Germany's Aid to Syria

Negotiations between German and Syrian officials ended in Germany with a German pledge for 70 million euros ($95 million) in development aid to Syria for the next two years, the German Ministry for Economic Cooperation and Development (BMZ) announced on Tuesday.

For years, German officials have been working with the Syrian government and various economic institutions to ease Syria's transition to a social market economy. The Syrian economy has been managed centrally by the state since the 1960s, when the country nationalized most of its major enterprises. Designed to address regional and class disparities, this legacy of state intervention and price controls is now seen as hindering economic growth.

The German strategy emphasizes the promotion of micro-credits to entrepreneurs unable to secure loans from commercial banks, according to the German Development Ministry. Germany co-founded Syria's first "micro-finance bank" and has supported various other initiatives, the ministry said.

The ministry added that it has been asked to consult on the privatization of the Syrian national bank, a step that, in addition to other market reforms, could pave the way for international investors to do more business with Syrian firms.

Renewable energy helps Syria, and Germany

Germany and Syria also agreed to cooperate in the area of renewable energies and energy efficiency, two industrial branches where Germany has been traditionally strong.

Although Syria is a major exporter of crude oil and natural gas, its reserves are dwindling, so that "the use of wind energy and provisions in the area of building insulation are becoming increasingly important," the German development ministry said.

Germany boasts one of the world's leading renewable energy industries, but because German energy markets are mostly saturated, producers and distributors of renewable power are on the lookout for new openings in the developing world.

Germans will also be sharing their knowledge in the area of water management and sewage systems.

Syria faces challenges and more reforms

Syrian Deputy Prime Minister Abdallah al-Dardari, who is largely considered responsible for Syria's economic reforms, took part in the talks that ended last week, the German development ministry said.

But despite the continued efforts of Syrian and German policymakers, Syria still faces a number of challenges, including low investment levels, numerous poorly performing public sector firms, a low rate of industrial productivity and high unemployment.

German Economic Cooperation and Development Minister Heidemarie Wieczorek-Zeul reaffirmed her intention to visit Syria in the first half of the year.

Debate has begun in several western capitals on how far relations with Damascus should reach, as some, including the US administration, have accused Syria of supporting terrorism.

Last week leading US Democratic legislator Nancy Pelosi defended a controversial meeting with Syria's President Bashar al-Assad. Pelosi said she told Assad he could achieve peace in the region if he stops supporting terrorism.

"We have no illusions about the complexity of the challenges facing this region, but hope that recent diplomatic activity will generate some momentum for progress," Pelosi said in a statement.