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  • The Geopolitics of Syria’s Reconstruction

    The Geopolitics of Syria’s Reconstruction

    Introduction

    Syria’s territories are controlled by a variety of actors – Al Assad’s regime (with Russia and Iran as its supporters); Kurdish dominated self-administration (with a small number of US troops supporting them); Turkey and its affiliated militias; and the Syrian Salvation Government affiliated to the Hay’at Tahrir al-Sham (HTS), a former al-Qaida offshoot.

    Fragmentation of the state’s territories, as the state lost control of its territories, resulted in the emergence of a network of localised war economies with numerous local and foreign actors being involved. War economies emerged in territories held by Assad’s regime as well as those under the control of various other opposition parties, characterised by an increase in smuggling of goods (among which essential goods, crude oil and arms were popular), extortion, rent seeking for essential services, and taxation of goods at checkpoints established by the warring parties, including local warlords, opposition armed groups or regime’s militias. The Syrian Arab army is also reported to have engaged in rent seeking behaviour through the establishment in recaptured territories (Hinnebusch, 2020).

    Another area of priority for armed opposition groups is the border crossings with Turkey whose access they have sought to control. The Ahrar-Al Sham group, established control over the Bab al-Hawa crossing between 2015-16, and earned around $5 million per month. Armed opposition groups have been involved in conflict with each other over control for border crossings, particularly conflict between Hay’at Tahrir al-Sham (HTS) and Ahrar al-Sham in 2017 (al-Kattan, 2017).

    The Syrian army (that was cross-sectarian) is in crisis of its reducing force size as it is hampered by resistance to conscriptions and many desertions. The Alawite sect was co-opted into the state’s army, political and security apparatus, resulting in tensions along sectarian lines. Another significant development was that those among the pre-war elite who advocated for a political solution based on power sharing were expelled from it, resulting in the contraction of the core to comprise of individuals along sectarian lines. Further, pro-regime militias emerged as pro-government communities were forced to rely on themselves for their defence, leading to a widespread localisation of power to fiefdoms (al-Kattan, 2017).

    The political, economic and security dimensions of the conflict which led to the emergence of war economies has been accompanied by shift of composition of the economy marked by the emergence of ‘war commanders’ and a decentralised elite, who capitalised on evading sanctions, served as middlemen between the armed groups of the state and opposition and established monopoly upon the supply of goods and services.

     These developments further led to the emergence of new centres of power which existed alongside the existing regime that consolidated its power by strengthening its relations with the new elite, army and security sector.

    The domestic dynamics of the Syrian conflict are closely related to a wider geopolitical struggle among regional and external actors who act as patrons for the domestic actors.

    In addition, by portraying itself as a bulwark against radical Islamism and strengthening its relations with influential individuals in minority communities and providing them with disproportionate authority within their societies, the regime’s efforts have redefined existing social hierarchies and co-opted pro-regime minority leaders to power. The regime’s policies, throughout the war, have not only strengthened the neo-patrimonial nature of the State and its relations with its multiple networks but lead to the decentralisation of a system of neo-patrimonialism (Middle East Institute & Etana Syria, 2020).

    The domestic dynamics of the Syrian conflict are closely related to a wider geopolitical struggle among regional and external actors who act as patrons for the domestic actors. The Syrian conflict that began as an internal conflict emerged into a proxy conflict where regional struggle for influence played out between the ‘resistance axis’ comprising of Hamas, Hezbollah and Iran, and Sunni dominated ’moderate’ states comprising of Saudi Arabia, Qatar and Turkey. The latter wished replace the Assad regime that was aligned towards the ‘resistance axis.’ Iran considers the Syrian conflict as threat to its survival and its ability to support Hizbollah against Israel.  The rival axes instrumentalised sectarianism as a part of their discourse and in their support for proxies. However, the interests of those within the Sunni camp clashed (with Turkey and Qatar’s support for the Muslim Brotherhood and Saudi Arabia and UAE against the Muslim Brotherhood and its version of political Islam) resulting in division of the Sunni camp further leading to the division of their proxies (Aita, 2020).

    The global struggle for power between the US and Russia, with the former promoting a liberal world order and advance its hegemonic interests, and the latter interested in increasing its sphere of influence, limiting US intervention while emphasising on state sovereignty. Russian intervention in Syria in support of the Assad regime tilted the power balance in its favour allowing the regime to gain control of its lost territories.

    Image Credit: Al Araby

    US sought to limit direct intervention in Syria while relying on proxies and financial sanctions (that it pursued along with the EU) to pressurise Assad’s regime to compromise to a solution that would promote its interests. Assad’s regime, due to its connection Iran, Shia militas in Iraq and Hezbollah in Lebanon, was able to manage despite the external pressure it faced. US attention and efforts were diverted to controlling ISIS. In 2019, while US withdrew from Northern Syria due Turkish intervention against the Kurdish forces, it announced it would redeploy its forces to the energy reserves in Deir ez-Zor to prevent Assad’s forces or ISIS from gaining control over them (Hinnebusch, 2020).

    The geo-political struggle for influence in the Syrian conflict among regional and global actors, has also transcended into efforts to capitalise on Syria’s post-war reconstruction efforts and business.

    With diversion of US efforts towards constraining ISIS, Russian intervention, growing differences between Saudi and Qatar, Saudi and UAE intervention in Yemen, have all resulted in a gradual withdrawal of the GCC, leading to a rise in the role played by Turkey, Iran and Russia. Turkey’s role and interests evolved from installing a Brotherhood government and targeting the regime to controlling the Syrian Kurdish PYD, which it views as a terrorist organisation. The threat of a confrontation with Moscow in Syria allowed it to participate in the Astana Process and a gradual realignment of its policy with that of Russia’s policy. More recently, Turkey and Russia have brokered a ceasefire deal in Idlib.

    The geo-political struggle for influence in the Syrian conflict among regional and global actors, has also transcended into efforts to capitalise on Syria’s post-war reconstruction efforts and business.

    This paper explores the local, regional and international dimensions of reconstruction and development Syria while analysing the impact the war has had on the political economy of Syria.

