While the international community remains captivated and horrified by the Turkish invasion of northern Syria, a quieter crisis brews inside regime controlled territory.
In trying to manage reconstruction efforts in government-controlled areas, the Assad regime is quickly realizing just how drastically its economy was obliterated by the war. With a weak currency, diplomatic isolation and a reconstruction bill topping $400 billion, the government has no immediate way to build its economy back.
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Meanwhile to Syria’s south, Jordan is struggling to cope with its own intractable economic problems, as its system of providing stable yet unproductive public sector jobs is being challenged by the International Monetary Fund (IMF), which seeks to reduce the country’s swelling debt.
Both are seeking quick wins to reinvigorate their economy, and as such, their individual crises are pulling each back into each other’s political and economic orbit.
In an October meeting with U.S. lawmakers, Jordan’s King Abdullah hinted at Jordan’s growing respect for the regime while emphasizing the need to repatriate Syrian refugees. Syria, for its part, is steadily exporting more goods into Jordan through the re-opened land border crossing linking both countries.
In an October meeting with U.S. lawmakers, Jordan’s King Abdullah hinted at Jordan’s growing respect for the regime while emphasizing the need to repatriate Syrian refugees.
While these moves may mitigate both countries’ woes, the main benefactor of this subtle warming is neither Syria nor Jordan, but Russia.
Vladimir Putin has established himself as the key powerbroker in Syria, pushed Russian companies to the forefront of Syria’s economy and has overseen a rapid increase in Russian investment in Jordan.
Although Putin’s quasi-imperial foreign policy doctrine has been derided by Western analysts as a cheap ploy to compensate for a fledgling economy at home and an increasingly disaffected public, his leveraging of Syria and Jordan could give Russia a stable base of operations for years to come.
While the U.S. and other NATO countries stumble over each other and struggle to react to the mutating turbulence in the Middle East, Russia is solidifying an ever-growing presence in the fog.
Syria’s Postwar Outlook
Idlib lies in ruins, Sep 2019 (AFP/FILE)
To say Syria’s economic outlooks appear bleak would be a gross understatement.
Destroyed towns and bridges burned farmland and oil reserves and an ever-inflating currency poses challenges to the hamstrung regime, which may be winning the war but is still struggling to effectively govern restive regions nominally under its control.
On top of ongoing military expenditures, the regime is faced with a $250-$400 billion reconstruction bill for its war, though its annual budget is only about $9 billion.
In an attempt to wrestle back control over its economy, the regime agreed with Jordan to re-open the Jaber-Nassib border in Oct 2018, which was vital to both countries before the war.
On top of ongoing military expenditures, the regime is faced with a $250-$400 billion reconstruction bill for its war, though its annual budget is only about $9 billion.
The opening represented "a step towards reintegrating with Syria's surroundings economically and recapturing the country's traditional role as a conduit for regional trade,” Sam Heller, an expert at the International Crisis Group said.
"For the Syrian government, reopening Nassib is a step towards normalization with Jordan and the broader region, and a blow to U.S.-led attempts to isolate Damascus.”
But current bilateral trade remains at modest levels, even though Syrian export volumes are a shadow of what they once were. Syrian ministries are tying up Jordanian imports in bureaucratic red-tape in an attempt to stymie smuggling operations, and are requiring businesses to obtain regime-backed licenses before taking in Jordanian goods.
The move has frustrated Jordanian businessmen and regulators alike. But that tension presents an opportunity for Russia who may be able to play a role in mediating conditions for cross-border trade as its role in the region grows.
For the Syrian government, reopening Nassib is a step towards normalization with Jordan and the broader region, and a blow to U.S.-led attempts to isolate Damascus.
Russia has utilized its dominant military presence in the region as leverage to guarantee itself a chunk of Syria’s shrunken economy.
A few months after the Assad regime allowed Putin to use the country’s largest port, Tartous, on the western side of Syria, as a naval facility for Russia’s military, Syria awarded the Russian company Stroytanszgaz a 49-year lease on the port itself. Stroytransgaz is owned by Gennady Timchenko, a close friend and ally of Putin.
Stroytransgaz was also given exclusive access to harvest and export phosphate from the lucrative Sharqiyeh field near Palmyra. For rebuilding Syria’s once-thriving agricultural sectors, Russian companies have reportedly beaten back competition from Iranian businesses and begun to generate substantial revenue from sugar and flour mills in southern Syria. Other Russian-linked companies were also given exclusive rights to export Syrian goods to countries in the former Soviet bloc.
For rebuilding Syria’s once-thriving agricultural sectors, Russian companies have reportedly beaten back competition from Iranian businesses and begun to generate substantial revenue from sugar and flour mills in southern Syria. Other Russian-linked companies were also given exclusive rights to export Syrian goods to countries in the former Soviet bloc.
