Ukraine’s war..Are there economic gains for Syria?

During the last 70 days since the beginning of the Russian invasion of Ukraine, much has been written about the economic impact of this war on the situation in Syria. In this regard, it may be useful to discuss some of the possibilities raised by an analytical study issued by the Jusoor Center for Study during the month of April.

The study, entitled “The Impact of the Russian Invasion of Ukraine on the Syrian Regime”, prepared by a team of researchers, dealt with various military, diplomatic and economic aspects. But what interested us most in the study was the “positive” economic effects that the researchers put forward, if possible in the medium and long term.

However, we will start by first reviewing the most prominent negative effects. The rising food bill at the expense of the Syrians is a foregone conclusion of the invasion. It is a result that has penetrated different parts of the world, but in the Syrian case it has its own peculiarity, in a “country” suffering from a situation similar to bankruptcy, and betting on loans and credit lines of “friends”. to continue to ensure the minimum need for Syrians for a loaf of bread.

While the authors of the study expect Russia to exclude the Assad regime from the grain export ban, which it decided a few weeks ago, they completely rule out any consideration on the part of Moscow over the price of grain going to the regime. carried out to collect. , which will be according to the emerging international prices. We undoubtedly agree with this analysis, as it is unlikely that Moscow will offer double privileges even to its closest allies, at this particular time, when the immunization of its economy and the livelihoods of its people against the effects of Western sanctions is its greatest concern. is.

As for the second most prominent negative economic impact, it is likely that the Russian credit line extended to the regime will be completely cut off. Russia, which has frozen its foreign exchange assets in Western countries, will be very careful about what it has left of these foreign exchange shares. And the last Russian loan, which was provided to Assad at the end of last year, with the aim of buying food, may be the last of the Russian credit lines offered to the regime for a long time.

However, are there “positive” gains for the Syrian economy? According to the study, some Russian investments could move to Syria, after losing the attractions of the West. Since the possibility of investing Russian money in a large number of countries in the world has diminished, due to Western sanctions, that money will go to the Russian interior and to the allied countries. Syria included.

The possibility, outlined above, seems theoretical. In practice, however, the options were not lacking to change the direction of Russian investments. According to international media reports, “hot” Russian money is moving fast to alternative destinations, especially the UAE, Turkey and Israel. As of this writing, no Russian investment movement has been recorded to Syria. Even in the medium and long term, investing in a country with a sanction, the purchasing power of which is significantly reduced by its citizens, seems like a desperate adventure. The massive leak of Iranian capital to Dubai, during the years before the 2015 nuclear deal – when Iran was under pressure from international sanctions – may be the most prominent example urging us to wait for the “desperation” of Russian capital of all people to expect. alternative destinations, to the point of betting on a country from which local capital is fleeing.

From the last point, we refer to the study’s expectation that Syrian capital will find a more attractive foothold within Russia. In the coming period, Moscow will be eager to attract investment to its countries, to compensate for the withdrawn Western investments. The study expects Moscow to provide additional benefits to the capital invested in it, and with the expectation of a future depreciation of the ruble exchange rate, the “small” investment will be more feasible in Russia, which will attract Syrian investors. This is indeed a possible expectation, given that the Syrian capital, at the end of the summer of 2021, has in any way shown a remarkable movement out of the country. Investment conditions there have become extremely repulsive. But we do not know how it can be described as a “positive economic impact”! The withdrawal of more local capital from the Syrian interior will negatively affect the livelihoods of the Syrians and the country’s economy.

The study also expects an increase in trade exchanges between the Assad regime and the “microscopic” countries protected by Russia, such as Crimea, Donetsk and Lugansk, as well as Abkhazia and Ossetia. This is a true expectation, but it is not something new, since this attempt began before the invasion. It can not be considered a “positive” effect, on the contrary. The narrowing of trade exchange options for “Assad’s Syria” so that it becomes in favor of those “microscopic” countries means an economic decline, not an improvement. Not to mention, for example, it will not reflect positively on the food bill, as “countries” such as “Crimea” will continue to demand that Assad pay the price of grain, at the new international price, so that the “Indian” grain becomes an option. more profitable for the regime, according to the recognition of its officials.

Finally, the most prominent conclusion presented by the study, with which we largely agree, may be that there is a comparison that will control the Russian-Syrian relationship in the coming period. The greater Russia’s involvement with Ukraine, the lower Syria will be on Russia’s list of interests, which will enable Iran to expand its influence and fill any gap that Russia may be forced to leave.

For our part, we can offer an economical translation of this equation. If an Iranian-Western nuclear deal does not take place, and the resulting tensions persist in the region, and with the possible expansion of Iranian influence in Syria, the option of Arab countries to open economically to the Assad regime will be more difficult word. and less feasible. Not to mention that the West’s options may be on the way to intensifying sanctions against the Assad regime, combating Iranian influence, and exerting more pressure on Russia, in the context of the ongoing conflict between these parties.

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