    Internal dynamics of Syria’s reconstruction

    The internal dynamics of Syria’s reconstruction are characterised by conflict among Syrian actors (supported by external actors) for resources and instruments that would lead them to strengthen their control. The regime views reconstruction efforts as a means to consolidate its authority and power over the country.

    Image Credit: NYT

    While the efforts made by the regime to consolidate its power and authority served its objectives and reduce the costs of governance, they have led to the decentralisation of political and security apparatus at the local levels. In addition, Iran and Russia continue to establish relations based on patronage with several Syrian clients. The integration of Hezbollah, Iraqi Shi’i militias and Iran’s revolutionary guards, have further loosened the control the regime holds over the security apparatus and strengthened sectarianism.

    The efforts of Assad’s regime have been directed at satisfying its loyalist elite on whom it is vitally dependent to legitimise its authority and power, and to a lesser extent the public.

    The regime sought to prevent local security apparatus from capitalising on their autonomy by incorporating them into the newly established units under centralised defence forces as in the case of the 5th Army Corps, although this was only partially successful. Russian intervention and participation in the conflict allowed it to establish order in the army.  The paucity of manpower further prevents the regime from extending its authority over the entire country, forcing it to continue to depend on its relations with tribal leaders and local warlords (Hinnebusch, 2020).

    The efforts of Assad’s regime have been directed at satisfying its loyalist elite on whom it is vitally dependent to legitimise its authority and power, and to a lesser extent the public. It encouraged its loyalists to participate and reap benefits off the war economies during the war as its authority over its local proxies declined, while the threat of being targeted by the opposition has ensured that the elites remain loyal. With the localisation of war, the regime has strengthened its relations with the elite while consolidating its power by encouraging investment of income and revenues earned through illicit means into the formal economy. The elite, the warlords, who are partners in the conflict are increasingly participating in the formal economy by setting up formal companies and businesses. However, there remains much to be done to fully integrate them into the productive economy, discourage involvement in rent seeking, and to promote the revival of a productive economy (Sinjab, 2017).

    One of the major effects of the conflict and its resulting socio-economic and political patterns has been the lawlessness, that serves as a deterrent to socio, economic and political cohesion, further preventing the investments required for reconstruction.

    Legislation aimed at Reconstruction

    The regime’s economic strategy for reconstruction namely the ‘National Partnership’, enforced in 2016, allows public bodies to form private investment companies while supporting the establishment of private firms.

    Image Credit: BBC

    Private investors are encouraged to investing in the remaining public property allowing the government to retain its influence on the economic movements. This serves the purpose of attracting new investors to invest in lucrative opportunities while the investments serve to support regime’s prime customers and clients. The legislation also enables them to obtain and secure public sector properties at the cost of the state treasury’s finances, thereby raising a doubt regarding the ability of the ‘new elite’ to alter the nature of the enterprise. Another significant measure taken by the regime as part of its reconstruction repertoire are property and urban reconstruction laws, including the Law 66 of 2012 and Law No 10 of 2018, that expropriate land and property from displaced opposition supporters in substandard living conditions and reallocate them to new upscale housing. This is meant to gather the support of the regime’s loyalists. The regime by creating uncertainty about the security of the property could discourage all investors with the exception of a few capitalists (Daher, 2018).

    Despite the fact that restrictions on capital movement makes it very difficult to attract investments into Syria, the Syrian government is implementing policies and schemes to attract financial aid from outside. It intends to tax finance inflows ranging from money sent by expatriates into Syria for humanitarian aid, which must be channelled through NGO’s funded by the regime. It also intends to attract $100 billion worth Syrian currency held outside Syria through tax concessions and by launching the Syrian International Business Association (SIBA) under the auspices of World Bank. Analysts warn about the difficulties associated with investments from other nations. They suspect that given the dispersion of investments, diaspora would find it difficult to compete with loyalists for reconstruction contracts and there may be issues with fraudulent officials and widespread corruption. The assets of those businessmen who left the state have been frozen. Lastly, the US and EU-imposed multilateral sanctions led to Syria being cut off from the international banking system(Aita, 2020).

    The Syrian Government has declared that reconstruction contracts will be granted to its supporters and not countries who supported its opposition. It has also offered concessions in order to attract investments from Russia and Iran, but this may jeopardize Syria’s financial independence in the coming years.

    Reconstruction of Syria would lead to stronger relations with Iran and Russia followed by simultaneous decline in relations with the West (to whoom it exported a major portion of its oil ) and the Arab Gulf. Previous economic partners may engage in reconstruction in areas where there is negligible regime-control. The reconstruction parameters are bound to affect Syria’s social fabric. The gap between the rich and the poor has widened due to the war economy. The rigged economy will put the interests and benefits of the common people in peril.

    Geopolitical Dynamics of Reconstruction

    The geopolitical struggle over reconstruction among competing players at the regional level is centred around increasing one’s own influence, either through direct intervention or proxies. Considering that different parts of Syria is under the control of different parties there is every chance that Syrian reconstruction effort may not be an integrated effort across the nation but rather take the form of parallel reconstruction initiatives across the many different areas of Syria.

    The global geo-economic factors influence whether resources become available for reconstruction and on what terms. Because the powers that are geopolitically strongest on the ground in Syria (Russia, Iran) are geo-economically weaker than those who lost the geopolitical conflict (US, EU, Gulf), the latter are using the capital that they can withhold and obstruct or seek to leverage their contribution to effect the looming winding down of the military conflict on their terms. They, together with the World Bank, are making their participation conditional on a political settlement. Specifically, this will affect whether the regime will be able to reconstitute authority over the country’s territory and its reconstruction, or will be forced into some sort of power-sharing/territorial confederation or, these failing, reconstruction deepens fragmentation. If the parties do not reach a compromise the outcome could be a frozen conflict consolidated by separate and minimalist reconstruction tracks.

    Further, regional and global actors that have not participated in the conflict happen to be economically stronger and have the means to mobilise resources. Their support and resources to fund the reconstruction and development of Syria remain contingent on the ability of Assad’s regime to fulfil their conditions of a political settlement.