Taken together, these moves help to illustrate Russia’s growing influence over Syria’s domestic economy and place in a global marketplace. And because of this, Syria’s economic wellbeing is now effectively tied to Russia as a trading partner and a geopolitical power that can guarantee an avenue towards normalizing relations with Russian-allied countries.
Jordan’s Lungs to the North
The Jaber-Nassib Border in Oct 2018 (AFP/FILE)
Although Jordan’s economic woes are largely unrelated to Syria’s, they both have opened a window of opportunity for Russia to increase its influence in the region.
Without an organically functioning economy, the Jordanian government has long relied on aid and a robust public sector that can provide stable jobs for its educated middle class. But aid is drying up and the government has begun implementing IMF-backed austerity measures, threatening the given role the government has played in economic stability.
In the face of this stagnation and growing discontent with the U.S., Russia has dramatically stepped up its trade with Jordan and has pushed for it to enter Eurasian Economic Union. In 2018, bilateral trade between Russia and Jordan was worth $602 million, a 383% increase over 2017.
In 2018, bilateral trade between Russia and Jordan was worth $602 million, a 383% increase over 2017.
If the opening of the Jaber-Nassib crossing allowed Syria breathing room from its own isolation, the opening also gave Jordan a critical lifeline that did not depend on the whims of the West. Prior to the war, local Jordanian businessmen commonly referred to the land crossing as Jordan’s “lung,” as it was used to export hundreds of millions in goods annually to Syria and hundreds of thousands of tons of agricultural products.
Linking both Syria, Jordan and Russia’s mutual interests, Jordanian farmers relied on the Tartous port to export their products to European markets before the war started in 2011. Now that the Jaber-Nassib border is re-opened, Jordanian businessmen are likely having to work through Russian channels to access the Tartous port.
Prior to the war, local Jordanian businessmen commonly referred to the land crossing as Jordan’s “lung,” as it was used to export hundreds of millions in goods annually to Syria and hundreds of thousands of tons of agricultural products.
Indeed with virtually every step of the way, Russia is positioning itself to mediate inter-regional trade and parts of its complicated politics.
The Long-term Play for Russia
A Russian soldier patrols Daraa, in Syria’s south (AFP/FILE)
Aiding Syria and Jordan’s economic recovery, Russia is becoming a vital partner, and has ample opportunities to combine its economic and political interests.
All of it relates to Putin’s strategy of reinvigorating his own country's steady decline by establishing his country’s presence abroad. And after nearly five years of a hard presence in Syria, the strategy is beginning to bear fruits.
Jordan, Syria and Russia are becoming more politically aligned and economically interdependent.
In Jan 2019, Jordan quietly appointed a charge d’affaires to its embassy in Damascus, which was shut down to protest the regime’s brutal crackdown early in the war. The appointment effectively backtracked efforts to isolate Syria, and signaled a growing willingness to renormalize relations.
Later on Oct 19, U.S. lawmakers visited King Abdullah II in Amman, where they discussed the Turkish invasion of northern Syria. In that meeting, the king reportedly emphasized Syria’s territorial integrity—a virtual 180 from when Jordan was funding and training rebel soldiers in Syria’s south who had the explicit intention of overthrowing the Assad regime.
Putin is attempting to attract desperate countries in the region into his sphere of influence, and it’s beginning to show early signs of success; a reality that cuts against U.S. interests.
In that same meeting, the king also mentioned guarantees for the “safe and voluntary” return of refugees, which at the very least signals that a safe return under regime rule is possible. These statements were not met with an avalanche of publicity, but they reflect a growing realization in the region that Assad is not only here to stay, but could actually be an asset.
The statements also come a year after Jordan established a Jordanian-Syrian Friendship Committee, which sent Jordanian parliamentarians to meet with Assad and other senior policy makers.
This rehabilitation of Syria’s image is doubtlessly down to the simultaneous military efforts of Russia to guarantee Assad as the victor of the war, and the ongoing diplomatic and economic efforts of Putin.
In effect, Putin is attempting to attract desperate countries in the region into his sphere of influence, and it’s beginning to show early signs of success; a reality that cuts against U.S. interests.
Putin is attempting to attract desperate countries in the region into his sphere of influence, and it’s beginning to show early signs of success
But it also poses a long-term problem for Jordan and Syria in the event of a recession in Russia, which looks more likely as the country is experiencing an economic slowdown.
If Russian companies can no longer operate in the region and manage the Tartous port or oversee exports or investments, and Putin is forced to wind down his role in Syria as a powerbroker, Jordan and Syria will find their own economies on the wane and more isolated than ever.
