WRAPUP 1-Syria rebels hope arms will flow to new fighter command

>

* Germany expelled four Syrian embassy staff

* Youth decapitates Alawite officer - amateur video

* Syria's economy to shrink by 20 percent - finance group

By Mariam Karouny

BEIRUT, Dec 10 (Reuters) - Syrian rebels expect greater military help from Gulf Arab states after they announced a new command structure which aims finally to unite President Bashar al-Assad's armed opponents, rebel commanders said on Monday.

Rebel fighters have made gains across the country in the last month, seizing military bases and taking on Assad's better-armed forces on the fringes of his powerbase in Damascus.

Activists said fighting raged on Monday in southern Damascus near the international airport and reported clashes in the northern Damascus districts of Rukneddine and Salhiyeh - the heaviest there since the uprising began 20 months ago.

Despite using more effective battlefield tactics and acquiring more arms, the mainly Sunni Muslim fighters have so far lacked the firepower to deliver a decisive blow to Assad, from the Alawite minority linked to Shi'ite Islam.

Abu Moaz al-Agha, a leader and spokesman of the powerful Gathering of Ansar al Islam which includes many Islamist rebel brigades, said the new, Islamist-dominated military command elected in Turkey over the weekend could change that.

"What we need now is the heavy weapons and we expect to get them after the formation of this. The anti-armour and anti-aircraft weapons are what we are expecting," he told Reuters by Skype from Turkey before heading to the Gulf.

"The Qataris and the Saudis gave us positive promises. We will see what will happen," he said, adding that officials from Western countries, who also attended the meeting in Turkey, had not mentioned arming the rebels but talked about "sending aid".

At least 40,000 people have been killed in Syria's uprising, which started with street protests which were met with gunfire by Assad's security forces, and spiralled into the most enduring and destructive of the Arab uprisings.

Stalemate between major powers, particularly the United States and Russia, has paralysed the wider international response to the violence, leaving regional Sunni Muslim states such as Turkey and the Gulf Arab countries helping the rebels and Shi'ite Iran providing support to Assad.

Washington and Moscow sent their deputy foreign ministers to talks with international envoy Lakhdar Brahimi on Sunday, but a statement after the meeting showed little sign of breakthrough, although they agreed a political solution was possible in Syria.

German Foreign Minister Guido Westerwelle announced on Monday that four Syrian embassy staff were expelled from Berlin, to send a "clear message that (Germany is) reducing relations with the Assad regime to an absolute minimum".

"REAL HOPES"

The new rebel command brings together most existing rebel entities including brigades which formed an Islamist front two months ago and "provincial military councils" which operated under the umbrella of the Free Syrian Army.

A commander in an Islamist brigade in the northern province of Aleppo, which also had a strong presence in the new body, said it would ensure proper supervision of weapons supplies.

"This time people have real hopes. We believe that weapons will be delivered," he said. "One of the main reasons for the formation of this body is so that thefts (of weapons) are controlled, and each one will get their rights and put the control in the hands of those inside and not outside Syria."

Rebels of the al Qaeda-linked Nusra Front, one of the most efficient fighters in Syria, are not part of the new body.

"They have their own leaders and their own structure, they fight side by side with the Free Syrian Army.

"The anti-armour and anti-aircraft weapons are what we are expecting," he told Reuters by Skype from Turkey before heading to the Gulf."The Qataris and the Saudis gave us positive promises"We have only seen good things from them and they are good fighters," said Abdul Jabbar al-Oqaidi, a senior commander in the new group.

Activists said rebels strengthened their hold on Monday over a military base in the Sheikh Suleiman region of Aleppo, Syria's biggest city, which they overran a day earlier.

The Syrian Observatory for Human Rights, which monitors violence across the country, said rebel fighters had been trying to seize the site for two weeks, after they captured a special forces base in the region last month.

The group also reported clashes in northern Damascus, where residents said parents rushed to pick up children early from school. One elementary school bus had only three students in it - one of them told the bus supervisor that all the others were collected early by their parents.

At a nearby girls' high school, the headmistress was trying to dissuade a mother from pulling out her 16-year-old daughter before the day's end. "If we keep letting parents pick up their kids anytime something happens, they'll be in a constant state of panic," she said.

The mother tried to explain that even though she was trying to keep a calm household, her husband was "really freaking out when we heard gunshots in our own street" earlier today.

In another sign of the sectarian and violent nature of the conflict, a video which activists said was filmed in the central city of Homs showed what appeared to be a youth with a long knife decapitating a man, identified as an Alawite officer. It was not possible to verify the video.

SHRINKING ECONOMY

A global finance association said on Monday that the combined impact of civil war and international sanctions will shrink Syria's economy by a fifth in this year. Syria's entire foreign reserves could also be spent by the end of 2013, the Institute for International Finance said.

Since the revolt started in March 2011, inflation has risen to 40 percent and the Syrian pound's official exchange rate against the dollar has fallen by 51 percent, the IIF said.

As well as financing the war, Assad's government has spent billions of dollars of hard currency reserves on wages, fuel subsidies and propping up the pound, bankers in Damascus say.

International measures to pressure Assad to step down have also affected the economy.

"The sanctions by the Arab League introduced in late 2011 and the September 2011 U.S. and EU sanctions have meant more economic hardships," said Garbis Iradian, IIF deputy director of the Africa and Middle East.

Stocks Markets