Dealing with regional and global powers
Moscow has three objectives in involving the international community in the reconstruction of Syria. First, it is a means to normalize relations with Assad. Moscow has identified reconstruction and the return of refugees as viable avenues for bringing other countries into initiatives that constitute de facto working with Assad. Second, reconstruction is also a means to reduce the cost of the Russian intervention. Ultimately, Russia wants to limit its investment in Syria and to end its military campaign, but to achieve this goal Syria needs to be stabilized. Third, managing Assad’s regional and international rehabilitation is a way to tacitly recognize Russia’s mediator role in the country. President Vladimir Putin is approaching the next phase in the Syrian conflict as the ‘big brother’ figure who sets the rules of engagement, and in return for his facilitator role, expects all actors to cooperate with him.
Moscow’s main interests are not necessarily concerned with the Syrian reconstruction projects and who funds them, but rather with managing their outcomes.
Syria needs help to rebuild, but many of the traditional international donors are not sympathetic to the regime. Moscow’s main interests are not necessarily concerned with the Syrian reconstruction projects and who funds them, but rather with managing their outcomes. However, despite the Russian official rhetoric demanding that the international community unconditionally contribute to Syria’s reconstruction, Moscow recognizes that only small funds and irregular streams of Western investment will be injected into this costly process. Thus, Moscow looks into engaging either countries with no political disposition against Assad or countries looking to advance their security agenda. As for Iran, it views the lack of international interest in the Syrian economy as an opportunity to establish a sustainable influence in the country.
Amid their deep mistrust of the Arab Spring uprisings, the Gulf Arab monarchies initially viewed the Syrian conflict as an opportunity to counter Iran’s expansion in the Levant. Consequently, Saudi Arabia, Qatar and the UAE poured money and arms into the Syrian opposition in the hope of ousting Assad and establishing a friendly regime in Damascus. The rise of Islamists with competing agendas, the ever-growing competition and drift with Qatar and Turkey over the leadership of Sunni political movements, and finally their perception of Russian victory in Syria, have all encouraged the Saudi–Emirati axis to rethink their strategy in the country. Not fully convinced of Assad’s willingness to abandon his relationship with Tehran, Riyadh and Abu Dhabi are willing to engage with Syria in the hope that Russia has the capacity to contain Iran. Aware of these sentiments and deep-rooted security concerns, Moscow has made no attempts at contradicting the growing belief in the Gulf that Russia is willing to curtail Iran’s role in Syria. In contrast, Iran, if given the chance, is likely to use all of its clout to convince Damascus to not accept any financial contributions from the GCC. However, it is likely to fail in this endeavour.
The first to test such an approach were the UAE and Bahrain, which reopened their respective embassies in Damascus in anticipation of restoring diplomatic ties with the regime.32 The move as described by Anwar Gargash, the Emirati minister of state for foreign affairs, was motivated by the necessity of reactivating an Arab role in Syria to counter the Iranian and Turkish expansion.33 Prior to 2011, several UAE companies invested in the Syrian real estate and banking sectors.34 Similarly, their interests in the future phases of reconstruction will most probably be confined to the same sectors with no significant investment portfolios in wider industry, infrastructure, energy or economic development. This tendency has been confirmed by the interest shown by UAE companies that recently visited Damascus, one delegation included Wael Al-Lawati from Damac Properties35 and another involved Abdul Jalil Al-Blooki from Aafaq Islamic Finance.36 Such investments could prove to be lucrative to certain local Syrian partners associated with the regime or Russia, but will have very little impact in boosting the Syrian economy, which needs investment in infrastructure rather than real estate development.
Alternatively, Russia could use its position to look into the financial capacities of the BRICS countries, especially China and India, which both supported the Syrian regime in the UN and also share a foreign affairs doctrine of non-interventionism. Beijing in particular is expected to play a major role in the reconstruction of Syria following its similar interventions in other post-conflict countries such as Angola, Congo and South Sudan.37 However, Beijing’s participation in the Syrian reconstruction is complicated by a number of factors. First, Moscow and Tehran’s tolerance of Chinese economic involvement is low. Both have invested heavily in preventing the collapse of the Syrian regime, and are wary of a ‘free-riding’ Beijing. Second, though known for their risk taking, especially in Africa, the opportunity-cost ratio for Chinese companies in Syria is relatively low, due to the lack of strategic resources and stability. Third, the threat of falling under US sanctions is also putting off most Chinese multinational companies such as Huawei, which recently announced its withdrawal from Syria and Iran.
There are two main Chinese interests in Syria. First, the presence of Uighur militants and the security threat they could cause if they find their way back to Xinjiang province, in northwest China.38 Second, the geostrategic location of Syria at the crossroads of routes linking western Asia to Africa and Europe. Syria is part of China’s $1 trillion Belt and Road Initiative.39 In 2017, Beijing pledged to invest $2 billion in Syrian industry and has also used the recent China–Arab States Cooperation Forum to announce a further $23 billion in loans and aid for the Arab region.40 However, the 2017 pledge failed to materialize in any significant projects and it is not clear how much of the proposed $23 billion will go to Syria either. Thus far, Syrian appeals for stronger investment appear to have failed despite the tireless efforts of Imad Mustapha, the Syrian ambassador to China. Simply put, China has shown no real confidence in investing in Syria. It fears that future investments will be scuppered by nepotism and corruption. Furthermore, China does not see any real benefit in taking part in a fierce competition with Russia and Iran for influence over the regime.
