BEIRUT (Reuters) - President Bashar al-Assad is in a quandary as the challenge to his autocratic rule grows in the streets of Syria: more concessions could signal weakness, but harsher repression risks radicalizing a growing opposition.
While some analysts believe Assad can contain the revolt through bold reforms, others believe he missed the chance to open up Syria's dictatorship when he inherited the presidency from his strongman father, the late Hafez al-Assad, in 2000.
"The regime is in trouble. People have been repressed for 40 years but suddenly the wall of fear has crumbled and they are no longer frightened," Sarkis Naoum of Beirut's an-Nahar newspaper told Reuters.
"Each time the regime makes new concessions, the people get bolder and ask for more. They see it as a sign of weakness. The regime doesn't know how to respond -- it's like an old grudge people have been waiting to avenge."
Close observers of Syria argue that -- as in the Tunisian and Egyptian revolutions that ousted Hosni Mubarak and Zine al-Abidine Ben Ali -- citizens are rebelling not just against a lack of freedom and opportunity.
They are also enraged by suffocating corruption that has enriched the elites while one-third of Syrians live below the poverty line.
"It was a combination of repression, corruption, incompetence and the degeneration of the system," says analyst Jamil Mroue. "It became combustible and people suffocated."
While crackdowns continued against activists who challenged Baath party rule, economic reforms since 2005 created lucrative new monopolies controlled by senior officials and Assad family insiders, among them his billionaire cousin Rami Makhlouf.
"The Baath Party is ancient, outdated and obsolete. The decisions are being made by the security forces and services who play a fundamental role in the country. They are the real force," said Talal Salman, publisher of Beirut's as-Safir daily, traditionally sympathetic to Syria.
A caste of army officers and clans of the dominant Alawite minority has sprung up, using its clout to suppress dissent and extort kickbacks, often demanding a share of the profits private business generates, observers said.
"The essential spark was ignited by the privatizing and franchising of corruption, which along with repression violated the fabric of society," Mroue said.
As with their Arab peers from Egypt to Yemen and Libya, young Syrians' aspirations have risen in tandem with their access to satellite TV, mobile phones, Facebook and the Internet.
The regional explosion that began in Tunisia and Egypt propelled people to seek a new way of life.
What adds an edge to Syria's crisis is the heavy-handedness of one-party rule, the sectarian rift between the ruling Alawite minority and the Sunni majority, and the brutality and impunity of the security forces.
Facing the most alarming challenge of his 11 years in power, Assad has juggled repression, economic handouts and calibrated concessions in an attempt to quash a month of protests.
Yet the unrest, which rights groups say has cost more than 200 lives, shows no signs of going away without radical change.
On Thursday, ahead of mass protests that broke out again on Friday, Assad ended a draconian state of emergency, in place for 48 years, that allowed blanket repression with impunity.
"President Assad might be able to overcome this crisis and contain the situation but the cost may be high... He has to change the regime or the people will force him to," said Salman.
ARMY SPLIT POSSIBLE
Analysts say toppling the system is harder because Syria's power structure differs from that of Egypt and Tunisia, where senior generals refused to open fire on demonstrators.
Alawite loyalists occupy the key positions in the Syrian military and Assad family insiders run the crucial security bodies, tying senior officers closely to Assad's own fate.
Yet the bulk of the army is Sunni and there have been persistent but unconfirmed reports of soldiers refusing to fire on protesters.
"There is a big possibility that the army will split or they won't accept to take part in a crackdown, if ordered. It is not easy to bring the regime down but it is easy to divide the regime," An-Nahar's Naoum said.
Nearly 30 years ago, the elder Assad ruthlessly put down an armed Islamist uprising, killing tens thousands of people in the city of Hama in a bombardment cloaked from international view.
That level of brutality would be harder to get away with today, when Syrians, despite state curbs on media, use mobile phone cameras to post instant images of protests on YouTube.
"Bashar's father killed 20,000 to 30,000 people in Hama... If Bashar wants to do another Hama in the first two hours the whole world will rise up," Naoum said.
While holding Assad responsible for failing to enact sweeping reforms, some analysts say issues beyond his control played a role, although he should have addressed them faster.
The country has been plagued by drought for several years, slowing its rise as a middle income economy.
Syria has 20 million people with a population growth rate of 2.4 percent. But entrants to the labor market are increasing at double that pace due to a faster birth rate in earlier decades, that far outstrips the capacity of the economy to create jobs.
Per capita gross domestic product languishes at $2,500 a year. The official unemployment rate stands at 10 percent but independent estimates are double that, with about a quarter of a million youngsters arriving in the jobs market every year.
Some Syrians believe the protest movement, unthinkable a few months ago, has now gained an irreversible momentum.
"There isn't anything impossible any more after Egypt and Tunisia," said a Syrian who refused to give her name. "Seeing Syrians defying the security forces on the streets while knowing that they might be shot dead is something beyond imagination.
"Do you think these people are willing to die just for some reforms or for an increase in wages? These people want the Assad regime out," she added.
Even if Assad, 45, concedes far-reaching democratic reforms, activists and protesters will want proof that he is making a real break with the past, testing the president's power over his own family and the Baathist elite.
"Assad has to carry out a white coup to clean his entourage of corrupt figures linked to the regime," Mroue said.
"He has to show people that there is dramatic change, that there will be elections in a few years, that he won't be president for life, that it is no longer a dynasty."
Such a high-risk course would entail confronting his own entourage and ditching a structure in place for 40 years.
No one knows what might come next -- a peaceful transition of power, a military coup, prolonged instability or civil war.
"Either he will opt for transformation of the regime or it will be torn apart," Mroue said.
(editing by Paul Taylor)