    Russia’s Reconstruction Support

    Russia’s role in Syria’s reconstruction have been driven by the benefits a stable Syria could provide it. It has provided Assad’s regime with support in economic and military terms and settled Syria’s debt. Russia also seeks to renew and recoup its pre-war investments in infrastructure and energy sector, and establish new contracts in geo-strategic areas. Assad’s regime has been granted a preferential role in redevelopment of its energy and infrastructure sectors. The state of the Russian economy has made lesser resources available for investment. The risk of investing in Syria due to the political and security climate and the threat of being targeted by US sanctions have led to minimal investment into Syria. The entities that have invested are operated/owned by oligarchs close to Putin, and those under sanctions, for instance, Gennady Tim-Chenko’s construction company (Van Veen, 2020).

    Russia has realised that it lacks the resources to actively finance Syria’s reconstruction effort and instead focussed its efforts on building the state institutions necessary to provide adequate security infrastructure, which is an important pre-condition for any reconstruction effort.

    Russia has realised that it lacks the resources to actively finance Syria’s reconstruction effort and instead focussed its efforts on building the state institutions necessary to provide adequate security infrastructure, which is an important pre-condition for any reconstruction effort. Simultaneously it tried to seek support from the European Union and international organisations to create the necessary infrastructure required to facilitate the return of refugees based out of Europe while ensuring the attainment of a political settlement that helps Bashar Al Assad to stay in power (Daher, 2018).

    Image Credit: NYT

    Russia has also worked with the Assad regime to implement policies aimed at the return of refugees thereby addressing some of the requirements and requests of the European Union. However, Bashar Al Assad has so far only paid lip service to such requests.  For instance a law intended to promote reconstruction projects has been amended under Russian pressure but without any major changes to its provisions and was used to expropriate the property of Syrians who fled abroad.

    Iran’s Role

    Iran has provided Assad’s regime around $16billion worth of financial aid since 2012.It has provided an additional $3.5 million in 2013 which was further extended by $1 billion in 2015 and $6.4 billion and $700million to pro-Iran militias in Syria.   It has expressed its interests in participating in the reconstruction of Syria. Iranian entities were awarded numerous contracts worth millions of dollars to initiate redevelopment of the electricity infrastructure by the central government as well as local governments but are yet to be implemented. The Iranian Revolutionary Guards, who have considerable experience in participating in the reconstruction of Iran after the Iran-Iraq war and own vast construction companies in Iran, have entered into agreements in the sectors of mining and communications. While Iran has stated it would offer $1 billion for reconstruction, the amount it pledged is a minuscule amount of the total funds required. Iran’s participation in Syria’s reconstruction is also likely to be limited due to the impact of US sanctions on its own economy(Van Veen, 2020).

    Diminished role of US, EU and Arab States

    As for regime controlled parts of Syria, Washington moved to block reconstruction funding in these areas. US pundits argued that the regime would inevitably be empowered by reconstruction and should not be rewarded for its brutal repression of the uprising; anti-regime interest groups moved not only to preclude US funding but also to erect obstacles to others participating in reconstruction. In April 2018 the US Congress passed the No Assistance for Assad Act (NAAA) which was designed to prevent any drift from humanitarian assistance to reconstruction stabilization, and according to Faysal Itani, had the effect of ‘killing any World Bank dreams to get funding to operate in Syria’. Indeed, the US has a long history of directing the flow of world financial capital via sanctions, conditionality, etc. for its geopolitical purposes; in Syria, it seeks to manipulate money (geo-economics) to obtain what it could not achieve via geopolitics: specifically, keeping Syria a failed state that would make it a resource-draining burden for Russia and its allies.

    The US has used its influence in North-Eastern Syria, to counter efforts by the Assad regime to consolidate its power over Syria which is a precursor to a “nationally integrated” reconstruction. Establishing control over energy reserves is essential for Assad’s regime to pursue its reconstruction efforts successfully. The US, by controlling reserves in the North-East Syria, has been able to deprive Syria’s access to essential resources.

    US efforts in reconstruction have been motivated by its interests to deter any reconstruction efforts sponsored by the regime through geo-economics measures such as sanctions, when its geo-political efforts have had limited success in motivating Syria and its allies in pursuing a political solution in line with US policy interests.

    The US campaign against ISIS devastated Raqqa but reconstruction there has remained limited to stabilization measures. The Trump administration tried to get the Saudis to assume the burden of reconstruction (asking for $4 billion). The US goal was to start enough reconstruction to deter any move in the area to join regime sponsored reconstruction efforts (Alaaldin et.al., 2018; Burcher, 2018; Harris, 2018; US Congress, 2018;). US efforts at convincing Saudi Arabia to undertake reconstruction efforts have not been successful as the latter offered relatively smaller amount (al-Khateb, 2020).

    US efforts in reconstruction have been motivated by its interests to deter any reconstruction efforts sponsored by the regime through geo-economics measures such as sanctions, when its geo-political efforts have had limited success in motivating Syria and its allies in pursuing a political solution in line with US policy interests.  It simultaneously blocked reconstruction funding directed towards territories under the control of the regime. The Caesar Act, now incorporated into the National Defence Act of 2020, targets investment into Syria, through individuals and businesses coming into the ambit of the UN sanctions (Hinnebusch, 2020).

    While the EU has provided substantial aid to Syrian refugees in Syria’s neighbouring countries, it has made its aid and participation in reconstruction contingent on efforts to reach a political solution that is in accordance with ‘UNSCR 2254 and the Geneva Communique’

    The EU has been affected by the Syrian Conflict due to the influx of refugees and large-scale migration of its citizens to partake in terrorist activities. While the EU has provided substantial aid to Syrian refugees in Syria’s neighbouring countries, it has made its aid and participation in reconstruction contingent on efforts to reach a political solution that is in accordance with ‘UNSCR 2254 and the Geneva Communique’ (Van Veen, 2020).

