Syria: End game and intelligent use of the reconstruction carrot

Nearly eight years into a war that has displaced millions of Syrians, Syrian President Assad has recovered control of most of the country with support from Russia, Iran, and Iranian-backed Shi’ite Muslim groups such as Lebanon’s Hezbollah.

On the diplomatic front there has been moves to rehabilitate him with first ever visit by an Arab Leader, Sudan’s Bashir to Damascus, although in hindsight not very auspicious given the on-going calls for Bashir’s removal by some Sudanese people, and the Arab League considering to readmit Syria to the organization.

Of more Assad morale boosting significance though was the decision by the United Arab Emirates, which reopened its embassy in Damascus, marking a diplomatic boost for Assad from a US-allied Arab state that once backed rebels fighting him.

Other Gulf countries like Bahrain and Kuwait are now mulling the same move, somewhat bitterly following the rather confused messaging from the US Administration that it is withdrawing its forces from Syria and throwing the onus of solving the Syrian quagmire and any post conflict reconstruction onto others, especially from the Gulf.

Saudi Arabia has not commented on American reports that it has increased any more funds to Syria besides the $100 million it pledged in October but the pressure on the Kingdom and other countries whether from the region or outside will be great to make or participate in more significant reconstruction efforts.

Marshall Aid

The reason is simple: the post war US Marshall Aid program to help reconstruct a ravaged Europe, and principally Germany, as well as similar efforts in Japan, was carried out with both a mixture of humanistic altruism but also with a clear eyed geo political perspective which was to ensure that the defeated Axis nations became firm Western Allies and to stop Communism from making inroads.

The result was that both defeated nations are now amongst the most politically stable, democratic and firm allies of the West. The Syrian situation is somewhat different.

Here, unlike the defeated Germans and Japanese, the Assad regime is slowly coming out as a messy battlefield winner, albeit battered and supported from outside by foreign powers, and those that supported the opposition are now faced with the realism that a political as opposed to a military solution is the real hope for all Syrians.

How to ensure that they are also represented at the negotiation table and that a more long-term acceptable Syrian government arises will become the next true act of statesmanship of those who advocated for Syrian regime change. It is here that the intelligent use of the reconstruction funding carrot will become an even more important tool of diplomacy than weapons.

Mr Assad knows his country is virtually bankrupt and in need of massive reconstruction aid and lifting of financial and other trade sanctions if he is to survive whether in the medium or long term as even Western countries like the UK and France that long saw him as an obstacle to peace and his removal was a prerequisite for any reconciliation, now grudgingly admit that that this is not realistic or as the British Foreign Secretary Jeremy Hunt recently put it: “The British long-standing position is that we won’t have lasting peace in Syria with that (Assad-led) regime, but regretfully, we do think he’s going to be around for a while.”

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By all accounts any reconstruction is not easy as there are many facets to it given the German and Japanese nation rebuilding exercise after the war. The Syrian reconstruction now being discussed is not just about physical or economic rebuilding as reconstruction can never be separated from politics, and only humanitarian or economic needs will rarely drive the looming choices.

Reconstruction will take place across a range of political contexts. External and local actors alike will get rich or be frozen out, accumulate social power or face marginalization. Politically convenient amnesties could restore war criminals to positions of power, or transitional justice institutions could lead to their political exclusion.

For Syria, the forms and modalities of reconstruction will stamp a new political status quo with long lasting implications. And this is where intelligent reconstruction participation will pay off in the long term to ensure that Gulf interests are not harmed.

International actors today are struggling with whether and how to support reconstruction for Syrian communities whilst ensuring that this does not end up privileging political supporters of the regime. Standing aside from reconstruction efforts in Syria may avoid offering support to the Assad regime, but at the cost of perpetuating Syrian suffering and ceding post-war influence to other actors like Iran and Turkey.

The Syrian physical reconstruction needs are staggering. The United Nations Special Envoy has estimated the cost of rebuilding Syria at $250 billion but some go as high as $1 trillion. Even if such levels of funding prove to be available, however, there is no simple economic fix for shattered societies.

The question of where this funding will come from looms large. The Trump Administration has indicated little support for large-scale American economic assistance to rebuilding Middle Eastern states. To complicate matters for any future US reconstruction participation, the American Congress has also got into the act and in April 2018 the House of Representatives passed a bill that, if enacted, would cement the US sanctions policy.

The “No Assistance for Assad Act,” would ensure that US taxpayer money isn’t spent on reconstruction in government-controlled Syrian territory, either directly or through the UN, IMF, or other international bodies. Its effect would be to halt any drift within international bodies that could see humanitarian aid sliding into stabilization and reconstruction.

Western money

Without Western money or at least hindrance of others, reconstruction in Syria is likely to be slow and incomplete but some non-regional powers see an opportunity to make an impact. In July 2018, China pledged $23 billion in loans and aid to Arab states, adding to the $2 billion investment in Syrian industry that it pledged in 2017.

It is not clear how much of the new package will go to Syria as opposed to other Arab states, but, regardless, it will be a drop in the bucket for Syria’s reconstruction needs. Russia and Iran seem unwilling or unable to pay for reconstruction, according to numerous media reports.

Both countries are also under US sanctions. This again leaves Arab, regional and Gulf actors to paly the key role. But while the United States and Europe continue to steer clear of involvement in reconstruction, Syria’s neighbours appear more open to Russia’s proposals.

Many in Lebanon and Jordan have grown impatient after years of economic strain imposed by the war and its spill over, and they seem to be moving ahead with Russia without waiting for US and European support.

The Jordanian foreign minister has also been in contact with his Russian counterpart about refugee repatriation last summer. Relations between Syria and Jordan were never fully severed and are reported to be improving, with the opening of the economically important Nasib border crossing between the two countries expected to come soon.

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Its closure, and the impact of the Syrian war, has caused significant economic strain in Jordan in recent years. Even Turkey, once a major supporter of the Syrian opposition, is reported to be negotiating with the Assad regime via Russia, in an attempt to gain valuable reconstruction contracts for its major construction and engineering companies with many years of experience in mega projects in the GCC and North Africa.

GCC companies with similar mega project experience and those able to supply a large segment of the material and supply chain needs of a devastated economy like Syria can and should benefit from any Gulf reconstruction participation as American companies were the driving force in the post war reconstruction of Germany and Japan.

Few aid in the world is “un-tied” and most financial aid packages stipulate that donor country contractors are the beneficiary of such project awards. The Gulf has now come of age and using Gulf companies to execute such mega and other smaller projects will add to Gulf employment opportunities for nationals and recycle some of the project proceeds back home.

Some GCC companies might even emerge as post conflict specialist contractors and the sad state of many Arab countries today indicates that such an experience will be sorely needed for many years to come.

The key question is what type of hard political and economic bargaining takes place at the reconstruction table , as for all the bravado of battlefield victories on the backs of allies , the Assad regime knows only too well that it does not hold all the cards if it wishes for a political solution to emerge that is widely acceptable and meaningful in economic terms.

Assad knows that his country’s stagnation will remain and that in the final analysis he has to compromise on the reconstruction negotiation table and that the carrot will achieve what the gun did not in the past eight years. Gulf contributors should go in with a strong negotiating hand. They have nothing to lose.
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Dr. Mohamed Ramady is an energy economist and geo political expert on the GCC and former Professor at King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia and co-author of ‘OPEC in a Post-Shale world – where to next ?’. His latest book is on ‘Saudi Aramco 2030: Post IPO challenges’.