The Syrian market doesn’t tempt the Russians: is there will be a awakening

Many questions are being raised about the secret of Moscow’s absence from the Syrian economic arena, which had won important investment contracts during the war. 

An absence of his reasons related to the economic structure of both countries, as well as the interests of the private sector, but there is official optimism at a different stage, in light of the preparation for new projects that would meet some of the Syrian needs in these exceptional circumstances that the country is going through.

At an international conference on insurance held in Moscow last year, the director of a private Syrian insurance company asked to speak at one of the discussion sessions, to ask whether Syria had a share of Russian foreign investments in this sector, especially since the relationship between the two countries has been strengthened since Russia entered the war alongside it’s ally.

One of the Russian officials in the insurance sector replied by saying that “Wars in the world are either fought for political reasons or to achieve economic interests and goals. 

Russia’s entry into the war in Syria was a political decision, not economic reasons.

Therefore, we do not have any future plans to invest in the Syrian insurance market, which in the end is a small and unattractive market compared to the markets of other countries”.

There is an answer that supports it in practice, in terms of the interest of the private sector in Russia to invest in Syria, as the data of the Syrian Investment Authority shows, in the period between 2009 and 2019, the existence of one Russian project covered by the investment law since 2013, related to the establishment of wind farms to generate electric power in al Suwayda governorate, but it has not yet been implemented.

Even the recent Russian investments in the oil, mineral and transportation sectors, which are regulated and governed by other legislation, would not have taken place without direct coordination between Moscow and Damascus on the one hand, and the vitality of the targeted projects and their rapid economic return on the other hand.

Most aspects of economic cooperation between the two countries for years, and perhaps decades, were being driven and guided by a political decision by the two countries, starting with the famous payments agreement in the days of the Soviet Union, through the agreement to settle and reschedule debts in 2005, all the way to Moscow entering the war alongside Damascus and its allies.

In 2015, and the subsequent signing of cooperation agreements and memoranda of understanding between the two countries.

Perhaps the image of trade exchange today is the most expressive of this reality, as Russia is absent from the list of the twenty most important countries to which exports of the Syrian private sector are heading, according to the data of the Ministry of Economy and Foreign Trade for the years 2018 and 2019.

Russia’s position as an exporting country to Syria declined from second place in 2018 to fourth place in 2019, and the reason is not that other countries such as China and India increased the value of their exports to Syria in 2019, but rather because Russian exports to Syria It decreased from about 240.8 million euros in 2018 to about 171.9 million euros last year.

On the other hand, the Russian product is also not popular inside Syria, due to low and lack of Russian Marketing. 

Thus, economic relations remain on another level affected by the consequences of the Syrian crisis, such as Damascus’ import of wheat and other products and commodities, while the Syrian capital does not seem interested in what Russia produces.

What attracting the Russian private sector towards the Syrian market doesn’t seem currently among the priorities of the Syrian private sector for various reasons, the most important of which is the quality of Russian products. 

On the other hand, the Syrian suppliers, unlike their Turkish counterparts, are not active in exporting the country’s agricultural products to Russia.

For these and other reasons, timid attempts were recorded during the past years to network between private sector activities in both countries, such as organizing visits to representatives of some private companies and re-forming the joint Syrian-Russian Business Council, but the indications of these steps are still not encouraging.

However, the approach has changed, as Russia wants to penetrate the Syrian economic situation after its security and military presence has stabilized, by proving its presence within the circle of mutual economic interests, and creating a new business class linked to Russian interests.

The Russian economic presence accompanying the military support was concentrated mostly in the oil sector, which gave the impression that Russian companies are only interested in acquiring major investments in the country.

An impression reinforced by two indicators:

The first is the absence of other large Russian investments in sectors necessary during the phase of Western sanctions (food, manufacturing and other industries). 

The second is the absence of any Russian move to alleviate the economic hardship that Syria is going through as a result of Western sanctions.

Even the operation of a Russian company to invest in the port of Tartus, represented in developing its infrastructure by pumping 50 million dollars in the first four years and working to remove it from the sanctions circle and reactivate it on the map of the Middle East transit trade, has not achieved its desired goal yet.

The Russian position turns into something like a popular disappointment in light of the successive crises in securing oil derivatives without any interference from Moscow, despite the fact that the latter is one of the largest oil and gas producers in the world, and it has – paradoxically – huge contracts with the Syrian Ministry of Oil.

In conclusion, the alliance between Moscow and Damascus has pushed for investments in strategic commodities such as oil or phosphate exploration, or the investment of the port of Tartus for military rather than economic considerations.

However, there are those who believe that it is still “too early to evaluate the results of the contracts signed with Russian companies in the oil sector,” according to an oil expert who preferred not to be named.

In the midst of the uncertainty surrounding the future of the economic relationship that the two countries seek, the recent visit of the Russian delegation headed by Deputy Prime Minister Yuri Borisov and the membership of Foreign Minister Sergey Lavrov came to Moscow to redeem its investment “eclecticism” and expand the circle of its interest and economic cooperation with Damascus, and that by entering into negotiations with the Syrian government to put the final touches on a number of various economic projects, it was said that there are 50 projects distributed sectorally and geographically, through which the Russian government hopes to recover its debts and help its ally to face US sanctions, based on the rule that has become constant among the “allies”

What has been achieved militarily must not be touched from the economic gate.

This is what made Damascus seem comfortable and optimistic about the upcoming stage of economic cooperation, in contrast to what some Western analyzes went to, which saw that the Russian economic step depends on a Syrian political one.