Argument

Capture the Flag

What the rebel banner says about Syria's civil war.

Deep in the Syrian Archives in Damascus, one can find black-and-white photographs of a military parade that took place in the Syrian capital on Syria's 17th Independence Day: April 17, 1963. The event occurred only 40 days after the Baath Party seized power. Members of Syria's top brass were dressed in their military attire, with colorful decorations of medals across their uniforms, and led by the two co-creators of the Baath regime: Deputy Chief of Staff Salah Jadid and Air Force Commander Hafez al-Assad. Behind them fluttered the official Syrian flag: a standard with three stripes of green, white, and black and three red stars drawn across the middle.

Nearly half a century later, this same flag is being waved by those seeking to destroy the regime Assad created and obliterate the Baath Party he commanded. But the symbol of the revolt against President Bashar al-Assad is being trashed by regime officials, who claim that it is the "flag of the French Mandate" imposed on Syria from 1920 to 1946. According to state-run media, Syrian rebels are using it to restore Western hegemony over Syria, part of a "galactic" Qatari, Israeli, Saudi, and American plot against Damascus.

From 1932 to 1963 (with one short 1958-1961 interruption), the "revolutionary flag" was Syria's official flag, which explains why it still strikes a nostalgic chord among elderly Syrians. The struggle to return to it speaks volumes about anti-regime Syrians' national identity and their desire to break with everything that reminds them of 49 years of Baath Party rule -- even if it means bringing down Syria's oldest surviving state symbol.

Attacking the flag as a symbol of colonialism lacks credibility. For years, after all, it had been hailed by state-run Syrian TV on Independence Day as a symbol of Syria's long fight against the French Mandate, rather than a sign of subservience to it. It had been created in 1932 -- during the era of Syria's first democratically elected civilian president, Muhammad Ali al-Abid -- by a parliamentary committee headed by the respected Ibrahim Hananu, one of the leaders of the anti-French revolts in the 1920s, whose name has been immortalized in Syrian history books, even by the Baathists themselves. The colors referred to rulers in Syria's past -- white for the Umayyads, black for the Abbasids, and green for the Rashidun caliphs of Islam.

The flag was hoisted on government buildings on the day of Syria's independence from France in 1946, and it remained Syria's flag until 1958, when Egyptian President Gamal Abdel Nasser abolished it upon the creation of the United Arab Republic. Syrians returned to the green-white-black standard when the union was dissolved in 1961, and it remained in use for almost a year after the Baathists came to power in 1963.

This long history explains why the flag remains such a potent symbol. It had been used by 12 Syrian presidents, starting with Abid and up to Amin al-Hafez in 1964. It survived 14 years of French occupation, one war with Israel, and six coups. The Syrian regime cannot write it off so easily.

That may explain why Syrian officialdom, taken completely aback by the audacity of a new flag, was slow in reacting to the new symbol. After initial hesitation on how to react to the flag controversy, pro-regime commentators began appearing on talk shows, in a clearly systematic campaign, trashing the old flag as having been "created and imposed by the French high commissioner in 1932, against the will of the Syrian people." The story was baseless, of course, and they could not document their argument. They also failed to answer why, if this were true, the people of Syria maintained the "commissioner's flag" 17 years after the end of the French Mandate.

Commentators also invented an imaginary story that the three stars in the middle of the old flag were a reference to three sectarian states created during the Mandate: the Alawite state, the Druze state, and the Sunni state (though no such states ever existed in Syrian history). "Those carrying the Mandate flag" they barked on TV, "want to divide Syria along sectarian lines and create three confessional states in our midst." In reality, however, the three stars on the old flag, according to the official 1932 decree, referred to "three revolts against the Mandate" -- those of the Alawites, the Druze, and northern Syria, headed by Hananu himself. They are symbols of unity, not federalism.

Along with the smear campaign came an attempt by the Syrian regime at increasing popular allegiance to the existing flag. Countless red, white, and black tricolor flags were manufactured for pro-Assad rallies in Damascus -- with some people going as far as placing a photo of Assad between the flag's two green stars. Meanwhile, a state-run campaign was launched to carry the "longest flag in the world" across the Mezzeh Autostrade, the urban artery that runs through the heart of Damascus.

