Seeking compensation
Russia’s involvement in Syria is driven by its engagement in global geopolitics and its objective is ultimately to maintain an unchallenged and grateful ally in Damascus. It aims to achieve this through security assistance, influence over political leadership, military operations, the construction of Russian military bases and the infiltration of key economic sectors. Moscow has limited its use of aid or direct economic assistance to pursue its aims. Data on Russian foreign aid programmes in Syria are difficult to come by. The available data show that the total amount of Russian foreign aid in 2015 reached $1.6 billion, and only a fraction of this aid was delivered to Syria (excluding the cost of military intervention).12 When it comes to aid projects and reconstruction work, Russia seeks to encourage the participation of the international community, while re-enforcing its capacity to have direct influence on events.13
Propelled by the apparent withdrawal of the US from the region, Russia has positioned itself as a new security provider in the Middle East and North Africa (MENA). Since its intervention in 2015, Moscow has made a point of accommodating US allies such as Turkey, GCC countries, Jordan, Israel and Egypt.14 By posing as a mediator, facilitator and guarantor of negotiations in the Astana process and the concluding Sochi talks, Russia seeks to place itself above regional rivalries.15 Nevertheless, Russia is constrained by its own available capacity to fully claim this role. Restrained by domestic economic difficulties and the public’s apparent indifference towards Middle East affairs,16 the success of Moscow’s renewed aspiration in the region relies on being unchallenged by local actors. Beyond the occasional use of deterrence to dissuade ‘rogue’ behaviour,17 Russia does not wish to confront actors in the region.18 Moreover, in return for accepting its role, Moscow is willing to allow – or at least tolerate – unilateral actions from regional powers to relieve their own security anxieties especially in areas where the US failed or was simply reluctant to assist. For instance, Russia allows the Israel Defence Force (IDF) to target Islamic Revolutionary Guard Corps (IRGC) assets in southern Syria as long as it does not threaten Assad’s stability.19 Similarly, it tolerated the Turkish incursion in northern Aleppo and Afrin to deal with the threat of Democratic Union Party (PYD) expansion.20 Moscow is also willing to let GCC countries believe it is open to the curbing of Iran’s interests in Syria at least.21 Nonetheless, Iran seems to be the regional actor most immune to Russia’s actions. In addition to a complex set of common interests with Russia in the Caucasus, the Caspian Sea, the Persian Gulf and Central Asia,22 Tehran is the only other regional power with influence over Damascus that can match Moscow’s sway.
When it comes to economic development, Moscow encourages regional and international actors to invest in and trade with Syria as long as they do not undermine the regime’s authority or disrupt its stabilization efforts. Potential financial and economic contributions from a range of international actors could benefit Russia’s ventures and maximize their outcomes in Syria. The general overview of Russian investments, as discussed later in this paper, reveals an opportunity-based approach in accessing the Syrian market. In the meantime, Russia will leverage its influence in Damascus to facilitate access to Syria’s private sector and other lucrative sectors of the economy such as energy, tourism, agriculture and arms.
When it comes to economic development, Moscow encourages regional and international actors to invest in and trade with Syria as long as they do not undermine the regime’s authority or disrupt its stabilization efforts.
For Tehran, the Syrian economy constitutes a potential target market for Iranian products. A significant role in Syria’s economic revival would also allow Iran to reinforce the influence of its Syrian local allies and maintain its sway over Damascus. Since 2013, Iran has provided Syria with three lines of credit for the import of fuel and other commodities, with a cumulative value of over $6.6 billion.23 These credit lines do not cover the costs of military hardware and ammunition, the salaries paid for militants defending the regime, or the emergency and transfer funds that prevent a freefall of the Syrian Pound. Restrained by US sanctions, and regularly surpassed by Russia in winning major concessions in lucrative sectors in Syria, Tehran has resorted to adopting two indirect approaches to entrench itself in the Syrian economy. First, Iran expanded its ventures in the most remote and underserved areas of the country, mainly in the countryside around Aleppo and Deir EzZor.24 These financial contributions allow Iran to increase its influence by building constituencies in neglected communities with little competition from the regime or Russia. Second, Iran has restricted those that can receive funding from the lines of credit it offers in Syria to Iranian companies.25 Tehran can thus continue to provide the regime with a lifeline of goods and energy supplies, while re-enforcing the roles of its affiliates in Syria’s economy.
