The economy of the Syrian conflict

War is always deeply interwoven with economics. At the most basic level, there are classic military costs. According to the Stockholm International Peace Research Institute, during 2006 - 2010, Russia accounted for 48 per cent of Syria's weapons imports, with air defense systems and anti-ship missiles making up the bulk of the deliveries. Other suppliers of major conventional weapons were Iran (21 per cent), Belarus (20 per cent), North Korea (9 per cent) and China (2 per cent).

Since the start of the conflict, there have been some indications of a growing Russian reluctance to supply weapons to the Syrian Government.

In January 2012 a Russian ship reportedly delivered 60 metric tons of ammunition and explosives to Syria.

In 2012, CNN reported that Russia had sold Syria 20 billion USD in arms over the years. The first consignment of three Mil Mi-25 helicopter gunships for Syria was also overhauled in 2012.

It is obvious that the supply of weaponry in recent years has grown at times, and the presence of Russian troops in Syria will require additional software.

However, Russia has not only strategic, but also cultural and economic interests in Syria and the region.

Data from the World Bank dealing with development indicators show poor results for last few years in Syrian Arab Republic. The country will require large amounts of aid and investment in the reconstruction of the country after the conflict. Russian companies may act as contractors and intermediaries to provide multiple services - from construction to the upgrading of communications systems. Experts in crisis management and political reforms will also be in demand. Since the Syrian power structure has many similarities with Russia's (especially the structure of the military, as well as security and law enforcement agencies), this experience can be used.

The oil and gas sector is also important, as well as the perspective use of the pipelines. Russia is interested in maintaining high prices for oil and gas, as well as controlling exports of hydrocarbons to Europe. Since Syria has the potential to provide transit routes for several gas pipelines, Moscow is interested in any delay of this scenario, including via direct participation - controlling the supply in the future. In the most likely scenario, a gas pipeline will be built from Iran through Iraq to Syria. Moscow could assist in arranging this politically, with the possibility of entering the project. There remains the possibility of balancing the price of oil on the Iranian side.
It is known that some oilfields are still controlled by ISIS in Syria and Iraq. Money from the sale of smuggled oil is being used to finance the purchase of new weaponry by the militants. Part of the oil is illegally channeled through the Syrian-Turkish border, while the United States hasn't imposed an embargo on Turkish companies or individuals which have helped in the financing of terrorist organizations.

Interests and roles of external actors

Many countries are interested in the outcome of the Syrian conflict. Besides neighbor countries such as Iran, Iraq, Lebanon, Turkey and Jordan, two gulf monarchies are deeply involved in the process: Qatar and Saudi Arabia. Both are interested in the overthrow of Assad’s government but their ideas regarding the future of Syria differ. Saudi Arabia mostly provides its support to the terrorist organization Al-Nursa, that controls northern Syria. Turkey is also dealing mostly with the north of country because of three factors: 1) its boundaries; 2) the Kurds; 3) Syrian Turkmen. 

But now Turkey is suffering from the flow of migrants. According to Association for Solidarity with Refugees, the number of Syrians in Turkey now exceeds 2 million. Of them, 260,000 live in tents and prefabricated cities. 
The Interior Ministry notes that Syrians have dispersed to 72 of 81 Turkish provinces. According to last year’s numbers, Istanbul alone had 330,000 Syrians, more refugees than the whole of Europe. Istanbul has become the new “capital” for Syrians. Gaziantep hosts the second largest group with 220,000, followed by Hatay with 190,000. 
There are clear signs of social problems among Syrians living in Turkey. There is severe exploitation and there are frequent reports of Syrian women being forced into prostitution in many cities, especially in Istanbul. 

Better-heeled Syrians are setting up companies across Turkey. In the first half of 2015, of 2,395 companies set up with foreign capital in the country, 750 belonged to Syrians. 

Syrian businesses generally operate in several sectors: restaurants, construction, textiles, shoemaking, real estate, travel agencies, transportation and foodstuffs.

The Middle Eastern Strategic Research Center and the Economic and Social Studies Foundation of Turkey carried out an exhaustive study in the areas where Syrians live and listed the problems they face during their integration process. Topping the list were:
- Differences in language, culture and lifestyle make societal harmony difficult. Even though it is illegal, local men are marrying multiple Syrian women, increasing local divorce rates.
- Child labor is becoming a serious issue.
- The ground is being laid for ethnic and sectarian polarization.
- The difficult living conditions of Syrians and a lack of access to education have led to social problems, including an increase in crime rates.
- The most serious security risk is the possibility of the local population becoming violent in reaction to their accumulated frustration. 
The rise of terrorist attacks inside Turkey (organized by Kurds, radical leftists and structures affiliated with ISIS) also undermine the inner political situation and Erdogan’s government.

