economy, and even petroleum earnings barely cover the loss of Arab aid, economic analysts say.

The picture is getting bleak. One diplomat estimated that at least half the wages of a poor family goes to buy bread. Double-digit inflation has damaged living standards of the middle class, and now the poor, with access to subsidized rations, are feeling the pinch.

Still, large sectors of the Syrian economy are in private hands--agriculture, commercial shops, the big hotels. In the parallel economy--the black market--anything is available with patience and at a price. It is endemic official corruption at the borders that brings variety to the Syrian shops.

“Take medicines,” a hotel worker explained. “My wife needs a compound that’s not found here. So I go to the pharmacist, place my order and come back in three or four days. He’s got it. He got it from Lebanon.”

Said a foreign resident of the smugglers: “It’s not three donkeys up the ravine. It’s 15 tractor-trailer loads coming down the highway.”