Tehran  ahead of new peace talks in Astana on February 14  is staking its claim as the key economic patron of Damascus, dampening hopes that Syria will benefit from Arab states opening embassies to restore diplomatic links.

Eleven economic agreements were signed by the Iranian and Syrian governments last week, during a high-profile visit to Damascus by Iranian Vice President Eshagh Jahangiri. Coming on the heels of fresh US and European sanctions on Syria, the visit was aimed at throwing a lifeline to the Syrian economy, which has been devastated by the country’s eight-year conflict.

The package included stop-gap measures intended to immediately impact the lives of regular Syrians. These included the delivery of propane and powdered milk for infants, two Iranian commodities on which Syria has long depended, but which have been in very short supply since the start of the year.

The Islamic Republic also promised long-term investments, namely rebuilding infrastructure damaged by the war.

Lastly, a joint chamber of commerce was formed between Iranian and Syrian businessmen, dashing Arab hopes that, through effective political engagement, neighboring capitals could slowly lure Damascus out of Iran’s orbit.

Arab engagement sidelined

The timing of the Iranian visit was noteworthy, coming just three weeks after the United Arab Emirates and Jordan reopened their embassies in Damascus, and as Syrian relations with Kuwait and Bahrain thawed. Sudanese President Omar al-Bashir visited Damascus in December, a trip believed to have been approved by Saudi Arabia. It was also aimed at ushering the Syrians back into the Arab orbit.

That flurry of diplomatic activity did not, however, translate into financial support, despite an urgent need for Arab investment to lift up the Syrian economy. Arab states that had been toying with the idea were forced to reconsider after the US House of Representatives threatened to impose sanctions on any party doing business with the Syrian government and after the European Union slapped new sanctions on high-profile Syrian businessmen involved in the reconstruction process. Those back-to-back measures came just weeks after the Arab rapprochement with Syria.

Syria – whether recognizing that the Arabs had been intimidated or due to a realization that no Gulf money would be coming anytime soon – received its Iranian guest with open arms.

Balance thrown off

It was a major course reversal for a government that, just one year ago, seemed reluctant to rely too heavily on Iran for economic assistance and sought to strike a delicate balance via Russia.

Although Tehran and Moscow were strategically allied on the battlefield, the powers appear to be on different pages regarding which would get what in the post-war reconstruction.

Rights to rebuild the ancient city of Palmyra and the old markets of Aleppo are seemingly going to Russian, rather than Iranian developers, due to Moscow’s role in their back-to-back liberation. Licenses to erect power plants and grain mills, and to extract natural gas from Syrian waters are going to Russian firms.

Cornerstones for a Russian school near Damascus were placed last September, and no such license was given to the Iranians. The children of Syrian soldiers killed in battle were meanwhile granted scholarships to study for free at the St Petersburg Military Academy, with the aim of cultivating a new generation of Russian-educated and Russian-influenced soldiers. No such arrangement was made with the Iranians.

Even in entertainment, plans are underway to purchase and dub Russian soap operas into Arabic – with a Syrian accent. No such rights were purchased from Iranian producers.

Part of that reluctance was due to a drawback in Iranian spending after US sanctions were re-imposed last November by President Donald Trump. Looking at neighboring Iraq, the Syrians observed that Iran stopped providing free electricity and cut back on its previously very generous spending on Shiite politicians, causing major drops in services that sparked off anti-Iranian demonstrations in Basra last year.

In January 2017, Syrian Prime Minister Imad Khamiss visited Tehran and signed a bundle of economic deals with the Iranian government – none of which got past the drawing board

In January 2017, Syrian Prime Minister Imad Khamiss visited Tehran and signed a bundle of economic deals with the Iranian government – none of which got past the drawing board. One agreement would have granted Iran the right to develop phosphate fields southwest of Palmyra. After multiple postponements, the rights were finally granted in August 2018 — not to Iran, but to Russia for a contract extending until 2068. 

A second agreement that would have granted an Iranian mobile communications company the right to operate in Syria is now all but dead, put on hold due to a disagreement over the division of its potential revenue. Third, Iran sought to obtain 5,000 hectares of agricultural fields between the town of Daraya in the western countryside of Damascus and the Sayyidah Zeinab Mausoleum near Damascus International Airport, territory that is presently guarded by Hezbollah and considered sacred by Shiite Muslims.

The Syrian authorities wiggled out of the deal, offering instead inaccessible land in the countryside of the remote, eastern province of Raqqa, which was and remains in the hands of Kurdish militias and US forces. The Iranians declined the offer. 

The Russians three years ago prevented an Iranian attempt to relocate some 10,000 Syrian Shiites from two besieged villages in the northwestern province of Idlib to the towns of Zabadani and Madaya, which were seized by its proxy Hezbollah in the Damascus countryside. Fearing this would create a “Shiite belt” in the vicinity of the capital, similar to the one held by Hezbollah in the southern suburbs of Beirut, the Russians shipped the displaced Shiites to the countryside of Aleppo, to serve as a bulwark against Turkish ambitions in the Syrian north.

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Although they are working together for a common military objective in Syria, Russia and Iran have very different end-objectives in the country. The Iranians want a country firmly positioned in the so-called “Axis of Resistance,” one that supports Palestinian and Lebanese militant groups and says no to any peace with Israel. Russian President Vladimir Putin is a very good friend of Israeli Prime Minister Benjamin Netanyahu, however, and would not mind inheriting – or forcefully taking over – the US role as mediator in the Syrian-Israeli peace process.

Moscow wants an endgame it can sell to world powers, and one which positions Putin as a peacemaker. The Iranians are more interested in embedding themselves in post-war Syria, keeping both Russia and potential Gulf Arab competition in check. 

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