Thursday 30 October 2008

Anger in Syria

The BBC reports:

Thousands of people have held a peaceful demonstration in Damascus against an alleged US raid on a village that Syria says killed eight people.

Thousands of people took to the streets of Damascus, waving flags and carrying banners reading "No to American terrorism" and "America the sponsor of destruction and wars".

The protesters, including many civil servants and students, also waved pictures of the Syrian president, as they converged on the central Youssef al-Azmi square.

Syria said a US school would close temporarily and warned US citizens to avoid the area.

Five of those killed in the raid on Sunday were from the same family, and the BBC's Paul Wood spoke to the woman who lost her husband and four sons at the scene of the raid.

She was being treated in a Syrian hospital for injuries she said she received during the attack.

"I went outside to get my son and the Americans shot me," she said. "I was screaming in terror."

She said all the men were working on the house that was in the compound where the Americans landed, and denied any link between them and al-Qaeda.

Stability, apparently

A curious piece in The New York Times commends Lebanon's financial sector. Curious because of the great secrecy at a the heart of our banks means we don't actually know what they have in vaults. Of course it could just be that they are awash with billions of dollars looted from Iraq.

For those with time have a look at A Political Economy of Lebanon.

Here's the NYT piece:

This small country, chronically battered by war, turns out to have a banking sector that has so far been a beacon of stability and growth, The New York Times’s Robert F. Worth writes. Its banks are posting record profits, aided by conservative central bank policies, skillful management and money from Lebanese expatriates.

Lebanon’s very instability — its 15-year civil war and frequent political crises — appears to have bred the banking sector’s fiscal prudence, analysts say.

Three years ago the central bank here barred investments in derivatives and other structured financial products, giving banks virtual immunity to the widening financial contagion. The banks here have done little borrowing on international markets. Deposits account for about 83 percent of their assets, making them among the most liquid in the world.

“The banks here are used to turmoil,” Nassib Ghobril, the head of economic research and analysis for Byblos Bank, the country’s third largest, told The Times. “Since the end of the civil war in 1990, there has been no loss of deposits, and there’s great confidence in the sector.”

As of August, the money flowing into deposits grew 16 percent over 2007 — itself a record year. Lebanon had no working government for most of that period, and at times seemed to be on the verge of civil war.

Those inflows appear to be rising further. The central bank released statistics showing that it increased its foreign assets by $572 million in the first two weeks of October, possibly a sign that foreign deposits are growing.

Lebanon has also attracted the hedge fund industry, which has until now focused more on Persian Gulf markets. “We consider the well-capitalized Lebanese banks as safe as the safer banks in the gulf,” Florence Eid, the regional managing director for Passport Capital, a hedge fund based in San Francisco, told The Times.

An added asset is Lebanon’s often wealthy expatriates. About 4 million Lebanese live in the country, but an estimated 12 million live abroad, and many send money home and invest in real estate. The total of such remittances is expected to top last year’s, $5.5 billion, one of the world’s highest per capita rates.

Partly for that reason, banks here have grown so large that they dwarf the national economy. Lebanese bank assets are about $100 billion, in a country with a $25 billion gross domestic product, said Marwan Barakat, in charge of research at Bank Audi, the country’s largest lender.

This growth has allowed the banks to expand internationally. Bank Audi, for example, now has branches in Egypt, Saudi Arabia, Jordan, Syria, Qatar and Sudan.

The continued growth here is probably also related to some modest good news in politics. In May, after 18 months of deadlock, Lebanon’s warring factions agreed to a compromise. So far, the deal seems to be holding. But the banks are also doing their part, holding much of Lebanon’s $45.4 billion public debt.

“In this crisis, governments in the US, Europe and elsewhere have been stepping in to rescue their banking sectors,” Mr. Ghobril told The Times. “Whereas in Lebanon the sector is so large it has been supporting the state for years.”

Wednesday 29 October 2008

Why attack Syria?

The US military attack on the Syrian border town of Abu Kamal I believe exposes growing divisions among the “coalition of the willing” behind the invasion of Iraq in 2003.

The timing and target of the raid raise many questions.

The Syrian regime, which is dominated by the Alawite branch of Islam, has been reeling recently after a series of bomb attacks widely blamed on Al Qaida and other Sunni Islamist groups.

If Abu Ghadiyah, the main US target, was an Al Qaida leader, as the US claims, then the Syrian regime would have had no scruples in arresting him. The US intelligence services acknowledge that for several years Syria has cracked down on the so called “foreign fighters” passing through its territory into Iraq.

Some commentators say that Syria’s recent moves to ease tensions in the region are the main motivation for the US attack. The Syrian regime has been involved in peace talks with Israel and has formally recognised Lebanese independence.

The US is also worried that a resurgent Russia is preparing to rebuild its ties with Syria. Last month Russia reopened a Syrian port used as a Mediterranean base for warships. The port was closed down following the collapse of the Soviet Union.

Embarassingly for the British government, the US raid came as foreign secretary David Miliband was due to hold a joint press conference with his Syrian counterpart. Miliband “withdrew” from the conference as news of the attack came through.

The fact that the US did not warn its ally of the raid has left the British foreign secretary deeply compromised.

The result, writes Sami Moubayed is that:

"One theory says that the entire ordeal was part of the internal US politics in the final lap of the presidential campaign, aimed at boosting the chances of Republican Senator John McCain by giving him more reason to pursue Bush's "war on terror" - this time with Syria.

"Had the Americans struck at a terrorist stronghold, the Bush team would have been the first to brag about it on all available media. The fact that the traditional US chorus remained silent seems proof that the Americans were not too proud of what they did, and that perhaps human error had come into play."

Another possibility is that this raid could be part of a recognition that, as the US withdraws from the western part of Iraq, the resistance will once again take over.

Whatever the truth, by attacking a Syrian border town the US is sending a message that it is prepared to spread the “war on terror” over borders.

This is a dangerous turn of events.