Nonetheless, the Iranian intervention in Syria is more about attaining regional strategic goals than opening up new markets. Its geographic approach in financial investment reveals what Tehran considers as strategic assets for its security and sustainable presence in Syria. In eastern Syria, along the Euphrates valley, Iran has made deals with local tribal leaders such as Nawaf al-Bashir of the al-Baqqara tribe to ensure its interests.26 Furthermore, it has rooted its influence by supporting local livelihoods, for example by providing abundant animal feed at low prices to encourage the vital animal husbandry sector. Iran has also built medical centres, rehabilitated schools and provided electricity to win over the local population. In southern and eastern Aleppo, where the IRGC has established the influential Local Defence Forces (LDF), Iran has encouraged its Syrian local allies to infiltrate local business, transportation and the oil trade. Encouraging the conversion of the LDF to become economic actors is also partially in anticipation of regime and Russian efforts to assimilate them into the Syrian army. In addition, Iran has encouraged local partners to acquire land and real estate in Damascus and Homs – both of which are strategic logistic nodes in linking Syria to Lebanon. It is important, however, to note that it is too early to measure the impact of the Iranian land acquisition strategy, as in many cases attempts to buy real estate have sparked anti-Iran sentiments within the local population.
For the regime, the Russian objective and strategy of reinforcing Assad’s authority and sovereignty over the country is much more appealing than the Iranian approach. Accommodating Moscow and offering lucrative contracts to Russian private companies comes at a lower financial and political price than allowing Tehran to further expand in key sectors of the Syrian economy. Nonetheless, Iran remains an important economic partner to Syria especially in providing vital commodities such as refined oil products, pharmaceutical supplements, ammunition and a variety of agriculture and animal produce.27 Hence, Assad walks a fine line between Iran and Russia, while constantly seeking to enlarge his own margin for manoeuvre. In addition to its ongoing efforts to re-establish its dominance, the regime also astutely manages its agreements on a case-by-case basis to maximize its outcomes. This was demonstrated when Tehran failed to provide the necessary finance to implement a project to build a third telecom network; Damascus did not hesitate to put the agreement on hold.28 This also applies to Russia and Iran’s approach to their respective contracts with Damascus. In cases where the Syrian government failed to secure the necessary funds, such as in a series of bids to reconstruct power plants, both Russia and Iran have not hesitated to pull out of agreements.29 Unsurprisingly, these dynamics confirm that conducting business in Syria is not only subject to geopolitical calculations but also to the financial sense of an investment. Meanwhile, the regime remains aware of the GCC’s strong disposition to curb Iranian influence in Syria. As a result, Assad is intensifying efforts to bolster his independence from Iran as a priority, and from Russia to a much lesser degree, in the hope of rehabilitating his relationships with these states.
As for Russia’s potential attempts to contain Iran in Syria, such efforts are only as effective as Moscow’s ability to dismantle Tehran’s complex net of influence in the country. If this becomes a Russian priority then a large part of its future engagement in Syria will be to prevent Iran from gaining massive influence over the economy. To achieve such an objective Russia requires increased foreign investments to stabilize the regime’s authority,30 which is difficult to realize as it would require convincing the West to invest without major concessions from Assad.31 This is at the core of Russia’s dilemma and leaves Iran with the opportunity to maintain and eventually expand its political and economic influence in Syria.
12 Asmus, G., Fuchs, A. and Müller, A. (2018), ‘Russia’s foreign aid re-emerges’, Aid Data: William & Mary’s Global Research Institute, 9 April 2018, https://www.aiddata.org/blog/russias-foreign-aid-re-emerges (accessed 8 Jan. 2019).
13 Hille, K., England, A. and Sevastopulo, D. (2018), ‘Russia seeks western support for postwar Syria’, Financial Times, 26 July 2018, https://www.ft.com/content/61ed036e-8f52-11e8-b639-7680cedcc421 (accessed 21 Dec. 2018).