    Russia is making efforts to broker a political settlement of sorts, with Turkey’s support, to convince EU to invest in reconstruction to enable refugees to return. While the EU seems to be relying on the inability of Syria’s allies to support its funding and thus force Assad to agree to the EU’s conditions, the regime does not seem to be interested in accepting EU conditions and give up its power in return for support of its reconstruction. However, individuals EU states have participated in reconstruction efforts in a limited manner in both the regime-held as well as opposition-held areas.

    Turkey continues to be one of Syria’s top trading partners. Numerous Syrian businessmen who have been exiled have invested in Turkey, around 26% of foreign investment in Turkey in 2014 originated from Syrian businessmen, particularly in its border regions with Syria. While a number of exiled Syrian businessmen supported the opposition, their investment would be instrumental, if mobilised, in territories held by Turkey and its militias at a time when refugees are returning to the region. While the Syrian government is against the participation of Turkey in the reconstruction of Aleppo, Russia’s efforts in mediation would lead Turkey to participate in the reconstruction process. Turkey has invested significantly in establishing institutions facilitating the governance of areas under its control and also in building economic infrastructure in these areas (Daher, 2018).

    While Jordan and Lebanon have expressed interest in participating in the reconstruction of Syria, the resources they can mobilise are limited.  The Gulf countries have, no doubt the resources required for reconstruction, but have made their role in Syria’s reconstruction contingent on withdrawal of Iran and its proxies and in case of some countries, a regime change. The UAE as expressed its interest in participating in Syria’s reconstruction so as to limit Iran’s influence. However, Yazigi (2017) states that reconstruction efforts, in the case of  Lebanon, were contingent on a solution that emphasised upon power-sharing, backed by regional and international actors and substantial financial aid from Saudi Arabia. It is unlikely that either of the two scenarios would play out in the case of Syria.

    China: A Possible Contender?

    the Chinese state considers Al Assad’s regime as a bulwark against terrorism and its relations with the regime an asset in combating Uighurs who are participating on the behalf of terrorists.

    China has expressed its interest in participating in the reconstruction of Syria to advance its interests through investments in economy and geo-strategic areas such as the maritime sector, and to develop and connect its Belt and Road Initiative in the region. Given China’s interests, size and nature of China’s capital, China becomes a viable partner in the reconstruction of Syria.  China conducted a trade fair in 2018, which was attended by 1,000 Chinese companies and witnessed an investment of $2 billion for the reconstruction and development of Syria’s industrial sector. Private investors have been concerned about the widespread corruption in Syria and the threats of being targeted by US sanctions. Moreover, the Chinese state considers Al Assad’s regime as a bulwark against terrorism and its relations with the regime an asset in combating Uighurs who are participating on the behalf of terrorists.

    Conflict Resolution vs Conflict Management

    Given that the warring parties consider the conflict to be more-or-less of a zero-sum game, territorial and social fragmentation of Syria, it would be extremely difficult for them to pursue means to resolve the conflict through creating the need for the conflict to be managed and downsized (Dacrema, 2020). The non-recognition of certain non-state actors by the rival sides and questions regarding the participation of non-state actors in negotiations, which would only serve to legitimise them further, complicates the process of negotiating a solution.

    Temporary Arrangements

    A strategy that would allow for the management of the conflict would be to negotiate temporary agreements and deals. Turkey and Russia have been able to broker temporary ceasefires at multiple instances, throughout the conflict, in the Idlib region. Temporary arrangements would help build confidence among the warring parties in the long run, and reduce the possibility of escalation of war (Dacrema, 2020).

    Conclusion

    Given that the warring parties prefer a status quo in comparison to the resolution of a conflict and value their geo-political and economic interests, it is highly unlikely that parties would push for resolution of the conflict. In consideration of a political stalemate, reconstruction efforts among the warring parties are likely to take place parallelly, as they have played out with the localisation of the conflict. While resources in the territories held by the regime are being diverted to areas that have remained loyal during the conflict and/or areas of strategic importance with areas formerly occupied by opposition forces receiving relatively lesser attention; territories under Turkish control and those held by the Kurdish forces have witnessed efforts aimed at stabilising the territories.

    Russia and EU have the potential and the leverage required to emerge as power brokers in the reconstruction and initiate the process in a manner that promotes social, economic and political cohesion in the long run.

    Russia and EU have the potential and the leverage required to emerge as power brokers in the reconstruction and initiate the process in a manner that promotes social, economic and political cohesion in the long run. The likelihood of being able to convince themselves that the possibility of achieving one’s interests alongside the other is a far better option in comparison to its alternative of a failed state, which threats both their interests. However, their ability to convince their allies and their clients (in this instance, Assad regime is Russia’s client) and the mistrust between both the parties as well as between their allies poses a challenge.

    Russia’s efforts in brokering a constitutional committee for Syria under the aegis of the UN is an indicator of a compromise. Hinnebusch (2020) suggests that “it is not impossible to move incrementally toward a minimalist sort of political settlement that might acquire enough international legitimacy to open the door to some reconstruction funding.” While the likelihood of this occurrence is difficult amid conflicting interests, it cannot be overruled.

    The humanitarian aspects of the conflict and urgent need for reconstruction to alleviate tangible and intangible costs of the conflict have largely been ignored. The warring parties have been preoccupied with advancing and fulfilling their interests at the cost of ordinary Syrians. There is a need for parties to acknowledge and make efforts towards the realisation of the urgency of reconstruction that is vital for securing the social and economic interests of ordinary Syrians. The likelihood of the same, however, is questionable.

