Irregular: Syria's New Dawn
Opportunities and risks in a new geopolitical environment.
Hello from Sydney,
In today’s Irregular, I want to share some insights about a topic that has – unsurprisingly – been demanding the attention of many of Geopolitical Strategy’s clients this past week. And that is the fall of Bashar al-Assad and rise of Hay’at Tahrir al-Sham (HTS) to power in Damascus and what that means for Syria, the Middle East and the regional business environment.
The transition in Syria is undoubtedly a watershed moment in the Middle East. That HTS, a relatively small rebel group of around 10,000 members, managed to rather bloodlessly remove Assad – a ruthless dictator allied with Russia and Iran who had run Syria for over 20 years – was remarkable and, to almost all observers, unexpected. That the Syrian civil war may have finally ended, largely through the support of Turkey, is of enormous significance to Syrians and the region. And that a large and geostrategically important country with over 25 million people will now be run by a Sunni Muslim group previously affiliated with Al-Qaeda, and designated as a terrorist group by many governments, poses new and unique challenges to an already very complex and volatile region.
Devil you know
While few shed tears over Assad’s demise, many are skeptical that HTS coming to power is good news for Syria or the region. HTS has tried to present a moderate face, but people remember its governance in Idlib was hardly democratic. It may well prove to be a coalition-builder, but those who believe leopards don’t change their spots worry that Syria will soon be run by “Al-Qaeda in suits.” And many governments across the region fear HTS will install a hardline Islamist regime – a prospect that could call for local imitation or allow for the return of ISIS.
Whatever HTS’s intentions, gaining power is the “easy part”. Its task ahead is monumental – and a much greater challenge than running Idlib. Even with all the best intentions in the world, the new regime will have to govern a fractured, war-ravaged country, forge coalitions among deeply divided factions, and navigate the profound skepticism of both domestic and international actors. Countries transitioning from dictatorial rule and civil war to “something else” rarely do so smoothly, quickly or without violence. And in a country full of weapons, poverty and calls for vengeance, there are many armed groups beyond HTS that will compete for their slice of Assad’s former power. If history teaches us one thing, it’s that revolutions often devour their children.
Nevertheless, for Syrians, exhausted by over a decade of civil war, there appears to be a sense of relief and of cautious optimism. Assad had ruled with an iron fist, began a civil war of extraordinary destruction to preserve his family’s rule, and has now left a legacy of poverty, chaos and despair. The fact that many Syrians – the people who know their country best – are beginning to return home suggests they believe the country has a more promising future today than it did last week under Assad. Many, it seems, would – for now, at least – prefer to live with the devil they don’t know than the devil they did, or in foreign countries as refugees.
Regional implications
The implications of Assad’s fall are already reverberating beyond Syria’s borders.
For Iran, this is a seismic loss. Assad was a linchpin of Tehran’s regional strategy, and his removal isolates the Islamic Republic both geographically and politically. Tehran now faces a dilemma: double down on its regional ambitions or seek rapprochement to salvage its dwindling influence, significantly diminished in the last year by the devastation of its proxies Hamas and Hezbollah. And the Iranian leadership appears spooked: it seems no coincidence that schools and universities were closed on account of “ pollution” the same week that Tehran was digesting the news.
For Turkey, to Syria’s north, Assad’s fall represents the culmination of a long policy of opposition. Ankara now finds itself in a position of considerable influence, having backed HTS’s ascent – at least for as long as HTS pulls the strings. Yet this victory is not without complications. Tensions with Syria’s Kurdish factions remain a volatile issue. And Turkey must navigate the delicate balance between its regional ambitions and its strained relationship with NATO, several of whose members will not be impressed with Turkey’s role in aiding and abetting the coup just as Assad was coming in from the cold and a resolution on Lebanon and Gaza was in sight.
