Rebuilding Syria: Why Arabs and the West are on a collision course

The United States and its Arab allies are on a collision course over the reconstruction of Syria, where President Bashar al-Assad, bolstered by Russia and Iran, has emerged the victor in a devastating civil war.

With lucrative contracts on the line, Gulf states are lobbying Washington and Brussels to loosen sanctions and not ensnare Arab companies and investors looking to rebuild their neighbor.

But more is at stake than fat contracts: Arab officials and lawmakers argue that Syria’s reconstruction is the last best chance to limit Iranian influence in Syria and reintegrate Damascus into the Arab world.

While much of the Arab world, the US, and Europe sided with anti-Assad rebel forces in the civil war, the Arabs are moving ahead of their Western allies in being willing to turn the page, even as the West continues to impose sanctions on the Assad regime, still regarded as having engaged in war crimes in the slaughter of its own citizens.

With Arab governments rapidly warming ties with Mr. Assad, Arab investors, lawmakers, businesses, and private citizens have been fast at work to reintegrate Syria into the regional economy and pave the way for its reconstruction.

One of the motivators is Syria’s geographic importance; Syria remains the only overland route to Europe for Jordan, Lebanon, and the Arab Gulf. Lying at the crossroads of Turkey, Iraq, and the Levant, officials and traders refer to Damascus as the “economic heart” of the region.

Economic opportunity

But it is the prospect of reconstruction after nearly eight years of war that has Arab governments, investors, and engineering firms lining up to court Damascus and be among the first to land a deal with Syrian partners.

The opportunities are massive.

Assad declared in December that rebuilding Syria would cost $400 billion, while some international analysts and organizations estimate the price tag at between $500 billion and $1 trillion.

A Syria rebuild would be a boost to Arab economies. Idle Gulf engineering firms and investment groups would benefit, while the involvement of Egypt’s state-owned companies could help Cairo ease its debt crisis.

But perhaps no country would benefit more than neighboring Jordan, which suffers a near-record 18.6 percent unemployment rate, soaring public debt, and growing discontent and ongoing protests over austerity measures and tax hikes.

Jordan boasts contractors and engineers with international experience and intimate knowledge of Syria, and the machinery and raw materials such as cement all desperately needed by Assad’s regime to start rebuilding Syria’s cities, infrastructure, and electrical grid.

But the Arab interest in rebuilding Syria is also profoundly geopolitical. By dangling the carrot of billions of dollars in Arab financing, manpower, and cooperation to secure a quick rebuild, the Gulf and its Arab allies are hoping to persuade Assad to reduce his regime’s reliance on Iran.

“Gulf countries have the financial ability to fund the reconstruction of Syria, and Gulf countries may be the only option for reconstruction,” says Riad Kahwaji, director of the think tank INEGMA in Dubai, United Arab Emirates.

“But this will not be for free – it will be as a direct result of efforts by the Syrian regime to transition to a more peaceful system and reduce the influence of the Iranians.”

In low-level delegations and unannounced diplomacy with regime officials, Arab governments, lawmakers, and investors are offering Damascus a marriage of Jordanian and Egyptian manpower and equipment with Gulf financing.

With Russia’s limited economic resources and Iran facing stronger US sanctions, many both in Damascus and in the Gulf believe that this arrangement is the best, perhaps only, option for a successful and speedy rebuild of Syria.

Western stumbling block

The momentum for Arab involvement in Syria is already gaining pace even as legal obstacles emerge.

Last week, the United Arab Emirates held a Syria trade and business forum in Abu Dhabi, inviting a delegation of prominent regime-linked Syrian businessmen for discussions that aimed to “enhance” commercial ties.

Earlier this month, the Syrian government received the Jordan Contractors Association in Damascus. The Syrian minister of public works proposed projects involving Jordanian companies to rebuild roads, bridges, water networks, and residential areas.

The Jordan Engineers Association is set to host Syrian engineers and government officials next month to draw up a list of projects for Syrians and Jordanians to work on, while the UAE and Jordan are considering whether to allow national carriers to renew flights to Damascus.

Yet the reconstruction drive is set to hit a substantial roadblock: Western sanctions.

The US, which provided training and support for anti-Assad rebels in the civil war and at one point openly called for Assad to step down, has long had a comprehensive list of regime officials, businessmen, and companies tied to Assad on its sanctions list, and has barred US citizens from directly or indirectly being involved in any transaction or sale to Syria.

Now, with the Caesar Syrian Civilian Protection Act before the Senate, Congress may soon require the president to impose sanctions on any foreign company or individual who has business dealings with Syria.

The legislation, which was passed unanimously by the House late last year, singles out anyone who engages in “significant financial, material or technological support to, or knowingly engages in a significant transaction with” the Syrian government.

Even more concerning to Arab companies and investors is a stipulation requiring the president to sanction any person or company in the world that “is involved with construction and engineering projects controlled by the Syrian government” or “supports Syria’s energy industry.”

The European Union, meanwhile, last week added an additional 11 businessmen and five companies to its lists of Syrians under sanctions for backing the Assad regime as part of its yearly review, raising the number of targeted entities to 270 people and 72 companies and organizations.

The Russia alternative

It is a clear message from Washington and Brussels that although the tide has turned on the battlefield, Western governments do not believe the time is right to do business with the Assad regime.

As the Syrian regime dominates the private sector and any medium to large-scale project will require some involvement by the government, such sanctions will likely scare off many investors.

However, with Russia remaining as the main powerbroker in Syria, many Arab firms are set to carry on with their plans with the coordination and support from Moscow.

“Arab companies that do not have assets in the US may pursue projects with the help of the Russians and the Chinese, but this slowdown will prevent the massive effort needed to rebuild Syria,” says Mr. Kahwaji, the Emirati analyst.

In Jordan, many construction firms and importers are without ties to US companies or US assets and are willing to take the risk in order to get badly needed contracts in Syria, betting that Washington would not go out of its way to target small companies in Jordan.

But in Washington and Brussels, the lobbying continues.

According to Arab official sources, the Gulf, Jordan, and Egypt have reiterated that they share the same goals as America: to limit Iranian influence in Syria and ensure Assad upholds, rather than undermines, regional security.

“If you prevent Arab countries from working in Syria, particularly Jordan and Egypt, because of sanctions, then you are basically giving Iranians more leeway, more access, and more reasons to stay in Syria at the request of the Syrian government,” says Fares Braizat, chairman of NAMA Strategic Intelligence Solutions, an Amman-based think tank.

Appeal to Trump?

Short of shifting policy at the State Department or winning over Congress, officials in Abu Dhabi, Riyadh, and elsewhere are hoping to sway President Trump personally by playing to his “America First,” transactional approach to diplomacy.

“They know at the end of the day, the White House – i.e., Trump – will be holding the pen when deciding who to sanction or not,” says one Gulf insider, who declined to be named. “As Gulf involvement in Syria reconstruction will mean a weaker Iran and a stable Syria at no cost to the US – this is a deal too good for the president to pass up.”

Jordan, meanwhile, has been arguing to the US that economic access to Syria’s reconstruction would be vital to the economic stability of the kingdom – which lost hundreds of millions of dollars and hosted more than 1 million refugees because of the war.

“We are sending the message to our allies in the US and Europe: Syria is a doorway to the world for us, do not prevent us from opening it,” says Qais Zayadin, a Jordanian member of parliament who recently met with Assad in Damascus as part of a Jordanian parliamentary delegation.

“Our Western allies have to give us leeway: You are tens of thousands of miles away, you can afford not to have a relationship with Syria. We do not have this luxury.”