"You have to upgrade yourself with the upgrading of the society. This is the most important headline."
Many analysts see Syria -- "in the middle of the Middle East," in Assad's words -- as a potential bell-weather for how other Arab leaders will respond to demands for change.
"Real reform is about how to open up society and how to start dialogue," said Assad, who took power in July 2000 after the death of his father, Hafez al-Assad, who himself ruled Syria for three decades.
Decades of political and economic stagnation, ideologically weak leaders, foreign interventions and war have driven the discontent that exploded in the streets of Tunisia and Egypt, he said.
"If you have stagnant water, you will have pollution and microbes, and because you have had this stagnation for decades ... we were plagued with microbes," said Assad, 45, drawing metaphors from his background in medicine.
"So what you have been seeing in this region is a kind of disease. That is how we see it."
This month's uprising in Tunisia inspired the ongoing revolt in Egypt, analysts say, prompting speculation that the Arab world is on the threshold of a period of greater democracy.
"It is a new era," said Assad, "but it did not start now. It started with the Iranian revolution. What is new is that it is happening inside independent countries in the Arab world."
The Syrian leader refused to address events in Tunisia and Egypt directly, saying it was too early to judge their impact on the region, but he said the situation in his own country was stable.
"Syria is stable although it has more difficult conditions than Egypt, which enjoys financial support from the United States while Syria is under embargo by most countries of the world," he said.
Sketching out his vision in Syria, Assad said 2011 would see political reforms geared towards municipal elections, as well as a new media law and relaxed licensing requirements for non-governmental organisations.
"You cannot have a democracy that is built on the moods of self-interested people," said Assad. "So the beginning is dialogue and the institutions."
He said Arab societies had become more closed-minded since the 1980s, leading to extremism and less development and openness. The challenge for leaders was how to open societies and build up institutions.
"If you didn't see the need of reform before what happened in Egypt and Tunisia, it's too late to do any reform," he said, cautioning however against rushing through reforms in response to events in those two countries.
When he took power, Assad hinted in his inaugural speech at a new era of openness and reform for Syria, but the so-called "Damascus Spring" by most accounts was brief.
According to Human Rights Watch, Syria has detained political and human rights activists, restricted freedom of expression, repressed its Kurdish minority and held people incommunicado for long periods, often torturing them.
Assad has put economic reforms at the top of his agenda, but he said Western embargos were hurting Syria -- still in a state of war with Israel -- at a time when it needs technology to upgrade its institutions and enhance its economy.
"Today is better than six years ago, but it is not the optimal situation," the president said. "They tell you move faster and at the same time they impose an embargo."
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