Until now, Turkey has not achieved serious success in dealing with the Syrian conflict. Most of its attempts have resulted in failure, in a geopolitical sense.

The Kingdom of Saudi Arabia is long-term partner of the USA in the region and is a counterweight to Iran as source for support for radical Islamic movements.

Attempts to organize a deal with Moscow have yielded no results for the Saudi-US agenda. Another important meeting occurred between the head of the national security office of Syria, Gen. Ali Mamlouk, and the defense minister of Saudi Arabia in Riyadh. There were organized leaks to the Lebanese newspaper Al-Akhbar, because Syrians don't trust the intentions of the Saudis, especially following the nuclear deal with Iran.

Saudi Arabia is also experiencing discomfort as a result of the war in Yemen. Despite the actions of the Arab coalition, the conflict affected part of the territory of Saudi Arabia, and has had a serious impact on its domestic policy. The royal family is trying to balance its economic assets, but after the fall in oil prices and the opening of the market for Iranian oil, its economy could falter significantly. Fluctuations in currency markets are also prompting some dysfunction in Riyadh' s plans.

The support Iran has provided to the Syrian government has been quite noticeable in the past. After the lifting of sanctions, Tehran will have more opportunities and tools to aid Assad. The Lebanese organization Hezbollah, which has been connected with Iran since the conflict began, is officially present in the region, marking the areas of its responsibility at the Lebanese-Syrian border, along the Damascus-Beirut highway, as well as in a number of hot spots.

The Syrian leadership is now trying to benefit from Iran's nuclear deal to the max, but at the same time is not mixing the support it gets from Russia and Iran. Syria wants to benefit economically, militarily and politically from each one of them separately, which is very logical for such a key geopolitical player.

At the same time it is courting Israel, but from a different angle and to cover its own interests. 

Israel is afraid that the injection of Russian military might, combined with the Iranian Revolutionary Guards, have given Assad a substantial lease on life.

Meanwhile, the Israel Defense Forces can reassess their sponsorship of the select rebel groups which are holding the line in southern Syria against hostile Iranian or Hezbollah cross-border attacks on northern Israel.

This option seems realistic because of the window of opportunity in dealing with the Golan Heights. Due to the large oil reservoir which has been found in the occupied Golan Heights, Afek Oil & Gas has already requested an extension of its exploration license. Afek is subsidiary of the American company Genie Energy.

Israel has also warned that Russian troops on the ground, in the air and at sea don't just represent support for Assad, but also Hezbollah. This seriously inhibits Israel’s flexibility for launching military strikes against targets selected by Iranian 

The Israeli media agency Debka notes that :
a) The Russian air force and navy are the strongest foreign military force in the eastern Mediterranean. The US deploys nothing comparable.
b) Israel’s military strength is substantial but no one is looking for a military clash with the Russians, although this did occur four decades ago, when Israel was fighting for its life against Russian-backed Arab invasions.
c) In light of the prevalence of the Russian military presence in the eastern Mediterranean, it is hard to see any foreign investor coming forward to sink billions of dollars in Israeli gas (there is an idea to bring in Russian investment totaling $7-10 billion for the development of the Leviathan gas field).

Visit of Netanyahu to Moscow was dedicated to discuss these contradictory questions and days before his trip Haaretz wrote that "the prime minister will present the threats against Israel that arise as a result of the increased flow of advanced weapons into the Syrian arena and the trickle of deadly weapons to Hezbollah and other terrorist organizations".

Russia can successfully manipulate because of this situation for its own benefit, especially in the context of the sanctions imposed by the West.

The Islamic State is the most unpredictable player in the region. If terrorist groups are cut off from the sources of oil which they use as a source of income, it does not solve the problem, as indirect revenues comes from Saudi Arabia and Qatar. Moderate rebels receive help from the US and the EU, although there is no guarantee that the ammunition and equipment won't fall into the hands of al-Qaeda and al-Nusra. In addition, one of their sources of income is the taking of hostages (usually foreigners). What's not quite clear in this situation is the organization of the flow of refugees. The rate for smuggling one person varies from 4 to 9 thousand dollars. It is obvious that the smugglers have the support of the security forces, whether the Turkish special services or militants in Syria.

Considering that not all refugees have the opportunity to pay those costs, there are two options: 1) the receipt of funds from relatives abroad, and 2) a repayment guarantee following shipment to Europe. Both options involve sustained and secret communications. The first case involves the hawala banking system, as through official banks money transfers to Syria are not possible. The second case involves an organized crime network which extends far beyond Syria and the region. 

