Regime Allies & Neighboring Countries
As the last quarter has been a devastating blow to Syria’s economy with sky-rocketing inflation and shortages due to the global commodities crunch, its two closest allies, Russia and Iran, remain keen to reap their rewards for saving the Assad regime. Even as Syrians go hungry and seek to leave, Russia and Iran are bleeding dry what little remains in the country, preventing any sort of domestic economic recovery from being able to happen. While Iran has focused on dominating sectors of the Syrian economy by flooding them with Iranian goods and forcing the regime to restrict Syrian businesses through no-compete policies, Russia has aimed to indenture Syria through parasitic debt and taking control of key infrastructure.
Most concerningly, a report by New Lines magazine recently revealed that between 2020-2021, Russia issued Syria two loans totaling $1 billion with extremely unfavorable terms. The loans were to purchase basic commodities from specific companies linked to Russian oligarchs under western sanctions, with a penalty to be paid if the full amount of loan was not used in a short period of time. The Assad regime is reported to have repaid $100 million on these loans to Russia to date, even though the basic commodities that they were to receive—including wheat, gasoline, heating oil, medical supplies, and animal feed—have been low quality and exorbitantly priced, far beyond global commodity prices. At times, the goods have never arrived and the Syrian regime has been unable to redress the failings of these agreements with Russia.
In March, Bashar al-Assad visited the UAE, marking his first trip to an Arab country since the beginning of the Syrian conflict in 2011. The Emirates has been making moves over the last few years to resume ties with Syria, including the Emirati foreign minister’s visit to Damascus at the end of last year, and the regime has been keen to engage with hopes of securing Emirati investment to rebuild Syria. Assad’s visit did not lead to the desired material outcomes with no commitments made for Emirati investment nor assistance to Syria. However, the ravaging of the Syrian economy and its financial institutions by the regime and its patrons begs the question why any rational investor would put their money in Syria.