Legal Briefing – November 2018

Government Reshuffle

• President Bashar Al-Assad reshuffled the cabinet of Prime Minister Imad Khamis. The following ministers were appointed to their respective portfolios: Minister of Interior Major General Mohammed Khaled Al-Rahmoun; Minister of Water Resources Hussein Arnous; Minister of Internal Trade and Consumer Protection Atef Naddaf; Minister of Tourism Mohammed Rami Radwan Martini; Minister of Education Imad Mouwafak Al-Aazab; Minister of Higher Education Bassam Bashir Ibrahim; Minister of Public Works and Housing Souheil Mohammed Abdel-Latif; Minister of Communications and Technology Eyad Mohammed Al-Khatib; and Minister of Industry Mohammed Maan Zein Al-Abidin Jazbeh.
• Appointments included a new minister of interior for the first time since April 2011. Major General Mohammed Khaled Al-Rahmoun, the Director of the Political Security Bureau, was appointed as Minister of Interior, replacing Major General Mohammed Ibrahim Al-Shaar, who served in his post since April 2011. Al-Shaar was tasked with leading the non-military security forces since the beginning of the Syrian War. Al-Shaar survived three assassination attempts while in his cabinet post.
• The Ministry of National Reconciliation established in 2012 was dismantled and its functions were transferred to a new public body called the National Reconciliation Authority. The former Minister of National Reconciliation Ali Haidar will head up this new public authority. As the only ever Minister of National Reconciliation, Ali Haidar is credited with persuading several rebel groups to lay down their arms, even engaging in direct telephone calls with them. Haidar is a member of the Syrian Social National Party, a one-time rival of the governing Baath Party. Ali Haidar survived four assassination attempts while he was Minister of National Reconciliation. He also lost his son to a rebel-sponsored assassination early on in the Syrian conflict.
• Hazwan Al-Wazz was replaced as Minister of Education by Imad Mouwafak Al-Aazab. Al-Wazz sparked protests last year after his Ministry released an unpopular national curriculum that forced the People’s Assembly to address the matter and question him. Moving forward, the Ministry of Education will be tasked with significant roles during the reconstruction period not least of which include shaping the minds of a lost generation of youth scarred by the scourge of war. The new Minister will have great influence in this respect.
• Staff at the Ministry of Tourism bid farewell to their boss Bisher Yazigi. Yazigi served as Minister of Tourism during Syria’s darkest years from 2013 to 2018. Syria’s pre-war tourism industry was a main contributor to the national economy at 12% of GDP. Despite the challenging circumstances of this sector during the war, Yazigi focused on local and religious tourism in safe areas while encouraging private investments.
• Veteran ministers of the Syrian War who departed their posts include Minister of Interior Major General Mohammed Ibrahim Al-Shaar who served from 2011 to 2018, Minister of National Reconciliation Ali Haidar who served from 2012 to 2018, though he will head up a similar public entity, and Minister of Tourism Bisher Yazigi, who served from 2013 to 2018.
• Governor of Damascus Bisher Sabban was also replaced after several years in his post predating the war. The long-serving Governor, who was appointed back in May 2006, was in charge when new development projects were slated for the capital before the conflict and more recently was tasked with overseeing the launch of Marota City. Adel Anwar Al-Olabi was appointed as the new Governor of Damascus and will now take charge and oversee the development of Marota City and neighboring Basilia City.

National Administrative Reform Program (NARP)

• Following the recent cabinet reshuffle, President Bashar Al-Assad informed the government that it must work to root out corruption in public institutions. It is clear that this is a reference to the National Administrative Reform Program, or NARP, which was announced approximately 18 months ago. NARP is an initiative launched personally by President Al-Assad to push through legal and judicial reforms as well as a restructuring of the public sector to enhance accountability. The non-governmental organization the British Syrian Society has been hosting conferences in Damascus and making recommendations with respect to NARP based on public feedback.
• As part of NARP, the Ministry of Administrative Development is set to play an enhanced role in the selection of assistant ministers, governors and directors of public entities based on technical qualifications and evaluations. For their part, assistant ministers play a key and influential role in the day-to-day affairs of ministries as they handle technical and administrative matters. Unlike ministers, assistant ministers tend to last longer in their positions and are more acquainted with the issues.
• Two of the most powerful ministries that could emerge in Syria are the Ministry of Administrative Development and the Ministry of Religious Endowments. The Ministry of Administrative Development is set to oversee the public administration and its appointments including assistant ministers and governors while the Ministry of Religious Endowments supervises the religious sphere.