In addition, until now there hasn't been significant progress to block the flow of new personnel to ISIS. Turkey and Jordan are major transit countries through which the fresh militants travel. This geography of newcomers has wide coverage – major countries of origin include Morocco, Tunisia, Saudi Arabia, Turkey, Jordan, the UK and France but additional recruits hail from Russia and Central Asia, Canada, the USA, Australia and other parts of the EU.

The US is concerned about the possibility of the further involvement of US citizens on the side of IS as well as a potential influx of refugees. Obama has said the United States can take 10,000 Syrians in 2016, which is six times greater than the number that is already in the United States. In addition, it will feel considerable pressure from the EU, which is already facing a migration crisis.

In addition to the current debates over whether to accept a Russian military presence in Syria, the White House also wants to reignite long-stalled international talks aimed at reaching a resolution to Syria’s multisided war. 

Possible scenarios

Since the north of Syria is actually controlled by Turkish-Saudi proxy elements, except for the Kurdish areas, there is a risk of the joint interests of Saudi Arabia and Turkey gaining a foothold in Syria. A possible deal would prevented by the inevitable convergence of the interests of Syria and Iraq, or Iraq and Egypt. The growth of the Russian presence will force Turkey and Saudi Arabia to take action in ways they can't anticipate. Given Turkey's dependence on Russian energy sources, Ankara is unlikely to openly confront Russian interests.

If control of the Damascus – Aleppo route is regained, there remains the problematic area of the desert, which borders Iraq, which ISIS claims as its own. Iraq and Syria, even with the help of Iran are unlikely to cope with the elimination of terrorist cells. Russia's role may be significant, but Moscow is unlikely to take the time to conduct another campaign without the support and the guarantee of the EU and the United States. This option is quite possible, given the current understanding of the risks for all parties, but the sanctions regime and cultural resentment which is directed by the EU and the United States against Russia slows down the process. In addition, the immediate presence of the armed forces of Russia will result in combat occurring under new conditions.

This is highly undesirable for NATO, whose members believe that Russia effectively uses hybrid warfare.

However, even the limited participation of Russia will help stabilize the situation in Syria. 

Assuming IS plans to expand its influence in Syria and Iraq, its next objects for attacks will be Turkey and Jordan. It is obvious that Turkey will not be able to solve this problem alone, as it is necessary to wage a war on two fronts - with IS and the Kurds. However, it will likely have to take advantage of Article 5 of the NATO Charter on collective defense. It will be a good test of solidarity within NATO, given the fact that Turkey is a kind of an outcast in this organization.

Because ISIS has a fairly limited supply of heavy equipment and lacks warplanes, any military success can only be temporary.
Jordan faces an interesting situation. This country is somewhat removed from the picture, because there no direct fighting, but the whole country is affected by the conflict.

The removal of the Hashemite dynasty from power or any shaking of the monarchy would necessitate the arrival of anti-Western powers. This is well understood in the United States, and Washington attempts to provide all possible assistance to King Abdullah. However, the country has already flared with unrest that could be repeated with greater intensity.

In a moderately likely scenario, after decades of an ambivalent relationship with the regime, Jordan's Islamist movement may capitalize on Islamist successes among Jordan's neighbors to directly challenge the Hashemite monarchy, with the goal of transforming Jordan into an Islamic state. 

Jordan is currently home to 1.4 million Syrians, of whom 646,700 are refugees. Eighty-five percent of refugees live outside in camps in some of the poorest areas of the country, and a significant proportion are classified as extremely vulnerable.

It's important to note that the available funding from World Food Program is still not sufficient to continue assisting all beneficiaries; as of September 2015, 229,000 vulnerable refugees living in communities in Jordan will no longer receive WFP assistance. The deterioration of the situation could lead to increased tension in Jordanian society, that will be used by radical Islamists. In March 2015, the government of Jordan proposed The Jordan Response Plan 2015 is a one-year program to consolidate all major national and international efforts to address the Syria crisis within the framework of a coordinated broad-spectrum response. The JRP has still not been implemented because it deals mostly with post-war scenario of reconstruction and development, rather than developing a response to terrorism.

Apparently, Jordan will take a wait and see position. In light of the increasing tensions with Israel on the Palestinian issue, any serious intervention from Jordan to the Syrian process should not be expected.

In any case, the conflict is unlikely to be completed in the near future. All external actors differ in their interests and methods of operation, which is being used by terrorists as a tactical advantage.

Извор: “KATEHON“