     

    References

    Aita, S. (2020). Reconstruction as a political-economy issue: The case of Syria. Retrieved 28 June 2020, from https://www.thecairoreview.com/tahrir-forum/reconstruction-as-a-political-economy-issue-the-case-of-syria/

    al-Kattan, R. (2017). Retrieved 25 June 2020, from https://www.atlanticcouncil.org/blogs/syriasource/the-economic-case-for-syria-s-stabilisation/

    al-Khateb, K. (2020). US outsources Syria aid to Gulf. Retrieved 4 July 2020, from https://www.al-monitor.com/pulse/originals/2018/08/us-outsources-syria-aid-gulf.html

    Dacrema, E. (2020). Three Concepts to Understand the Future of Syria. Retrieved 25 June 2020, from https://www.oasiscenter.eu/en/what-future-for-postwar-syria

    Daher, J. (2018). The political economic context of Syria’s reconstruction : a prospective in light of a legacy of unequal development. Retrieved 3 July 2020, from https://core.ac.uk/display/162303203

    Hinnebusch, R. (2020). The Battle over Syria’s Reconstruction. Retrieved 1 July 2020, from https://www.globalpolicyjournal.com/articles/development-inequality-and-poverty/battle-over-syrias-reconstruction

    Human Rights Watch. (2019). Rigging the System. Retrieved 25 June 2020, from https://www.hrw.org/report/2019/06/28/rigging-system/government-policies-co-opt-aid-and-reconstruction-funding-syria#_ftn114

    Middle East Institute, & Etana Syria. (2020). Manufacturing Division: The Assad Regime and Minorities in South-west Syria. Retrieved 2 July 2020, from https://www.mei.edu/publications/manufacturing-division-assad-regime-and-minorities-south-west-syria

    Sinjab, L. (2017). How Syria’s War Economy Propels the Conflict. Retrieved 25 June 2020, from https://syria.chathamhouse.org/research/how-syrias-war-economy-propels-the-conflict

    Veen, E. (2020). The geopolitics of Syria’s reconstruction: a case of matryoshka. Retrieved 27 June 2020, from https://www.clingendael.org/publication/geopolitics-syrias-reconstruction-case-matryoshka

    Yazigi, J. (2017). Analysis: No Funds to Foot Syria’s Reconstruction Bill. Retrieved 1 July 2020, from https://www.newsdeeply.com/syria/community/2017/12/04/analysis-no-funds-to-foot-syrias-reconstruction-bill

     

    Main Image Credit: Palmyra before its destruction by ISIS – www.citymetric.com 

     

  • China’s support to Syria: In Conflict and Redevelopment

    China’s support to Syria: In Conflict and Redevelopment

    China is looking to ramp up relations with Syria both as part of its strategic Belt and Road Initiative (BRI) but also to take advantage of the multi-billion dollar reconstruction effort that is expected to materialise following the gradual winding down of the war.

     

    Syria is an ancient civilisation and also an important part of the ancient silk route, with cities such as Palmyra, Aleppo and Damascus playing an important role in trade and travel between the East and the West. While the discovery of a maritime route between Europe and Asia has to some extent diminished its importance in this regard, Syria is still strategically important. China is looking to ramp up relations with Syria both as part of its strategic Belt and Road Initiative (BRI) but also to take advantage of the multi-billion dollar reconstruction effort that is expected to materialise following the gradual winding down of the war.

    China’s non-interference policy is an integral aspect of its involvement and role in the Middle East. During the course of the Syrian war, China has consistently supported the Bashar Al Assad government on the diplomatic front – through the exercise of the veto power against the resolutions introduced in the United Nations Security Council either condemning the Syrian government, calling for ceasefire or for imposing sanctions on suspected war criminals. While negotiating the renewal of border crossings for aid, China agreed on the need for humanitarian assistance but emphasised on state sovereignty. China’s policy of non-interference has served it well in strengthening bilateral relations and advancing its interests.

    One of the reasons for the diplomatic support extended by China to the Syrian government is also the involvement of the Uighur fighters in the Syrian conflict which has greatly bothered China. While it has never got directly involved militarily in the Syrian conflict there are unconfirmed media reports which suggested that China was sharing military intelligence with the Syrian government and also sent its military advisors to Syria to help it in its fight against the rebels. In this sense, it saw Syria as a key player in its fight against religious extremism thereby preventing its export to its own volatile Xinjiang province.

    With the Syrian conflict slowly winding down and Bashar Al Assad’s hold on Syria greatly strengthened more than at any other time since the beginning of the civil war, China is ramping up its diplomatic efforts in Syria  using trade as an important policy tool to ramp up the relations between the two great civilisations.

    Based on Chinese government’s invitation Syria has participated in the second BRI summit held in Beijing in April 2019. Previously in 2018, China held a Trade Fair on Syrian reconstruction projects which was attended by nearly one thousand Chinese companies and which saw investment proposals of nearly USD two billion. The collapse of most of the industry in Syria due to the war has also resulted in a significant increase of cost-effective Chinese imports into Syria ranging from toys to car parts and industrial machinery and equipment.

    China is also leveraging its economic strength fully by using aid as a foreign policy tool. In 2019,  Xinhua reported on the  that an economic cooperation agreement was signed between Syria’s Planning and International Cooperation Commission (PICC) and the Chinese embassy in Damascus. As part of this agreement, a donation will be set aside to fund a series of humanitarian projects as agreed upon by both sides.

    The collapse of most of the industry in Syria due to the war has also resulted in a significant increase of cost-effective Chinese imports into Syria ranging from toys to car parts and industrial machinery and equipment.

    China is expected to be a key player in the international reconstruction and development effort that is expected to take place in Syria due to its strong bilateral ties with not only Syria but also its alignment with Russian and Iranian position on Syria , these two players being the major supporters of Bashar Al Assad’s government in the civil war. While Russia and Iran are surely expected to carve out a large part of the reconstruction contracts between themselves, their capacity to make the huge investments in these projects, estimated to be worth anywhere between USD 200 million to USD 1  trillion is doubtful. This creates the ripe opportunity for China to enter the reconstruction business effort either by themselves or, as is more likely, in partnership with Russian and Iranian governments or businesses.

    Beyond the business opportunities provided by the potential reconstruction of Syria, China is also strategically interested in Syria. China was always interested in securing access to the Ports of Tartus and Latakia on Syria’s Mediterranean coast. Such an access is expected to complement Beijing’s interests in the Greek port Piraeus (COSCO shipping, the Chinese state-owned shipping and logistics services supplier company in the Port authority) and the Israeli port of Haifa, in securing a trade route to Europe. In alignment with these strategic interests, Chinese companies’ area also exploring the possibility of upgrading the deep seaport of Tripoli, Lebanon to allow it to accommodate larger vessels and also the possibility of building a railroad that would connect Beirut and Tripoli in Lebanon to Homs and Aleppo in Syria.