Paying the price for years of Baathism

Syrian officials grumbled. How people could abandon their flag that easily? After all, the Tunisian and Egyptian revolts had not challenged the existing flag. Even the Lebanese did not think of changing their cedar flag after years of civil war -- it continued to represent every faction of the complex Lebanese system, ranging from Maronite nationalists to Shiite Islamists. Why was Syria different?

The answer, of course, can be found in the Syrian regime's own malpractices. Until 2003, the regime never promoted true allegiance to the Syrian flag. Long before the outbreak of the revolt, Syrian officials were always seemingly more interested in marketing the flag of the Baath Party, as well as the image of the president, rather than Syrian state symbols. That flag, which is the same as that of Palestine, was copied from the 1916 Arab revolt against the Ottoman Empire. It consists of the same tricolors as the old Syrian flag -- a black, white, and green horizontal triband -- plus a red triangle on the left side. Syrians growing up in the 1980s often had a hard time identifying the official flag of Syria because the Baath flag -- along with photos of Hafez al-Assad -- flew higher at public rallies and in government offices. The Syrian flag fluttering on government buildings was more often than not miserable and torn into pieces by so much neglect.

The result? Generation after generation came of age with little attachment to the Syrian flag -- respect for state symbols had been forced upon them, rather than developed with explanation, emotion, and humanity. People felt that the flag meant very little to Syrian officialdom, giving them little reason to hold it in reverence if state officials were themselves seemingly more committed to Baathism than "Syrianism." The same applied to the Baath Party anthem, which was blasted at rallies either side by side with the official Syrian national anthem, or sometimes instead of it. During these ceremonies at state-run schools, the words of the national anthem lost their meaning, and so did the spirit of the flag.

When Bashar al-Assad came to power in 2000, that began to change -- reportedly upon the advice of the Turks, who attached great importance to the Turkish flag after Recep Tayyip Erdogan rose to the premiership in 2003. Erdogan firmly believed in the power of the flag to unite all Turks and bridge the gap between his country's Ottoman past and secular present. After 2003, accordingly, Syria's official flag began to take precedence over that of the Baath Party. The regime took to the idea and milked it dry, using the flag's tricolor at every presidential event and even manufacturing it into jackets, watches, bracelets, and caps. The flag became yet another loyalty test to measure fealty to the regime, the state, and the president.

When protests broke out in March 2011, Syrian officials resorted to the flag in any attempt to find a state symbol that Syrians could rally around. But by then it was too late -- the two flags had already emerged in Syria, one for the pro-regime street, and one for the opposition. Soon the country would have two armies as well, one for each flag. The state's abuse of the Syrian flag from 2003 to 2010 made it difficult for the flag to serve as a unifying force in 2011. Syrians wanted a new symbol, and they found it in the independence flag.

The red-striped flag is no more the flag of the regime, however, than the green-striped one is that of the French Mandate. Both assessments are flawed and need to be revisited calmly and seriously by Syria's new regime, which will likely include figures from the outgoing era uninvolved in the violence and destruction of the past 16 months. Some obviously want to maintain the current flag -- as happened in Egypt -- while others will push for a Libya-like flag change. A national referendum is vital at some point in the future.

Amid the tumult in Syria today, the colors of the flag may not seem like the most pressing issue. But this controversy raises an important issue for Syria's future -- how Syrians relate to each other as citizens of a common nation. They simply cannot go on judging each other's patriotism by the color of the flag they are waving. Neither banner can be eliminated from Syrian history. Millions still identify with the current flag, regardless of their views of the regime. Likewise, not everybody who opposes Assad feels at ease with the revolution's flag. And all of these people are going to have to work together to build a new Syria.

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Argument

The Big West Solution

What Arizona can teach Europe about weathering a housing crisis.

For more information about the woes of Club Med, click here. 