Less vocal in its support of Assad, India has shown little interest in regime change in Syria. Contrary to its traditional allies’ stance in the GCC, which are crucial for securing India’s primary interests in the region, New Delhi’s tacit support for the regime is driven by three factors: its fear of instability, its commitment to non-interventionism and Assad’s continued pro-India stance on the Kashmir issue.41 But economically speaking, the bilateral trade between the two countries has never reached a significant threshold. In 2017, annual trade reached $175 million despite India’s commitment to renew its pre-war projects, specifically the Tishreen power plant.42 The reason behind the lack of Indian engagement is the absence of security guarantees to protect Indian experts and companies. For the time being India’s involvement in the Syrian economy will remain confined to trade and export. The president of the Federation of Indian Export Organizations, Ganesh Kumar Gupta, predicted that Indian annual exports could reach $500 million by 2020, including automobiles, machinery and plastics.43
Meanwhile, other regional countries such as Lebanon, Jordan, Iraq, Egypt and even Turkey could eye Syria as a potential market for their goods despite their different stances towards Assad. However, there are no indicators that such pragmatic approaches could translate into any significant investment in the reconstruction of Syria in the short term – even though it is difficult to imagine that Ankara would pass on reconstruction opportunities if available.
32 The National (2018), ‘Bahrain says it will reopen embassy in Damascus, after UAE restores mission’, 28 December 2018, https://www.thenational.ae/world/mena/bahrain-says-it-will-reopen-embassy-in-damascus-after-uae-restores-mission-1.807082 (accessed 25 Jan. 2019).
33 Hurriyet Daily News (2018), ‘UAE reopens Damascus embassy after seven years’, 28 December 2018, http://www.hurriyetdailynews.com/uae-reopens-damascus-embassy-after-seven-years-140077 (accessed 25 Jan. 2019).
34 Barhoom, F. and Varga, J. (2017), ‘Banking reforms in Syria’, Regional and Business Studies, 9(2): pp. 19–30 (accessed 19 Feb. 2019).
35 Enab Baladi (2019), ‘Syria: A Getaway for UAE to Face Economic Crisis’, 10 January 2019, https://english.enabbaladi.net/archives/2019/01/syria-a-getaway-for-uae-to-face-economic-crisis/ (accessed 20 Jan. 2019).
36 Damascus Cham Holding Company (2018), ‘زيارة السيد عبد الجليل البلوكي نائب رئيس مجلس إدارة أفاق الإسلامية للتمويل-الامارات’ [‘Visit of Mr. Abdul Jalil Al-Blooki, Vice Chairman of Afaq Islamic Finance’], UAE, 7 August 2018, http://damacham.sy/%D8%B2%D9%8A%D8%A7%D8%B1%D8%A9-%D8%A7%D9%84%D8%B3%D9%8A%D8%AF-%D8%B9%D8%A8%D8%AF-%D8%A7%D9%84%D8%AC%D9%84%D9%8A%D9%84-%D8%A7%D9%84%D8%A8%D9%84%D9%88%D9%83%D9%8A-%D9%86%D8%A7%D8%A6%D8%A8-%D8%B1%D8%A6 (accessed 25 Jan. 2019).
37 Yang, J., Wang, W., Wang, K. and Yeh, C. (2018), ‘Capital intensity, natural resources, and institutional risk preferences in Chinese Outward Foreign Direct Investment’, International Review of Economics & Finance, 15: pp. 259–272 (accessed 19 Feb. 2019).
38 Dorsey, J. M. (2019), ‘The Greater Middle East: China’s Reality Check’, Sharq Forum, https://www.sharqforum.org/2018/12/27/the-greater-middle-east-chinas-reality-check/ (accessed 25 Jan. 2019).
39 Gao, C. (2017), ‘Why China Wants Syria in its New Belt and Road’, The Diplomat, 30 November 2017, https://thediplomat.com/2017/11/why-china-wants-syria-in-its-new-belt-and-road (accessed 28 Dec. 2018).
40 Burton, G. (2018), ‘China and the Reconstruction of Syria’, The Diplomat, 28 July 2018, https://thediplomat.com/2018/07/china-and-the-reconstruction-of-syria/ (accessed 29 Dec. 2018).
41 Mehta, K. (2017), ‘Understanding India’s response to the Syrian civil war’, Observer Research Foundation, 1: pp. 1–6 (accessed 1 Jan. 2019).
42 Axon, A. and Hewitt, S. (eds) (2018), Syria 1975/76–2018, in Contemporary Archive of the Islamic World series, Brill.
43 India Times (2018), ‘India-Syria trade to reach $500 million in next 3 years: FIEO’, 11 September 2018, https://economictimes.indiatimes.com/news/economy/foreign-trade/india-syria-trade-to-reach-500-million-in-next-3-yrs-fieo/articleshow/65769371.cms (accessed 20 Dec. 2018).