    Beyond the business opportunities provided by the potential reconstruction of Syria, China is also strategically interested in Syria. China was always interested in securing access to the Ports of Tartus and Latakia on Syria’s Mediterranean coast.

    Chinese investments into and trade ties with Syria however, risk the attraction of US sanctions on Syria. The arrest of Meng Wanzhou, Chief Financial Officer of Huawei, , in Canada, based on a request by the United States highlights the extent of these risks. “The Caesar Syria Civilian Protection Act”, also known as “The Caesar Act”, a United States legislation that sanctions the Syrian government, including Syrian president Bashar al-Assad, for war crimes against the Syrian population, parts of which  are now incorporated  in the “National Defense Authorization Act for Fiscal Year 2020” greatly tightened the sanctions environment against the Syrian government and a number of its industries potentially impacting the Chinese investments and trade ties. While China has called for an end to sanctions stating they were “inhuman,” they have been wary of being targeted by sanctions and further straining their relations with the US. However, it is unlikely that the sanctions would have a significant effect on China given the size of China’s economy and its ability to circumvent sanctions while dealing with Iran and North Korea. China, as part of its ‘mask diplomacy,’ is increasingly providing aid to the Syrian government in their efforts against Covid-19. This serves the dual purpose of strengthening China-Syria relations and strengthening China’s narrative of Covid-19.

    To conclude, China has been a staunch supporter of the incumbent Syrian government of Bashar Al Assad during the almost decade long Syrian civil war and is set to reap the benefits from the post-war Syrian reconstruction effort in conjunction with the Russians and the Iranians to advance its interests.

    Image: Middle East Institute

     

  • Local Protests: A New Status-Quo in Political Lifestyle?

    Local Protests: A New Status-Quo in Political Lifestyle?

    Hong Kong and Chile convulse, Lebanon possibly spiralling into a civil strife, and sanctions induced discontent paralysing Iran, a pattern of global protests is increasingly evident. The global political landscape is currently marked by frequent mass protests, and this wave is geographically much broader and unfolding in countries at different stages of development. Unlike earlier protest movements that aimed at radical political change and revolutionising the existing order, the modern demands abandon this narrative of overthrowing the system instead aiming for democratisation of the established institutions. In other words, the anti-government protests cropping up in various parts are not trying to dismantle the democratic structures but to redefine its scope and depth.

    New Wave of Protests – questioning inept governance

    In contrast to the previous waves of uprising like the Pink Tide in Latin America or the Arab Spring, that was spreading in a particular region with similar agenda, the recent protests are occurring in different zones and is marked by the uniqueness of initial triggers and demands put forth by the protestors. In Lebanon, the discontent was sparked by regressive taxes proposed (mainly Whatsapp tax) but turned into massive demonstrations, transcending sects and classes, calling for a technocratic government in the backdrop of sectarian political regime, widespread corruption and mishandling of the economy. The Yellow Vest movement in France originally against the fuel tax snowballed into nationwide protests to address the socio economic inequalities, stemming from high unemployment and stagnating economy. Protests in Chile against hiked transport fares escalated to countrywide riots revealing the dissatisfaction with the pro rich growth, heavily privatised welfare system and pro market regime. On observation, these isolated protests by themselves can be a defining feature of the current wave of protests, different from the previous waves that were characterised by common contestations.

    Despite being unrelated events with independent agendas, the countries undergoing mass protests share similar trends of inequality and economic downturns. Further scrutiny beyond the seemingly small initial triggers reveal an evident pattern of economic anger and insecurity in these nations. Experts have suggested that Hong Kong’s pro democracy movement is also fuelled by wide income inequality (highest among developed nations), especially in the last 45 years since its handover to the Chinese. The Latin American region, witnessing the most number of countries breaking into sustained protests, is the world’s most unequal zone. In addition to inequality, sustained unrest in states like Colombia, Catalonia to Iraq and Egypt, the protests are driven by slowing economic growth, mounting public debt and austerity measures. Even in populist and authoritarian regimes, citizens are demanding an end to corruption and restoration of democratic rule of law. For instance, long serving, extremely popular, leftist leader Evo Morales was forced to resign in Bolivia after protests erupted accusing him of undermining democracy to extent his rule. There are increasing clashes against repressive democracy in Russia, and revolts against autocrats in Slovenia and Czech Republic.

    Leaderless or smart mobilization?

    Interestingly, a majority of the modern protests are leaderless, led by students and youth. In Hong Kong, the protests are gaining momentum through the active involvement of the students while in Chile the unrest for systematic change was ignited after school students launched a campaign to end the 4 percent subway fare increase. Niall Ferguson noted that this demographic trend of the young leading the demonstrations is a repeat of the 1960s, which like the present had an excess of educated youth over the number of available jobs. Another similarity amongst the protests is the urban-centric mass unrest. According to migration theorists, uncontrolled urbanisation resulting in rural to urban movements is a major cause for the ongoing demonstrations. Pushed into informal settlements in cities, often ignored by authorities and without basic social coverage, the urban area becomes a ground for discontent. For instance, in Haiti the protests began due to gasoline and food scarcity. Therefore, the socio-economic marginalisation of the urban poor is a significant yet overlooked factor that drives people to the streets. This is also compounded by a lack of faith in the government. More than the poor state policies adopted and prevalent corruption, in some protesting nations, there is deep distrust among the citizens. Hong Kongers believe that their government does not have legitimate powers over Beijing, and in countries like Lebanon, Chile or Ecuador, reversal of the initial triggers did not stop the dissenters from demanding a new government.