Three years after the Great Recession officially ended, the United States is still struggling with high unemployment and a faltering recovery. But for the troubled economies across the Atlantic, where there is now open talk of the potential collapse of Europe's shared currency, the United States looks like a veritable economic success story -- perhaps even a place to look for lessons on how to manage the crisis.

As it turns out, the experiences of a few U.S. states in weathering the housing crisis that precipitated the 2008 global financial crisis can provide insight into the eurozone's struggles. The Sun Belt states of Arizona, Florida, and Nevada saw a big housing bubble and subsequent bust, much like Greece, Ireland, and Spain -- a group we call "Club Med." While both groups continue to suffer from the aftereffects of the crisis, the Sun Belt is recovering more vigorously than Club Med, which appears caught in a vortex of failing banks and deteriorating public finances. Here's what the United States got right -- at least compared with its European cousins -- in its economic recovery.

The Power of Market Adjustment

There are plenty of differences between the United States and the European Union, but they have one important aspect in common: Both are monetary unions. That means neither the Sun Belt nor Club Med can resort to currency devaluation to help weather the shock of an economic downturn by enhancing competitiveness and stimulating exports. Instead, their channels for adjustment are limited to cutting wages, increasing productivity, encouraging some workers to move across borders, and relying on transfers from stronger states within the monetary union. On these counts, as we illustrate here, the United States comes much closer to being an optimal currency zone -- where shocks affect some regions more than others but can be more easily managed. As a result, while the Sun Belt and Club Med both experienced downturns that were severer than those of their broader monetary unions, the Sun Belt has managed a stronger, more rapid recovery.

In the Sun Belt, average annual GDP growth rates from 2000 to 2007 were 1.3 to 2.4 percentage points above the U.S. average. The Sun Belt states' recessions were also steeper: In 2009, their respective GDPs declined between 2.6 and 3.4 percentage points more than the U.S. average. Underscoring the severity of their recessions, the Sun Belt states' GDPs remain between 6.9 and 9.1 percent below their 2007 peaks, even as U.S. GDP has recovered to its pre-crisis level.

Club Med also experienced a sharper boom than the rest of the eurozone. From 2000 to 2007, these economies grew between 1.4 and 3.4 percentage points higher than the European average. Their fall was also steeper than elsewhere in Europe: In 2011, Greece's real GDP was 13.2 percent below its pre-recession peak, Ireland's was down 9.5 percent, and Spain's was down a more modest 3.1 percent. Meanwhile, GDP for the eurozone as a whole was only 0.4 percent below its pre-crisis peak.

Importantly, the Sun Belt states have since returned to growth. In 2010 and 2011, their GDP grew between 0.8 and 1.1 percent, and recent indications suggest that growth is continuing. But the U.S. economic recovery -- modest and hesitant as it is -- is still a distant dream in Europe.

The Sun Belt's quicker housing adjustment has likely played a role in its relative success. Between 2007 and 2011, housing prices fell 43 percent in Florida and Arizona and 53.5 percent in Nevada. In contrast, home prices in Greece, Ireland, and Spain fell 12 percent, 33 percent, and 15 percent, respectively, over the same period. Declining housing prices can be expected to accelerate the recovery of housing demand and, perhaps even more importantly, force banks to recognize and process losses on their mortgage loans more rapidly. This occurred too slowly in Europe -- everybody pretended for too long that housing prices remained stable, nurturing concerns that banks in Club Med carried large, unrecognized real estate losses. This in turn deterred lending to Club Med by other banks and eventually led depositors to withdraw their money, accentuating the credit crunch.

Other economic indicators tell an even more striking story. The increase in Sun Belt unemployment was less than half that in Club Med countries, where it is approaching depression levels, despite both groups experiencing a similar decline in GDP from their peak levels. Moreover, while unemployment in the three U.S. states has declined by 1.2 to 2.8 percentage points since the worst days of the crisis, unemployment in their European counterparts is still on an upward trend.