Judiciary

• The Minister of Justice launched a new system that would seek to bring judges from the Public Prosecution together under the instructions of attorneys general throughout the Syrian provinces to resolve old criminal cases within a period of one month.
• Perjury is apparently becoming a major issue in Syrian courts whereby desperate economic conditions are leading witnesses to become easy bait for corrupt lawyers and their clients who promise them material benefits in exchange for false testimony during judicial proceedings.
• The Ministry of Communications and Technology announced that it is planning to launch an electronic system that facilitates the provisional attachment of financial assets in January 2019.

Urban Renewal

• A leading Chinese company Hubie Zhuyuo Group met with the management of Damascus Cham Holding to discuss potential joint ventures together in real estate development projects in Marota City.
• The People’s Assembly discussed amendments to the Urban Renewal Law 10/2018 that were later voted upon and became Law 42/2018. The new provisions give landowners one year to prove their ownership of land located in an area designated for redevelopment where such ownership rights have not been recorded in the Land Registry. The time limit was originally 30 days when the Law was first issued back in April and caused considerable controversy. Law 42/2018 was approved by the People’s Assembly on November 6th and ratified by President Bashar Al-Assad on November 11th.

Property

• Poland intends to contribute to the reconstruction in Syria by participating in housing projects for Syrians.
• The Ministry of Interior issued a resolution that requires security precautions to be taken to check that tenants renting properties in Syria are not wanted by the security forces.

International Trade

• Despite the reopening of the Nassib crossing on the Syrian-Jordanian border, Lebanese exporters have not benefited substantially due to a five-fold increase in transit fees imposed by Syria and also because of foreign competition that replaced them starting in 2015 when the border crossing was overrun by rebels.
• Syria’s free zones generated revenues of SYP 3.3 billion since the beginning of 2018 until the end of October. Goods entering the free zones were worth SYP 50.5 billion over the first ten months whereas the value of exported goods reached SYP 39.5 billion. Capital invested into the free zones amounted to $750 million (US) by 1,038 investors. The value of customs duties during the mentioned period is estimated at $4.5 million (US). The General Establishment for Free Zones is the relevant public authority overseeing free zones.
• Syrian exports have reached 100 countries including the US, which imposed sanctions against Syria.

Investments

• Prime Minister Imad Khamis led the government on a trip to Aleppo to launch a city-wide rehabilitation and development program. Every sector of the local economy was discussed as ministers prepared to revive the industrial hub of Syria and its largest city.
• On its mission to Aleppo, the Council of Ministers approved Syria’s new Investment Bill, which seeks to streamline the licensing process for investors and aims to further develop special economic zones to satisfy reconstruction demands. The bill should head to the People’s Assembly next.
• During an investment conference in Damascus organized by the Ministry of Finance, the Syrian Investment Authority presented a number of dormant projects already in the pipeline to the private sector to assess their appetite in undertaking their execution. The Syrian War is transforming the economy in the country from one that has been led by the public sector since 1963 to one where the private sector may end up in the driver’s seat. The strain on public finances caused by the conflict would seem to inhibit any other outcome.
• The Russian company Stroytransgaz has signed a 40-year investment contract worth at least $200 million (US) to exploit fertilizer production in the Syrian province of Homs.

Corporate

• As Kuwait-Syria Holding launches its real estate development project in the Damascus suburb of Yaafour called ‘Park Residences’, interest in the Kuwaiti listed company has led one of its main shareholders, a prominent member of Kuwait’s Kharafi family, to sell part of their shares to eager investors.

Finance

• Former Syrian Minister of Economy and Trade Nidal Shaar attributed the rise of the US Dollar in relation to the Syrian Pound due to demand for imported materials for reconstruction. However, an argument can be made that a stronger US Dollar in general against all currencies is partly the reason.
• Banks in Syria expressed their displeasure with a recent Central Bank resolution that required loan applicants to maintain a certain balance in their accounts before credit can be disbursed to them. Such a decision was expected to affect the ability of banks to grant loans. There were concerns that people such as public sector employees with limited income means to maintain a sufficient balance in their bank accounts would struggle to qualify for loans. Without the ability to grant numerous loans, banks also ran the risk of receiving fewer interest payments. By conditioning the provision of loans by banks on the need for customers to maintain a sufficient balance in their accounts, the Central Bank risked hindering the ability of banks to earn interest on would-be loans from borrowers in order to service interest payments on deposits. Such arguments eventually led the Central Bank to reverse its decision.

