Syria Weekly: Will China fund post-war reconstruction?

Syria's Foreign Minister Walid Muallem visited China on Sunday to "strengthen bilateral relations" and seek a pledge from Beijing to contribute to post-war reconstruction. 

The talks were held in a spirit of friendship, but pro-regime media reported that the ultimate aim of the Syrian foreign minister was to follow up on previous pledges made by Beijing to invest in the country. 

Although no formal offers were made by Beijing to Syria, Muallem did return with 200 buses - but the lack of movement opens up the question of who will fund reconstruction in Syria? 

Who funds?

Key regime backers Iran and Russia have both been hit hard by US sanctions. Although they are likely to maintain a military and economic presence in Syria, neither will be willing to contribute to post-war reconstruction. 

Both have carved out strong business interests in the country but their ultimate hopes are for the EU to pay for the reconstruction of Syria, which is estimated to cost anywhere between $100 and $200 billion.

If the EU were to agree to pour billions into Syria for this purpose, then Russian and Iranian construction companies would likely be the biggest beneficiaries. Although the EU has so far ruled out bankrolling the reconstruction of Syria unless there is a move towards political pluralism by Damascus - something the regime is dead against - growing apathy in Europe towards the Syria war and rising populism has made rapprochement with Assad a more likely scenario. 

Bachar El-Halabi, Middle East Researcher at the Asfari Institute at the American University of Beirut (AUB), said an EU agreement to pay for reconstruction without guarantee of political reform would be disastrous for the country and in particular the millions of Syrians living outside the country, who are mostly from towns and cities badly damaged from regime assaults on opposition areas. 

"It is quite obvious that pouring in cash will legitimise the Assad regime, prop up its crony networks and will make it impossible to reach a solution that will ensure the return of refugees to their homeland… Assad made it clear during a speech in February that he doesn't want the refugees back, when he talked about Syrian society being more homogenous now," Halabi told The New Arab.

"The balance of power has tilted towards Assad on the ground, the reconstruction and normalisation of the regime leading to its reconnection to global financial markets remains the best bet to extract concessions from Assad." 

Russia's Vladimir Putin has sought to use the sensitive issue of Syrian refugees as a bargaining chip in negotiations with the EU, with hundreds of thousands now living in Europe and millions more on its borders in Turkey. 

Europe

Growing populist sentiments and the rise in right-wing political groups in Europe - driven partly by Russia-linked alt-right media - has seen Putin reportedly offer to facilitate the return of refugees if the EU coughs up the cash to "stabilise" post-war Syria. 

"So far, the Americans and Europeans have been strict on the issue. No western taxpayers' money will be poured into Syria to legitimise the Assad regime before reaching a political solution to the conflict," Halabi said. 

"However, it's important to keep an eye on what could be an American-Israeli-Russian understanding whereby Israel and the US offer Russia incentives in a bid to curb Iran's influence in Syria."

Although Russia is likely to continue to back Iran while opposition groups in Idlib remain active, there has reportedly been some tensions on business interests in Syria, while there are also rumours of a military spit between pro-Russia Bashar and his pro-Iran brother Maher.

The US and Israel will likely be keen to exploit any disagreements between Iran and Russia, while tough sanctions on Tehran could make Tehran a less than reliable ally for Moscow in the future. 

Iran and Russia are not in the game to pledge money for the Syrian regime and the reconstruction process - Bachar El-Halabi, Middle East Researcher at the Asfari Institute at the American University of Beirut

US National Security Adviser John Bolton, Israeli National Security Adviser Meir Ben-Shabbat and Russian Secretary of the Security Council Nikolai Patrushev will meet in Jerusalem in June, Halabi added, which will likely centre on the Iranian presence in Syria.

Cashing in 

Russia and Iran have already managed to extract several concessions from the regime, meaning that a large section of money being generated in Syria is going straight out to Tehran and Moscow. Iran's elite military outfit-cum-business conglomerate, the Revolutionary Guards, has already carved out key security and economic interests in the country, including the port of Latakia. 

Tehran has also been given rights to establish a mobile phone network in Syria and is in the process of purchasing key agricultural and urban lands in the country.

Syria's controversial Law 10, which when enacted in the coming months, would allow Tehran, through the regime, to confiscate properties of Syrians currently unable or afraid to return to. Analysts say Iran is seeking to open malls and other commercial properties abroad to help the Revolutionary Guards divest its business interests that are vulnerable to US sanctions. 

Russia meanwhile has acquired a 49-year-lease for Tartous port for transport and economic use, while Stroytransgaz has been given a contract to mine phosphate near Palmyra, territory which Moscow helped the Syrian regime recapture from the Islamic State group. 

"Iran and Russia are not in the game to pledge money for the Syrian regime and the reconstruction process. A mere observation of recent developments show us that both countries are eyeing contracts for their own, while stripping the Syrian regime of its own income," Halabi added.

China's moment

With Iran and Russia in no position to pay for the reconstruction and the EU so-far resisting Russian pressure, then China as a key contender for post-war reconstruction in Syria, along with Gulf countries.

Beijing is likely to be a lender rather than a donor, Halabi said, and investment would likely go though Chinese public private partnerships (PPP) and state-owned enterprises rather than being funnelled through the Syrian regime and its state-linked businesses. Such a scenario would benefit China rather than Syria, Halabi said, and frustrate the regime's efforts to be seen as taking charge of the country and providing for the people.

"First of all, it is very important to differentiate between China being a donor or China being an investor and this is where the Syrian regime stands to face a real dilemma. Indeed, as mentioned at the Beijing conference, media, and even confirmed personally to me by the Chinese ambassador in Beirut,Syria is an important piece of China's BRI (Belt and Road Initiative) puzzle," he added.

"The challenge the Syrian regime faces in that the Chinese investment model will prove to be counterproductive for the regime plans to regain its influence and legitimacy across the Syrian territory. While the Assad regime is looking for the cash to be funneled through it, Beijing typically funds infrastructure abroad through loans, usually requiring Chinese companies to undertake the construction." 

As witnessed in other parts of the world, Chinese companies will likely step-up and invest in Syria, but extracting wealth and clamping down on workers' rights will not heal the deep scars of the country.

Paul McLoughlin is a journalist at The New Arab. 

Syria Weekly is a new, regular feature from The New Arab.