What economic impact of Saudi moves in Syria?

Meetings of the Syrian and Saudi Chambers of Commerce in Riyadh, June 2023 (al-Watan newspaper)

Meetings of the Syrian and Saudi Chambers of Commerce in Riyadh, June 2023 (al-Watan newspaper)

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Enab Baladi – Yamen Moghrabi

The Saudi moves towards the Syrian regime during the past two months have gone beyond the political issue to include economic aspects. This is something the regime aspires to and expresses openly, as happened during its attendance at the preparatory meetings for the Arab summit in Jeddah last May, during which it called for economic support and investment in Syria.

Between last April and June, three indicators appeared about these movements.

The first was the publication of the Official Gazette in Syria that a Saudi company obtained a work license bearing the name of “Al-Sabe’ Biyar Portland Cement.” It is owned by three Saudi citizens and a Syrian national, with a capital of 60 million SYP (about $6,666).

The second indicator relates to the statements of the President of the Federation of Saudi Chambers of Commerce, Hassan Mujeeb al-Hwezi, on June 14 during his meeting with his Syrian counterpart, Muhammad Abu al-Huda al-Lahham, in which al-Hwezi indicated “the aspiration of Saudi companies to contribute significantly to investment and partnership with Syrian companies and to launch a large workshop in Syria,” without specifying a confirmed date.

Meanwhile, the pro-regime newspaper, al-Watan, quoted the head of the Damascus Countryside Chamber of Commerce, Osama Mustafa, as saying that the Federation of Saudi Chambers will visit Damascus soon “to see the available investment opportunities.”

The third indicator is when Boutros Murjana, head of the Arab and Foreign Affairs Committee in the Syrian People’s Assembly, considered in an interview with the Russian agency Sputnik last April that “the Syrian-Saudi rapprochement will open the door to activating trade between the two countries, and the return of important banking relations between them.”

Therefore, the most important question related to these indicators, including the previous UAE moves in the economic aspect, is the possibility of their positive impact on the Syrians living in the areas of influence of the Syrian regime.

The volume of Saudi investments in Syria is not known until the start of the Syrian revolution in March 2011, since economic relations stopped.

Despite the declared boycott, Saudi Arabia opened its doors for trucks coming from Syria to Saudi Arabia via Jordan, as the Syria Files for Studies website indicated that Saudi Arabia ranks first as the country that imports the most from Syria, specifically in the food and ready-made garments sectors, with nearly 140 billion Syrian pounds (about $55 million) in 2020.

In 2021, the Syrian Ministry of Interior announced that the “Nahla al-Riyadh” company had obtained a license to work in Syria as part of the contracting activities and trade in building, decoration and cladding materials, foodstuffs and electrical appliances, with a capital of five million Syrian pounds.

According to the Saudi Statistics Authority, Saudi exports to Syria amounted to 83 million Saudi riyals (about $22 million).

How are these movements reflected?

In 2018, the UAE restored its diplomatic relations with the Syrian regime, and after that, it was announced that dozens of Emirati companies had been licensed in Syria without carrying out actual activity on the ground.

Although the UAE preceded Saudi Arabia in establishing companies, it seems that Saudi Arabia is moving in the coming period towards establishing a number of companies within a general strategic vision related to political, economic, and sports aspects that are not only related to Riyadh but include the Middle East as a whole.

However, the most important question is how the Saudi moves can be reflected in the Syrian economy and the living conditions of the Syrians in the areas of the Syrian regime that suffer severe economic and living crises.

Abdulmoneim al-Halabi, Ph.D. in international economic relations, told Enab Baladi that the positive impact may come through the Iranian-Saudi-Turkish regional competition in the region, and these countries, which competed politically and militarily in the recent past, transferred their competition to the economic field.

Dr. al-Halabi explained that transferring competition from the military and political situation to the economic one may lead to an improvement in the Syrian economic situation if things go according to the regional plan, which will be reflected in the living conditions of the Syrians.

This improvement is linked to the return of the movement of Syrians to the Gulf region to normal, the restoration of respect for the Syrian identity, the presence of direct investments, support for monetary reserves, and the return of financial investment channels again, as well as to banks and government capital, says the economist.

On the other hand, Ayman al-Dassouky, a researcher at the Omran Center for Strategic Studies, believes that the movement of openness to the Syrian regime and the developments we may witness in the field of financing early recovery projects in the regime-held areas by several parties and under several names will not have significant and tangible effects on the living conditions of the population and the economy in general in regime-controlled areas.

The researcher said that what weakens the impact of economic openness on the regime is the control of warlords and nepotism networks in the economy, and the weakness of existing governance in light of the laxity and corruption it suffers from, and thus gains that will be reaped by the beneficiaries.

Regarding the start of Saudi companies entering the Syrian market in the areas controlled by the Syrian regime, al-Dassouky indicated that the establishment of these companies is not new, but it gained momentum after the recent political developments and the rapprochement between Damascus and Riyadh.

In the World Bank’s Doing Business report, issued in 2020, Syria ranked 176th out of 190 countries, 143rd in starting commercial activities, and 186th in issuing building licenses.

Al-Dassouky believes that the environment is still not conducive to starting serious investments in Syria for the previously mentioned reasons.

The current situation comes within the framework of preserving economic channels in the form of visits and the establishment of companies, which can be employed to explore investment opportunities, the possibility of work and its areas, and activate involvement in the Syrian market seriously in the event that the political condition is met and the economic obstacle is removed.

Object of Saudi moves

The recent Saudi move towards the Syrian regime is also linked to its moves towards its main ally in the region, Iran.

This indicates that Riyadh is working according to a strategic vision that is not only related to its view of the Syrian regime or its attempt to rehabilitate and float it again, despite the fact that the Syrian economy has diversified resources between agriculture, tourism, arts, industry, and natural resources.

A study by the International Institute for Iranian Studies stated on April 13 that there are several gains for Saudi Arabia, represented in strengthening its strategic position, realizing its development projects, and getting out of the climate of confrontation to zeroing problems, removing diplomatic obstacles, putting pressure on the United States, rearranging the Arab House under its leadership, and getting rid of Captagon drug smuggling.

The study indicated that the Syrian economy has become a prisoner of the Captagon drug trade within the framework of what is known as the “shadow economy,” which represents a direct threat to Saudi Arabia and other Gulf states.

Al-Dassouky believes that Saudi Arabia’s approach is based on maintaining stability, activating its regional role in a manner that reflects on internal stability, and assuming a leadership role in calming and settling conflicts so that they do not turn into an arena of international polarization or chronic crises.

This helps it provide an attractive environment for investments and revitalize economic ties as a common interest among all countries in the region, he added.

It also seeks to open up to everyone and support the state with its institutions to deal with it in order to solve the humanitarian and security crises created by the conflicts in the region, according to the Omran Center researcher.

On the other hand, the expert in the International Economy, Dr. Abdulmoneim al-Halabi, believes that Saudi Arabia sees the importance of diversifying the Syrian economy, its effectiveness, and the possibility of finding a place for it in it.

However, the matter is related to the liquidity that was suspended due to the sanctions and the exit of oil resources from the hands of the Syrian regime, and therefore it may seek to reactivate the economy with Saudi capital directly or through investment companies, the expert concludes.

 

 

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