14 Kortunov, A. (2018), ‘Russia: the Power Broker in the Middle East?’, Moscow: Russian International Affairs Council, 22 November 2018, http://russiancouncil.ru/en/analytics-and-comments/analytics/russia-the-power-broker-in-the-middle-east/ (accessed 10 Dec. 2018).
15 Ibid.
16 Petkova, M. (2017), ‘Do Russians care about Syria?’, Al Jazeera, 30 August 2017, https://www.aljazeera.com/indepth/features/2017/09/russians-care-syria-170928110745906.html (accessed 12 Dec. 2018).
17 Russia has deployed an Air Defence S300 to dissuade the IDF from striking again in Syria. Similarly, it has threatened to use an S400 air defence unit stationed in Hmeimim to down any hostile airplane that falls under its radar within the Syrian territory.
18 To date, Russia has only targeted the Syrian opposition in addition to the Islamic State of Iraq and Syria (ISIS); there has been no record of confrontation or escalation with any of the other actors, including with the US after it reportedly killed tens of Russian mercenaries near the al-Omari field or with Israel after the regime’s mistaken downing of a Russian airplane near the Syrian coast in September 2018, during an Israeli attack on SAA warehouses in Latakia.
19 Averbukh, L. and Klein, M. (2018), Russia-Israel relationship transformed by Syria conflict: political interests overshadow social and economic ties, Stiftung Wissenschaft und Politik, https://www.swp-berlin.org/fileadmin/contents/products/comments/2018C37_avk_kle.pdf (accessed 19 Jan. 2019).
20 Issaev, L. (2018), ‘Why is Russia helping Turkey in Afrin?’, Al Jazeera, 29 January 2018, https://www.aljazeera.com/indepth/opinion/russia-helping-turkey-afrin-180125122718953.html (accessed 12 Dec. 2018).
21 Parker, J. W. (2018), Between Russia and Iran: Room to Pursue American Interests in Syria, Washington: Institute for National Strategic Studies, National Defence University.
22 Tarock, A. (2017), ‘Russo-Iranian Relations in the Post-Soviet Era’, Diplomacy & Statecraft, 28(3), pp. 518–537, doi:10.1080/09592296.2017.1347449 (accessed 12 Dec. 2018).
23 Turkmani, R. (2018), ‘EU Syria engagement from a human security perspective’, EU Global Strategy and Human Security, Abingdon and New York: Routledge, pp. 64–84.
24 Hassan, M. (2018), إيران تعمِّق بصمَتها في دير الزور [Iran Deepens its Mark in Deir EzZor], Analysis, London: Chatham House, https://syria.chathamhouse.org/ar/research/2018/iran-deepens-its-footprint-in-deir-ez-zor (accessed 3 Jan. 2019).
25 Syria Report (2015), ‘Syria-Iran Economic Relations Since 2013’, 13 July 2015, http://www.syria-report.com/news/economy/factsheet-syria-iran-economic-relations-2013 (accessed 21 Dec. 2018).
26 Dukhan, H. (2019), State and Tribes in Syria: Informal Alliances and Conflict Patterns, Abingdon and New York: Routledge.
27 Syria Report (2018), ‘Iran Exports to Syria Continue to Rise’, 2 July 2018, https://www.syria-report.com/news/economy/iran-exports-syria-continue-rise (accessed 21 Dec. 2018).
28 Bozorgmehr and Solomon (2018), ‘Iran faces uphill battle to profit from its role in Syria war’.
29 Syria Report (2018), ‘Damascus Fails to Get Funding from Allies for Power Plants Projects’, 12 November 2018, https://www.syria-report.com/news/power/damascus-fails-get-funding-allies-power-plants-projects (accessed 11 Dec. 2018).
30 Author interview with a Russian diplomat in Moscow.
31 Peel, M. (2018), ‘Russia presses EU to pay up for rebuilding Syria’, Financial Times, 10 January 2018, https://on.ft.com/2mmY5Yg (accessed 11 Dec. 2018).