Syria hikes key price subsidy after Tunisia events

Gov't increases heating oil allowance for public workers by 72% to the equivalent of $33 a month
SYRIA MOVE: Syrian authorities sharply raised a key subsidy in a reversal of policy after Tunisias president was driven from power by unrest
By Reuters
Mon 17 Jan 2011 10:27 AM

Syrian
authorities sharply raised a key subsidy on Sunday in a reversal of policy
after Tunisia's president was driven from power by unrest over soaring prices,
unemployment and state repression.

The Syrian
government, which has been controlled by the Baath Party since it took power in
1963, announced it had increased the heating oil allowance for public workers
by 72 percent to the equivalent of $33 a month.

The
government had hitherto been slashing subsidies as it lifts bans on private
enterprise to try and repair decades of economic stagnation and draw back
capital.

In
neighbouring Jordan, the state announced a $225 million package of cuts in the
prices of several fuels and staple products including sugar and rice.

Syrian
Finance Minister Mohammad al-Hussein said the increase in the heating oil
allowance would cost the state $326 million a year, benefiting two million
public workers and retirees out of a population of 20 million.

"This
liquidity will have a positive impact on economic activity," Hussein told
Syria's official news agency.

The
government slashed heating oil subsidies three years ago, prompting an outcry
from farmers whose costs rose because the fuel is also used in transport and
agricultural pumps.

Subsidies on
fertilisers were removed last year, despite opposition from the
government-backed General Peasants Union. The agriculture minister said the
move curtailed corruption.

The
government gave out coupons worth 10,000 Syrian pounds ($217) last winter to
make up for higher heating oil prices. But a year later, the subsidy was
delayed as complaints surfaced about graft in distribution and the government
went about setting up an assistance fund specifically for the needy.

Many could
not afford to wait. In areas bordering the occupied Golan Heights, forests are
being cut down illegally as people switch to cheaper wood-fired stoves,
witnesses say.

Economic
policy is a rare area where public criticism has been traditionally permitted
in Syria. But debate was curbed in recent years and independent figures who
faulted policy and graft were jailed on charges of "weakening national
morale".

In its scant
coverage of events in Tunisia, Syria's state-run media have focused on the
disorder since President Zine al-Abidine Ben Ami's flight to Saudi Arabia.

The al-Watan
newspaper said in an editorial on Sunday that Ben Ali was toppled because he
was too close to the West.

"The
guarantor of stability is people sticking with their leadership. This is the
experience of Syria, whose leadership has been always on the side of the
aspirations of the people," the newspaper remarked.

But
government officials have acknowledged that the gap between rich and poor has
widened in Syria. Unemployment is officially around 10 percent, while
independent estimates put the figure as high as 25 percent.

Experts say
drought and mismanagement of water resources have hit large areas of eastern
Syria, which produces all of the country's 380,000 barrels per day of oil, and
deepened poverty.

Since
violent protests by minority Kurds in 2004, Syrian authorities have stressed
that stability is their priority, pointing to solid economic growth figures,
the limited impact of the global financial crisis on Syria, and a state that
still provides free education and health care.

The
International Monetary Fund expects Syrian inflation to remain steady at 5
percent this year, with economic growth rising slightly to 5.5 percent.

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