In both groups, the bursting of the housing bubble was associated with an abrupt interruption in the growth of the labor force; this was mainly due to the cessation of the big net migration during the pre-crisis years (see Table 2). In addition, many discouraged workers have dropped out of the labor force. The much larger rise in unemployment in Club Med primarily reflects the far-larger decline in employment than that seen in the Sun Belt, rather than differences in the rate at which the labor force grew -- a surprising result given the supposed impediments to firing workers in Spain, for example. The dramatic drop in Club Med employment rates also likely reflects employers' widely held expectations that the crisis will continue for many years, a reluctance or inability to cut wages due to legal constraints, and the fact that Club Med countries have become very uncompetitive -- their labor costs relative to Germany soared 20 to 30 percent during the boom years. In the Sun Belt states, on the other hand, no comparable loss of competitiveness is evident, wages adjust more readily, and workers move much more easily across state borders than in Europe.

The Power of Uncle Sam

The European Union simply can't support its individual member countries in the way that Washington can help faltering state economies. The net fiscal transfer from the U.S. federal government to the Sun Belt during the worst of the recession may have amounted to 5 percent or more of their GDP and still remains substantial today. This includes automatic fiscal stabilizers -- lower tax liabilities to the federal government and increased fiscal transfers, including unemployment insurance, food stamps, Medicaid payments, and welfare -- that played a critical role in cushioning the shock.

The effect of these automatic stabilizers is to offset as much as 40 cents of every $1 decline in state GDP, according to former Council of Economic Advisers chair Martin Feldstein. This amounts to a large fiscal stimulus over and above that provided by the 2009 economic stimulus package, which added up to 2.8 percent of U.S. GDP over the course of 2009 and 2010 and which disproportionately benefited the hardest-hit states.

Nothing of comparable magnitude exists within the eurozone, for the very good reason that the European Union is not a country and it doesn't have a large central government. The widely advertised headline numbers of the support given or planned to stem the crisis in Europe are certainly impressive. However, most of these measures -- such as the European Central Bank's interventions to provide liquidity to banks and purchase government bonds -- have their less-heralded parallel in Federal Reserve operations and the automatic working of the U.S. monetary union. Crucially, intergovernmental transfers in the eurozone take the form of loans to the troubled eurozone countries, adding to their debt and, because those loans come with strings attached and are the result of protracted negotiations, constitute an ongoing source of uncertainty and speculation.

The most striking difference between the Sun Belt and Club Med is the avoidance of a serious crisis in the U.S. state governments' balance sheets. Sun Belt governments' spending represents a small part of state GDP (see Table 3), and they broadly abide by a self-imposed balanced budget rule. Even as Club Med saw its credit ratings collapse, the Sun Belt governments avoided crippling debt problems. Their credit ratings remain solid -- Florida actually retains AAA status. And unlike Club Med, which was forced to cut its deficits while in recession, the Sun Belt governments were able to rely on countercyclical spending, supported directly or indirectly by the federal government.

Importantly, Sun Belt states were not called upon to bail out their failing banks, relying instead on Uncle Sam's FDIC and TARP programs to do so. Meanwhile, Club Med had to deploy massive sums to prevent their banks' collapse -- well over 100 billion euros in Spain alone. The close link between banks and nation-states in Europe has meant that the banking and sovereign debt crises continuously fed on each other.

Meanwhile, as mentioned earlier, the Club Med countries' labor and other costs have massively diverged from Germany -- Europe's economic motor -- further complicating the economic recovery. Even if Club Med had been able to rely on the support of a federal system, such divergence in competitiveness suggests that its adjustment was always fated to be more protracted and painful than that of the Sun Belt.

Club Med cannot just take a page from the U.S. playbook to pull itself quickly out of the economic doldrums. The differences are structural and will take many years to fix, and institutional reform is fraught with political obstacles that could delay the process indefinitely. However, the European project's now obvious weaknesses -- the linking together of very different economies, the slowness of their markets to adjust, and the lack of a strong central government -- at least provide a diagnosis for why the eurocrisis has been so extreme. They also provide some useful pointers for European policymakers on how the eurozone should evolve to prevent a repeat of today's disaster -- assuming, that is, that it survives that long.

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