WORLD PERSPECTIVE : MIDEAST : Syria Plays ‘Whole New Game’ Under Economic Reforms

It is midnight, and the Sheraton Hotel’s brick and wood-paneled cellar pub is full of young couples sipping 12-year-old Johnny Walker Black Label and Paulaner draft beer from Munich. “Cheers!” exclaims the bartender, setting up a round.

Waiters in red vests work their way through the smoky room, serving the menu favorite--surf and turf--followed by “All-American apple pie.” Over by the snooker table, a British vocalist named Kathleen is singing the refrain, “Just another day, with you and me in paradise. . . .”

Well, paradise Damascus is not.

But the grim days when Syrians had to smuggle toilet paper from Lebanon and the Sheraton’s lobby echoed with the footsteps of only an occasional guest are over. Damascus, said to be the world’s oldest continuously inhabited city, has lightened up and is aglow with a sheen of prosperity.

Paris fashions fill the shops. Luxury cars cruise the palm-lined boulevards.

“Syria today is like Europe after World War II,” said Waddah Abd Rabbo, 30, who has come home from Paris as publisher of a gossipy monthly magazine on Arab affairs, financed by Libyan interests. Lighting a cigarette with a gold Dunhill lighter, he went on: “Anything is possible. We’re halfway between socialism and capitalism, and it’s a whole new game.”

Officially, Syrians attribute the city’s upbeat mood to optimism over the future and to President Hafez Assad’s decision to reverse years of disastrous economic and social policies by liberalizing the economy and offering investors handsome tax incentives on various businesses and projects.

The reform, instituted in 1991 and known as Law No. 10, has not sent Western investors or Persian Gulf Arabs scurrying to Damascus. But it has brought young Syrian expatriates home from Europe and resulted in a rush of imports and investment in everything from agriculture to stores that sell the latest cassette tapes.

There is a caveat in all this, though: To cash in on the country’s new opportunities, a Syrian must be connected--preferably to the Assad regime, the military or the security apparatus.

Assad, 64, a former Air Force commander and minister of defense, came to power in 1970 and brought stability to a country that had been racked by coups d’etat for more than 20 years. As a member of the tiny Alawite minority, a Shiite Muslim sub-sect, Assad rules over Syria and its Sunni majority (70% of the population) through a system of spoils that rewards the politically connected and enriches the military.

But for Syrians without connections, there are few chances to join the nouveaux riches, an inequality that could be a troubling portent for a country with a birthrate of 3.7%--one of the highest in the Arab world--and a regime that is solidly secular. Islam is a growing cultural force here, not a political one, its strength having been sapped by Assad’s brutal suppression of a fundamentalist rebellion in the city of Hama in 1982.

The Sunni countryside--despite access to water and electricity in every village--remains poor and underdeveloped. Joblessness is high.

Assad’s economic reforms--and moderation in attitudes toward Israel and the West--have taken place against a backdrop of changing alliances in the Middle East. His Soviet allies went home, leaving Syria with an as-yet-unpaid military bill for $12 billion and a 408,000-member military that has been hurt by the absence of Soviet advisers, spare parts and state-of-the-art weapons, Western defense analysts say.

Kuwait and the Gulf states have partly filled the void by pumping an estimated $500 million into Syria in appreciation for Assad’s joining the allied coalition that fought Iraq in 1991. Assad remains Iran’s closest ally in the Arab world but has cultivated closer relations with the United States and entered into peace talks with Israel.

Lamb recently was on assignment in Damascus.