    The youth bulge and the shrinking economic opportunities only partly explains the global protests. The reach and accessibility of social media and free messaging apps have exploded in the past decade. In addition to acting as a medium to organise and sustain mass protests, these channels are also used to express political frustrations. Unlike before when media had a monopoly over mass reach, individuals and groups have the capacity to mobilise and garner support over specific issues. While the protests seem unconnected, it is possible to see a copycat element in the way protests are carried out. The coverage of news and faster reach makes it possible for protestors to adopt methods of action that were successful elsewhere. It is also harder for states to contain and repress dissenting voices. Thus, the spread of communicative technology and social platforms offer a conducive environment for protests. 

    Social Media enables activism

    The ability of electronic media to break down physical barriers and bring more events to global audiences might be increasing the visibility of protests, which would have otherwise remained local. Data from GEDLT Project, which has been tracking protests around the world from the past 40 years, reveals that the frequency of protests has not significantly increased. However, the intensity and the length of protests have improved. Despite a spike in these political activities wherein citizens are actively mobilising to pursue their demands, there has been a decline in the success rate of protests. A recent study highlights the staggering decline in success rate of protests from 70 percent in 1990s to 30 percent in 2010. Some highlight the “smart” methods adopted by regimes to prevent and suppress clashes like reinforcing loyalty of the elite, infiltrating and dividing the opposition, etc. For instance, in Lebanon, the initially united protests has created anti protest groups that supports the Hezbollah. Governments are also adopting a strategy of blaming foreigners and outsiders to reinforce support from the public. For instance, China is building a narrative of US backed forces disrupting Hong Kong to get an advantage in the ongoing trade war, which has strengthened after US signed a Hong Kong Human Rights and Democracy law. Iran’s authorities are also blaming outsiders, especially the US, for the violence that ensued after state raising gasoline prices by 50 percent.

    Overall, there is an influx in political activism. Global unrests are now spreading and have significant implications for countries everywhere. With electronic media and its potential for mobilisation, it is now easier to bring issues to national discourse. However, while the willingness and ability of mass political activism to recur and cause disruptions have increased manyfold, its success rates have decreased. It may be said that the political frustrations and the current protests will not bring a major transformation in the political structures but rather it is a new status quo in the nature of political lifestyles.  

    Renuka Paul is a Research Analyst with TPF. She holds a masters in Public Policy.

    Image: Aerial night shot of Beirut Downtown, Lebanon during protest against Government, Lebanese revolution – Phot by Ramzi – Licensed from www.stock.adobe.com

  • Venezuela’s Collapsing Economy: Victim of Geopolitical Games

    Venezuela’s Collapsing Economy: Victim of Geopolitical Games

    Manjari Balu and M Matheswaran                                                                     June 23, 2019/Analysis

    The collapse of Latin America’s oil-rich country, Venezuela, epitomises the probable debacle of a socialist regime while the geopolitical strategies espouse the power struggle at the cost of the economy. After the death of Hugo Chavez in 2013, Nicolas Maduro, the hand-picked successor of Chavez took overthe office to preserve the “petrostate” status of Venezuela.  USA, backed by Brazil, Canada and many other countries, have recognized the opposition led by Juan Guaido as the interim president and have questioned the legitimacy of the Maduro government. Venezuela’seconomy depends to the extent of 95 per cent on oil exports and the dwindling oil prices in 2014 deepened the latent crisis, an inevitable consequence for a socialist government with illiberal economic agendas. Chavizmo rose to fame with a brand of Bolivarian revolution that promised to reduce poverty and deter the US in interfering in the country’s functioning.

    Economic Collapse: Paradox of Largest Oil Reserves and Economic Mismanagement

    Venezuela is a prime example of what economic mismanagement, impractical socialist measures, and corruption can do to a country that is wealthy with natural resources. At 300, 878 million barrels of proven oil reserves, Venezuela has the largest amount of proven oil reserves in the world. The country’s economy is largely tied to its oil wealth and was one of the richest in Latin America until a few years ago. Economic collapse has led to a huge humanitarian crisisunseen in the country’s modern history. IMF has predicted that Venezuela’s inflation rate will reach 10 million per cent in 2019, becoming one of the worst cases of hyperinflation in modern history.

    TheTransformation Index that evaluates the political and economic transformation of a country, has ranked Venezuela 110 out of 129 nations with a score of 3.27 out of 10. In addition to criticizing the poor state of the economy, it also reported that the state-sanctioned crime rates have spiralled. The current catastrophic economic crisis and political chaos is the result of a pervasive economic mismanagement and an economy rooted in a single commodity, petroleum.

    Inflation was 1,30,000 per cent in 2018 and the economy has contractedby 22.5 per cent, indicating the dire status of the economy. The economic future of the country continues to be bleak and the debate has converged to the geopolitical relevance of the issue. Data on money supply is a key element to understand the inflation rates in an economy and Venezuela has refused to publish money supply data in the past years. A recent data suggests that  12 trillion BsF (Bolivares Fuertes) were printed exposing the economic ruination.

    Initial denial by the Venezuelan government about the crisis never let aid flow in, recent acceptance of humanitarian aidhas tripled the aid budget. With poor socio-economic indicators as a major challenge, Venezuela is further saddled with huge external debt as a problem to be solved by the new dispensation, be it Maduro led government or any other successor. Currently, Venezuela’s external debt stands at  150 per cent of the total GDP.

    American Sanctions, Food Imports, and Falling Aid

    Few consider the problem to be homegrown in Venezuelaand many blame the US for artificially creating the hyperinflation.  The US justified the economic sanctions to bring down Maduro regime and accused him to have caused upheavals since 2014 and the controversies besieging election manipulation by Maduro’s party substantiate the allegation. Political funding for a coup against the regime change in Venezuela was extensively promoted by the Bush administration. The protraction of political interest led to imposition of anti-democratic sanctions,  and reiterates the hegemonic strategy that the US continues to pursue.

    The recent economic sanctions imposed on the state-owned oil company, Petroleos de Venezuela SA (PdVSA)  by the US has exacerbated Venezuela’s problems in its oil production- the output is expected to fall by 33 per cent in 2019. Investigation of Venezuela’s oil production before and after the economic sanctions suggests the production has been on downtrend even before the sanctions.  

