PPP: The Law That Never Was?
The morning of December 4, 2010 is remembered as a cold but sunny one for the leading legal, financial, business and governmental personalities who made their way to the Four Seasons Hotel in Damascus that day. The weather merely symbolized the mission at hand for them. The cold represented the challenging task that lay ahead for the experts as they would be confronting Syria’s decades-long socialist legacy while the sun suggested what at least appeared to be a bright future within reach for the country. The objective of the workshop that day was to discuss and offer recommendations on the Draft Public-Private Partnership (PPP) Law that was expected to deliver a considerable boost to Syria’s economic prospects.
PPPs can be defined as long-term contractual arrangements entered into by governmental entities and private sector parties with the aim of delivering services to the general public. When delivering public services under these business models, the private partner bears most of the risk and management responsibility associated with running the public facility in return for a profit. The private partner may even take possession over the public asset and transfer it back to the state after a specific length of time such as 25 years. PPPs differ from outright privatization where the private sector takes ownership and control of the public facility or service while the authority of the state is limited to oversight and regulation rather than actively being a partner in the undertaking. PPPs are to an extent a middle ground between nationalization, where the state is wholly responsible for delivering public services, and privatization.
By the late 2000s, the Syrian government had in principle formally adopted the concept of PPPs. They were expected to play a role in carrying out a number of planned infrastructure projects on a large scale and relieve much of the state’s financial burden, which was not sustainable in the long term. Given Syria’s socialist background, this policy was also clarified in an attempt to reassure various segments of society that there was no intention to pursue privatization. PPPs were being promoted on the basis that the government would resort to the private sector to contribute both in finance and expertise to the delivery of a public service by means of a partnership with the public sector and not through privatization. It is worth noting that the government believed a legal framework to this effect would be welcome since the current Public Procurement Law does not provide appropriate mechanisms to execute PPP projects.
The leading advocate of PPPs in the government at the time was Abdullah Dardari, the then-Deputy Prime Minister for Economic Affairs. In 2009, the Central PPP Unit was set up and linked to his office so that he could oversee the development of this new program. In this respect, the idea of PPPs fitted in neatly with the government’s declaration in 2005 to move away from a state-run command economy towards a social market orientation that attempted to reach a compromise between socialism and a market-based economy.
A range of major infrastructure projects that were in the pipeline were expected to be implemented in accordance with PPP models. They included power plant projects, two planned highways running north to south and west to east across the country, the Damascus metro network, airports and much more. In fact, special legislation was enacted to procure the power plant project in Al-Nasserieh north of Damascus on a PPP basis. Not long before that workshop in late 2010, the Electricity Law was passed. Accordingly, it sanctions a greater role for the private sector in the financing and development of power-related infrastructure projects. Furthermore, the government permitted the Ministry of Transport in the summer of 2010 to enter into contracts with the private sector for the establishment and operation of new airports. It also gave its approval for private sector companies to develop and modernize existing airports in Syria. Earlier in 2005, a law was pushed through permitting the separation of ownership and management of publicly-owned commercial entities, which resulted in Syria’s two main ports at Lattakia and Tartous being operated by private international firms.
The first major conference on PPPs in Syria was held in late 2009 in conjunction with the British-Syrian Society, a leading organization dedicated to fostering relations at all levels between the United Kingdom and Syria. The conference brought together an extensive number of leading businessmen, investors, lawyers, bankers, consultants and many more professionals from around the world. The significance of the event was not missed on anyone who attended that they were indeed witnessing what was expected to be an important milestone in Syrian economic policy.
By late 2010, Syria’s first-ever comprehensive Draft PPP Law was prepared after two years of work undertaken by Syrian and French lawyers. That day in December at the Four Seasons Hotel, Abdullah Dardari chaired the workshop comprised of renowned Syrian and foreign lawyers, bankers, prominent consultants from abroad, leading representatives from Syria’s top holding companies, other businessmen and concerned public sector officials to discuss the Draft PPP Law. One reputable foreign lawyer hailed the draft as one of the best he had seen in the region that would offer foreign investors a reasonable degree of legal comfort. Despite the backing it received, there were some issues in the draft that needed more attention but overall, nothing was expected to delay its enactment in early 2011. In line with the socialist underpinnings of Syria’s economy, the correct balance carving out the private sector’s envisioned role appeared to have been struck in the draft. That evening, everyone left the workshop feeling optimistic that Syria’s future looked promising but within two weeks, everyone’s attention was elsewhere.
First Tunisia but then suddenly countries such as Egypt, Libya, Bahrain and Yemen all hit the headlines at roughly the same time in early 2011 and the rest is history. Civil unrest in those countries was making people and business communities in the Arab world nervous about the region’s future in general. It looked at first that Syria would not be scathed by any unrest. It was even mentioned in business articles throughout March 2011 that the passage of its Draft PPP Law was imminent. Nevertheless, in the middle of that month, Syria itself was in the news.
The country was gradually subjected to unrest during the first few months of the crisis and then full-scale war drawing in regional countries and the world’s superpowers. Within the first few weeks if not days of the unrest in Syria, it was clear that PPPs were no longer on anybody’s mind and understandably the Draft Law was shelved. After almost five years of conflict, the country’s economy and infrastructure, not to mention the human cost in lives and suffering, has been immensely impacted. Consequently, the government’s plans in 2010 are irrelevant to Syria’s future today.
Publicly, the government is still backing the concept of PPPs and has given its approval for the enactment of the Draft Law. In the midst of the conflict in August 2014, the government resurrected the draft and forwarded it to the People’s Assembly, the national Parliament, to initiate deliberations on the bill. In December 2015, the People’s Assembly submitted the draft to its Constitutional and Legislative Affairs Committee to review it. The bill is now expected to be brought to the floor of the People’s Assembly very soon. To anyone following these developments, it may seem evident to them that now is simply not the time to be considering a piece of legislation of this magnitude. Still, it is not far-fetched to suggest that it may be essential at some point and that it is not destined to keep collecting dust as the law that never was.
When reconstruction gets underway, the state’s coffers may have already been depleted if not severely diminished and the once miniscule pre-war national debt will most likely have soared. In order to rebuild the country, the state will no doubt be in need of investments and will be looking to contributions from the private sector. Such a state of affairs only lends credence to the argument that PPPs will have a significant role to play in rebuilding and rehabilitating Syria’s infrastructure. Once stability returns to the country and to an extent the region, investors will be looking to complement their physical security requirements with legal protections and that is when the PPP Law will be most in need.
The workshop to discuss the Draft PPP Law might seem like a distant memory at this point when a different Syria existed. One can only wonder what path the country would have been on today in the absence of the dreadful conflict that has been visited upon it. Nobody can know for sure what the PPP program would have looked like but it is difficult not to imagine it playing a noteworthy part in the years to come once the guns fall silent. Many people remain skeptical about the country’s territorial integrity going forward but maybe that bright future for Syria may once again be within reach just like it was on that Damascus morning in December more than five years ago.
Beautiful article Naim.. What a waste… But there is always a glimpse of hope. Surely, such laws will be much needed when the reconstruction phase starts. But what will matter most is the country’s stability, infrastructure and institutions. This law was debated in parallel with a major project for the reform of the judicial system, which would bring more security to investors. The future is still unclear. Keep up the good work and thank you for this great journal !
this law is helping in improving the infrastructure and institutions aspects of Syria.
thank you for this great journal !