Russia and Iran are the most influential external powers supporting the Assad regime and it is expected that Moscow and Tehran will reap the benefits of Syria’s economic recovery. However, the reality of this dynamic is complicated.
Summary
- Russia and Iran, the two main military allies and enablers of the Syrian regime, are engaged in competition over access to the Syrian economy, with a particular focus on opportunities to obtain reconstruction contracts.
- In addition to lines of credit and the supply of vital strategic products, Russia and Iran are pursuing a larger role in the Syrian economy by agreeing investment contracts for their major companies and conglomerates.
- Moscow and Tehran seek partial compensation for their military interventions in Syria, and both adopt an opportunity-based approach to the Syrian market.
- Russia demands unconditional international support for the reconstruction of Syria to stabilize the security of the country and to allow the return of refugees. Moscow also perceives reconstruction as an opportunity to facilitate the international and regional rehabilitation of Bashar al-Assad.
- Russia and Iran have built up alliances with local businessmen in Syria, and each country has established a business council to support and boost these relationships. The key sectors targeted by Russian and Iranian companies include oil and gas, electricity, agriculture, tourism and real estate.
- Assad constantly seeks to enlarge his own margin for manoeuvre by manipulating the interests of his allies. In addition to his ongoing efforts to re-establish his authority, Assad also astutely manages Syria’s economic interests on a case-by-case basis to maximize revenues.
- Contracting Russian private companies comes at a lower political cost to Syria than allowing Tehran to further expand in key sectors of the Syrian economy. However, Iran will remain influential in the foreseeable future as it is an important trade partner with Syria and an essential provider of oil refined products.
- US and EU economic sanctions on key sectors of the Syrian economy and individuals have impeded the regime’s capacity to initiate and push the reconstruction phase of its recovery. Moreover, these sanctions have also discouraged major foreign companies from investing in Syria. However, they can only be truly effective as part of a comprehensive framework to assist Syria in a meaningful and credible political transition.