Telecommunications

• Local mobile network operator MTN Syria has received initial approval to list its shares on the Damascus Securities Exchange and must now complete the remaining procedures before obtaining final approval. Last October, rival operator Syriatel also received initial approval to list. Syriatel and MTN Syria are the only two mobile network operators in Syria though there has been continuous speculation of a third operator entering the market. MTN Syria was previously known as 94 Areeba-Syria and owned by the Mikatis of Lebanon before being bought out by South African giant MTN. Both Syriatel and 94 Areeba-Syria (later MTN Syria) entered the Syrian market in 2000 on 15-year build-operate-transfer models whereby the operators would build the telecommunications infrastructure and whose ownership would revert to the state in 2015. In 2015, Syriatel and MTN Syria were granted 20-year licenses to operate the mobile networks. The terms and conditions mandated the listing of both operators on the Damascus Securities Exchange within three years of being granted their licenses. Syriatel and MTN Syria were due to list their shares on the Damascus Securities Exchange before the end of 2017 but they faced obstacles in meeting that deadline, such as the lack of permanent licenses and relatively few shareholders according to Minister of Finance Maamoun Hamdan. The capital of Syriatel is SYP 3.35 billion and its profits increased during the first half of 2018 by 109% to reach SYP 31.1 billion compared with the same period in 2017. The capital of MTN Syria is SYP 1.5 billion and its profits increased during the first quarter of 2018 by 71% to reach SYP 2.06 billion compared with SYP 1.2 billion in 2017.

Transport

• The Ministry of Transport announced that it has received confirmation from the International Maritime Organization based in London that Syria is to be included on the White List.
• Reports suggest that the Lebanese government has ordered Beirut International Airport not to refuel Syrian airliners so as to comply with US sanctions.

Agriculture

• In cooperation with Russia, the Ministry of Water Resources in Syria is planning to establish an artificial lake in Lattakia province before the end of 2020 in order to provide water for drinking and agricultural purposes.

Media

• The new Media Bill in Syria is being drafted in response to the experiences of the last seven years when irresponsible reporting contributed to a surge in conflict. While fines are being increased for violations, journalists will no longer face the threat of imprisonment as a penalty.

Armed Forces

• The General Command of the Army and the Armed Forces issued an order ending active duty status on November 6, 2018 for the soldiers of Session 247 and the previous sessions where they have served for more than five years up until July 1, 2018; the same applied to reservists called up in 2013.
• MPs in the People’s Assembly deliberated on a bill that would provide soldiers and veterans of the Syrian War with economic benefits to resume their daily lives.

International Relations

• The potential for Syria to team up with Gulf states in countering outlawed organizations such as the Muslim Brotherhood should not be taken lightly and the Awqaf Law in Syria, which strengthens the powers of the Ministry of Religious Endowments, could be regarded as a useful tool.
• A Jordanian parliamentary delegation headed to Damascus to help facilitate a resumption of normalized relations between the two countries following the reopening of the Nassib crossing on the Syrian-Jordanian border. The improved economic cooperation is also leading to a surge in hotel bookings in Syria by Jordanians.
• Not only Syrian factories found their way forcibly into Turkey through acts of looting but also Syria’s thriving olives business. Turkey’s role in plundering Syria’s wealth and land during the Syrian War will not be overlooked so easily when the war formally ends.
• According to Syrian Deputy Foreign Minister Ayman Sawsan, a number of Arab and European countries have sent representatives to Damascus to inspect their embassies in anticipation of resuming diplomatic relations with Syria.

International Sanctions

• The US sanctioned Russian and Iranian companies over oil shipments to Syria. The oil shipments are meant to provide heating for Syrians during the cold winter and to secure electricity to power hospitals and other facilities. Russia denounced the move as an attempt by the US to hinder reconstruction in Syria.