    Private investments and productivity in agriculture dropped alarmingly as the socialist government led by Chavez nationalized agribusiness and industries and encouraged food imports.  Seventy per cent of the food requirements were met by imports. According to the United States Department of Agriculture, Venezuela is one of the potential markets for the US to export agricultural produce, and accounted for 21 per cent of total agricultural imports of Venezuela. However, as the economy collapsed, over-dependence on imports for food began to tell. In 2016, food imports fell by 72 per cent and reports state that people have lost an average of 8.6 kgs of weight due to food scarcity.

     

    China’s Extractive Relationship with Venezuela

    Majority of the loans are from China and Russia and their servicing or repayments are tied with its oil revenue. It is estimated that Venezuela owes around 13.5 billion USD to China as of 2019. Under Chavez leadership, China and Venezuela laid a financial foundation by crafting  “China-Venezuela Joint fund” known as the FCCV. The central bank of China alone loaned 42.5 billion US dollars from 2007-2012 to Venezuela. The compounded bilateral interest incentivized China to support even when the Venezuelan economy faltered in 2014. China further escalated its commercial interest byloaning a sum of $4 billion as cash for oil deal paying little attention to the projected contraction in the Venezuelan economy. In the year 2017, Maduro announced ambitious planning to spend 70 percent of the total budget on social schemes to address food scarcity. While the quixotic socialist paradigm was impressive during Chavez’s tenure the public soon realized the huge dent made in the economy by imprudent  social spending.

    The defensive lending strategy adopted by China post Maduro’s electoral victory shifted the focus of investments to oil and oil-related infrastructure. Although China’s recent intervention in Venezuela’s domestic affairs is evident from the endorsement for Maduro,  oil supply has always been its priority over political rivalry in Venezuela. As China became more sceptical about Venezuela’s ability to repay the loans because of low oil production and the adverse impact of US sanctions, its capital flow to Venezuela shrunk.  Maduro had viewed relations with China to be based on ideological common ground, but China was focused on leveraging its abundant resources, which, in turn, contributed to the crippling of the economy of Venezuela. This asymmetric relationship between Venezuela and China thwarted expectations of Maduro to acquire more credit from China.

    For China, endorsing Maduro is not an option as far as its economic interest is concerned; increasing rebellion of Venezuelan people portends a threat to the Maduro government that could bring in democracy in Venezuela, which could make it a potential defaulter of past debts. The Chinese government is considered culpable for Venezuela’s crisis by many American policymakers, and are accused to have followedthe “debt trap diplomacy”. The investment strategy in Venezuela resembles the Angola model- Chinese government extends credit tied with oil. However, in the case of Venezuela, China is bearing the cost of overestimating the performance of Venezuelan economy.

    Russia’s All-Weather Ties

    As we see a pragmatic China becaming more cautious about the failing economy of Venezuela, Russia’s interest and the relationship go beyond just the commercial narrative. Russia ties with Venezuela are deep-rooted since the time of Chavez, and it has continued to bolster the failing Venezuelan apparatus for clear geopolitical reasons. Vladimir Putin has invested strongly on  Russia’s international image and prestige, especially while rebuilding Russia post the Yeltsin years. The first credit line of arms relations between Russia and Venezuelawas signed in 2006. Although the export of military equipment to Venezuela have reduced drastically by nearly 96 per cent in the past few years, Venezuela has been the largest buyer of Russian arms in the Western Hemisphere with a total estimate of $4 billion during Chavez years. Russia has made consistent efforts to support Maduro by deploying military presence in Caracas even as Venezuela’s economy took a downturn.

    Chavez and Putin deepened their political ties on common grounds of  supporting a multipolar world order, and Chavez expected tangible benefits for Venezuela out of this agreement. Oil deals between both the countries advanced asRussia’s largest crude oil producer, Rosneft, partnered with PdVSA for several projects. Rosneft holds 40 percent shares and plays an instrumental role in pivoting Russia’s foreign policy through sound investments in the West. Venezuela agreed to commit 49.9 percent of its share in Citgo, American subsidiary company in exchange for credit from Rosneft. Russian emphasis on the “strategic” importance of the alliance with Venezuela reveals Russia’s intention to strengthen its geopolitical presence in USA’s backyard. Putin’s domestic political image has become sharper with his strategic take on Venezuela.

    However, sanctions on Venezuela has severely restricted the ability of Rosneft to borrow or invest, thus escalating tensions between Russia and the US.  Much like in Syria, Putin has sent a strong signal to the US by deploying a small contingent of Russian military personnel in Venezuela.

    Pawn on the Chessboard of Great Power Politics

    Venezuela has become the strategic battlegroundfor geopolitical struggle between the USA, Russia, and China. Collapse of the Venezuelan economy does not augur well for China in the long-term. However, China will look to strengthen its ties with Venezuela through economic support as its energy needs have a critical link with Venezuela. USA’s ‘Manroe Doctrine’ and its ‘Roosevelt Corollary’  has fiercely opposed any external powers’ strategic presence in the Western Hemisphere. This policy has led the USA to be an interventionist in Latin American countriessince the 1960s. Not much has changed since then. Chavez’s Venezuela has been a major opponent of US hegemony  Putin’s Russia is looking to strengthen its presence in South America, and support to Venezuela forms the lynchpin of this strategy. While international community looks for peaceful resolution of the rapidly deteriorating situation in Venezuela, geopolitical competition of external players has ensured  power tussle continues in Venezuela. Political Victory of either Maduro or opposition would represent the triumph of their Global supporters, Russia or the USA.  The socialist seed sown by Hugo Chavez is haunting Venezuela with a dented economy and a crisis in leadership. The “Petrostate” desperately needs economic reforms and international support to rebuild its economy. Structural reforms to remove the bottlenecks of growth in the post-crisis period and opportune investments in potential areas would rescue Venezuela in the following years.

    Manjari Balu is a Research Analyst at ‘The Peninsula Foundation’.

    Air Marshal M Matheswaran (retd) is the President of TPF.

    Image Credit: BBC News