Authors: Ting Shi, Henry Meyer, Donna Abu-Nasr, IIya Arkhipov
Posted on: Bloomberg| December 21st 2017
Western powers are reluctant to help rebuild Syria after its civil war, because they think the wrong side won. Russia and Iran played a major part in that outcome — but they can’t afford a bill estimated at a quarter-trillion dollars.
Qin Yong is about to make his fourth trip to Syria this year. As vice-president of the China-Arab Exchange Association, he sees burgeoning interest among Chinese companies. “We get phone queries every day,” he said. “They see huge business potential there, because the entire country needs to be rebuilt.” The enthusiasm is reciprocated on the Syrian side, says Qin. “They’re like, don’t come tomorrow, come tonight!”
As the 6 1/2-year war winds down, with Bashar al-Assad still in power, the battle for influence in Syria has shifted to the diplomatic arena. Reconstruction, which the United Nations says could cost $250 billion, is a key part of it.
‘People of Goodwill’
Russian President Vladimir Putin has declared victory in his two-year military operation to shore up Assad, and is now appealing for international funds. At his annual press conference on Dec. 14, Putin showed signs of frustration. He said Syria, whose conflict sparked the worst refugee crisis in Europe since World War II, will remain a breeding-ground for extremist groups such as Islamic State without improved living standards. “All people of goodwill around the world should understand that if we do not resolve this together, it will be their problem as well,” he said.
The U.S. and its European and Gulf Arab allies, which backed the Syrian rebels, say that problem is largely of Putin and Assad’s making. They’ve eased up on calls for the Syrian leader’s immediate departure, but continue to insist that he can’t stabilize the country and has no long-term future. Withholding money for reconstruction is one of the few cards they have left.
Unlike Iraq, which was pumping out about 2 million barrels of oil a day even in the traumatic years right after the 2003 U.S. invasion, Syria has little ability to generate cash internally to pay for its own rebuilding.
Diplomats in Moscow say that Russia has repeatedly pressed European Union governments to help foot the bill. At the same time, Russia has rebuffed calls for Assad to step down eventually, and his government has shown few signs of willingness to share power.
The EU, Arab nations and the U.S. put aside $9.7 billion in April for humanitarian aid and rebuilding Syria. But in September U.K. Foreign Secretary Boris Johnson said the anti-Assad coalition won’t support reconstruction without a political transition.
In the U.S., lawmakers from both parties this week introduced legislation they dubbed the “No Assistance for Assad Act,” seeking to channel any American aid to the parts of Syria still outside government control. U.S.-backed Kurdish fighters hold much of the country’s northeast.
“Things have hit a dead end,” said Alexander Shumilin, head of the Center for the Analysis of Middle East Conflicts in Moscow. “Russia’s military victory in Syria hasn’t brought a political settlement any closer.”
That’s keeping European companies away. German business, for example, has “the know-how, the products and the motivation to reconstruct Syrian infrastructure and industry,’’ said Philipp Andree, director for the Middle East and North Africa at the Association of German Chambers of Commerce and Industry. It can’t happen without “an internationally recognized peace agreement,” he said. Steelmaker Thyssenkrupp will only “re-enter the market” once Syria stabilizes, spokesman Tim Proll-Gerwe said.
Turkey, whose construction industry is active throughout the region, has been angling for business. “Turkey and Saudi Arabia will be the reconstructors of Syria,” the chairman of the Council of Saudi Chambers of Commerce, Abdulrahman Abdullah Al Zamil, told Turkish newspaper Sabah in February.
But both countries supported the opposition in Syria. Assad insists such nations won’t get a role in reconstruction, even if they want one.
Abd al-Kader Azouz, a consultant to Assad’s government, says money can be found from wealthy Syrians, the BRICS group of emerging economies, and multilateral lenders not controlled by the West. A few deals have been reached. Last year, Syria said it had agreed on 850 million euros of contracts for Russia to rebuild infrastructure. Iran signed accords worth “several hundred million euros” to repair power grids, Press TV reported in September.
Russia says it’s been promised further contracts to rebuild Syria’s energy facilities. Western involvement isn’t essential, Putin’s top envoy to Syria, Alexander Lavrentiev, said in an interview in Ankara: “There are Russia, Iran, China, India and many other countries.” Still, he acknowledged that Syria’s post-war financial needs are “colossal.”
China, an increasingly close Russian ally, won’t meet them all. Qin’s association estimates there could be about $2 billion of investment at this stage. Qin says the companies he’s been escorting to Damascus, Homs and Tartus — including China National Heavy Duty Truck Company, whose Hong Kong-listed arm is Sinotruk — are eyeing projects to build roads, bridges, airports and hospitals and restore electricity and communications.
Belt and Road
That may just be the beginning, because Syria fits into Chinese strategy. The country was a key link on the ancient Silk Road — and President Xi Jinping’s most ambitious plan involves building a new one: the multi-billion-dollar Belt and Road Initiative, which aims to weave a Chinese web of trade and transportation links across Eurasia and Africa. Foreign Minister Wang Yi, who met his Syrian counterpart Walid Muallem in New York in September, said that will be “an important opportunity for bilateral cooperation in future.”
For all those grand visions, there’s an immediate obstacle for Chinese business in Syria, according to Qin: Settlements in dollars and euros are banned, because of U.S. and EU sanctions aimed at cutting Assad’s regime off from the world economy.
That’s one indicator that, without a compromise on Assad’s future, Syria is likely to remain partially destroyed for years to come. Robert Ford, who was U.S. ambassador to Damascus during the early years of the war and is now a senior fellow at the Middle East Institute in Washington and a Yale professor, says the deals mooted so far are a drop in the ocean.
“We’re talking about hundreds of millions of dollars,” Ford said. “Syria needs billions. It’s going to fall well short of what’s needed to rebuild the country — which means that the country won’t be rebuilt very quickly.”