Recent events may indicate the world wants to start doing business with Syria again, despite its government being accused of war crimes. But how likely is it China, the EU and Gulf states will start spending big there?When Musan Nahas, an industrialist known to be close to Syrian dictator Bashar Assad, was spotted in Paris recently, it caused a minor scandal.
Nahas, who holds various senior positions in Syrian industry, was taking part in the fourth Arab-French Economic Summit on March 15. As the Syrian government-run national news agency would later boast, the summit took place under the patronage of the French President and while there, Nahas posed for pictures with senior French executives.
Outraged Syrian anti-government activists noticed. How did Nahas even get into the country?, they demanded. Wasn’t Syria sanctioned by the European Union?
More worryingly, they wondered if this might be yet another sign that the world was preparing to re-establish commercial relations with Syria, a country that has been diplomatically isolated for over a decade because of war crimes committed by its authoritarian government.
Is normalization with Syria coming?
Over the weeks since Nahas’ jaunt to Paris, that concern — that Syria was reestablishing international trade ties — has only grown.
In early May, Syria was allowed back into regional cooperation body, the Arab League. It had been suspended from the body for more than a decade.
Last week, on the sidelines of the Arab-China Business Conference in Riyadh, the heads of the Saudi and Syrian chambers of commerce agreed to resume bilateral trade. Iraqi officials have also previously expressed enthusiastic about doing the same.
And this was not just happening in the Middle East. In February, shortly after a devastating earthquake in Syria and Turkey, the Italian Agency for Development Cooperation signed an agreement on closer cooperation with the Syrian Arab Red Crescent, a humanitarian organization well-known for its ties to the Assad government. The Italian deal is thought to be the first time of its kind in Europe since the Syrian civil war started in 2011.
All talk, no action
However, as experts have pointed out, it’s hard to know how realistic all the talk of more cooperation is.
For instance, the Paris incident with Assad-friendly businessman Nahas was far from what it seemed. The Syria Report, an economic news platform, investigated and came to the conclusion that it was not Syria sneaking back into the EU’s good books.
Nahas is not on the list of over 320 Syrian individuals sanctioned by the EU, journalists said. They also discovered that a lot of these kinds of activities with trade federations are just automatically granted presidential patronage.
“Nahas’ participation in this summit looks more like a (diplomatic?) blunder on the part of the French than any devious attempt to normalize with the Syrian regime,” Syria Report researcher Benjamin Feve wrote on Twitter.
Other recent announcements about increased trade and investment in Syria require similar scrutiny, experts told DW.
Despite Syria’s readmission to the Arab League, there are still three main reasons that countries like Saudi Arabia and the United Arab Emirates, as well as nearby states like Jordan and Iraq, are unlikely to see private investment into Syria positively, Zaki Mehchy, an associate fellow at the UK-based think tank Chatham House, told DW.
Firstly, wide-ranging, international sanctions on Syria are a problem because they also apply to any third-party that deals with Syria. And if a new US law, the Assad Regime Anti-Normalization Act of 2023, is passed by the American government, sanctions will become even tougher.
Secondly, the business environment in Syria is not that attractive, Mehchy said, referring to the fact that there’s still much instability and corruption there.
“The third factor is that all of the quick win investments — for example, in oil or gas — have already been taken up by the Russians and Iranians,” he argued. Russia and Iran are longtime supporters of the Assad government.
Not a good investment
“There’s not much of a business case for this [investment into Syria]. But,” Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington, or AGSIW, told DW, “there is certainly a political case.”
Political motivations include reducing Iranian influence in Syria and curtailing Syria’s illicit multi-billion-dollar trade in the amphetamine, Captagon. Syria’s regional neighbors, some of whom are hosting millions of Syrian refugees, want to see stability return to the country and will pay to make that happen.
Because of this, even if there is little likelihood of direct investment into Syria now, it’s possible that the Gulf states will eventually be able to send more money into the country. This could happen because Western sanctions are gradually loosened — generally considered an unlikely prospect — or because the funds go through international humanitarian agencies like the United Nations.
“There is a category of humanitarian response called early recovery [at the UN] and early recovery is not well defined,” Karam Shaar, a political economist and senior fellow with the New Lines Institute, told US radio show, The World, last month. “If you take a relaxed definition, you can claim its reconstruction and if you take a conservative definition, it’s basically us allowing people to help themselves.”
This is a “loophole” that could be exploited by Gulf countries who want to send money into Syria but don’t want to be sanctioned, Shaar suggested.
An opportunity for China
There are also other potential investors for Syria from counties like India or Brazil. But, as Guy Burton, an international affairs professor at the Brussels School of Governance, whose work focuses on the Middle East, says, “private companies from those countries are also likely to be cautious about investing in Syria, considering the risks.”
China is the other major potential investor often mentioned in conjunction with Syria. Syria signed onto China’s Belt and Road Initiative in early 2022 and representatives of the Chinese and Syrian governments have discussed projects in transport, industry and communications.
However, here too, observers say that there’s a lot of talk, but not much action.
“Syrians have expressed a strong interest in Chinese investment and the Chinese have been open to those discussions,” Burton told DW. But, he adds, look at the Iran situation. “[Iran] is also under sanctions and talks up its connection with China too. However, the level of actual Chinese investment in the country has been minimal, even after the supposed 25-year agreement signed two years ago.”
“China’s economic engagement in the Middle East is overwhelmingly concentrated in the largest economies,” the AGSIW’s Mogielnicki confirmed. “People often say the Chinese are just waiting to jump into this power vacuum. But I think there’s a much lower tolerance for risk and a much greater hesitancy than a lot of people realize.”
As for Europe, Mehchi thinks there may be some relaxation in European businesses’ attitudes towards Syria, but it tends to be more covert. “I know many businesspeople in European countries, like Greece or Italy, and they have already rebuilt their commercial relationships inside Syria,” he says. “So we do have these kinds of individual transactions between Europeans and Syrians. But,” he stresses, “they’re doing this in an indirect manner.”
For example, a European company might complete a business transaction using an intermediary based in a Gulf state, he notes.
Softening up the EU?
Mehchi believes the gradual change in attitude in Europe follows on from the Arab countries apparently resigning themselves to the fact that that they will need to deal with Assad in order to stabilize the country.
That attitude was highlighted at this week’s Syrian donor conference in Brussels, Mehchi says. “There was a lot of talk about helping Syrians help themselves, with focus on the private sector,” he notes.
After the Thursday event, which resulted in E5.6 billion ($6.13 billion) being pledged to help Syrians both inside and outside the country, Josep Borrell, the EU’s foreign policy chief, seemed to be saying similar. Borrell insisted the EU had not changed its approach to Syria and would maintain sanctions on the Assad regime.
“We are not on the same line as the Arab League,” he told journalists this week. “But it does not mean that we will not explore any possibility for improving the situation in Syria … As the Arab League believes that this new policy [toward Syria] can bring some results, we will support them.”
Edited by: Jessie Wingard
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