In the Gulf, the reaction has been cautiously optimistic. Both Saudi Arabia and the UAE have signaled a willingness to invest in Syria’s reconstruction, provided HTS demonstrates an ability to govern inclusively. Their ultimate goal is stability, but they are acutely aware of the risks posed by a potentially resurgent Islamist regime. The Gulf’s approach will be transactional, conditional, and, above all, pragmatic. And they will be more concerned with ensuring Syria becomes stable, rather than democratic.
For Israel, Assad’s fall represents both opportunity and challenge. Unlikely to engage directly with HTS, Israel will continue its policy of preemptive strikes to secure its interests. While Netanyahu has claimed its capture of additional lands in the Golan Heights will be permanent, it may ultimately use this as leverage as part of a broader Middle East deal. Either way, Israel will be pleased at Iran’s loss of influence – including its Syrian landbridge (via Iraq) to arm Hezbollah in Lebanon – but even more so interested in having an effective buffer in place. For Israel, things could go wrong very easily: for example, if HTS forms an Islamist regime it could become hostile towards Israel or if the civil war re-erupts there could be a return to the growth of terrorism and groups like ISIS.
The global players
Russia, too, faces a significant reckoning. Assad’s fall is a humiliation for Moscow, undermining years of investment and strategy. But Russia is nothing if not pragmatic. Putin’s harboring of Assad does not signal that Russia supports whatever remains of his regime in Syria but that Russia is never a fair weather friend – if Russia supports you, you will be protected, an important message to Russia’s other autocratic friends. But Moscow’s top priority will be preserving its Mediterranean foothold and so it will engage with HTS, however distasteful, to maintain its naval and air force bases in Tartus, essential to countering NATO influence and projecting power in the Middle East and North Africa. The alternative is Libya, where some Russian assets have been heading, but which has Syria-like characteristics to say the least.
The wildcard, in some ways, is the United States. During the remainder of the transition period, the Biden administration will likely adopt a “wait and see” approach, limiting itself to commenting on events and any potential authoritarian turn or outbreak of violence. Compared to Biden, president-elect Trump – who has a strong view that Syria is not America’s problem – will likely be less perturbed by whatever form of governance HTS imposes, more supportive of Israeli strikes across the country, and may even move to remove the last 900 or so remaining American troops on the ground (there to prevent ISIS regrouping) and reduce military aid to the Kurds – although removing sanctions on doing business in Syria and removing HTS’s listing as a terrorist organisation are unlikely to occur swiftly.
Either way, the overall geopolitical situation has changed significantly. Turkey has gained influence. Russia faces risks to its military bases and has lost an ally. Iran has lost a friendly government and a core element of its forward defence strategy. And the Trump administration will likely vacate the field. All of which have significant business implications.
Business implications
As with other countries (potentially) transitioning out of civil war, there are major opportunities for foreign businesses looking for high returns although ongoing instability, a fragile political environment and ongoing sanctions mean that they will come with equally high risks .
Perhaps the greatest opportunity for foreign investors arises from reconstruction. The civil war has left vast devastation across the countries with countries like Aleppo, Homs and Raqqa especially needing extensive rebuilding. The scale of redevelopment – housing, schools, hospitals and transport infrastructure – is staggering, with some estimates saying costs could exceed $250 billion. The Gulf States, particularly the UAE, have signaled their willingness to fund large-scale projects. And much of the actual reconstruction will likely be done by Turkish firms owing to their experience, risk tolerance and support from the government, which has good ties with HTS and will keen to secure commercial returns for its support.
Beyond construction, Syria’s agricultural sector holds potential as a driver of local economies and regional trade networks. Pre-war Syria was a major exporter of olive oil, cotton, fruits and wheat, with the agricultural sector employing 17% of the labour force and generating 21% of GDP. Since then, however, the sector has been devastated, with Syria becoming a net importer of wheat and heavily reliant on humanitarian aid. Should political and economic stability return, however, there may not only be major growth opportunities in agriculture but also growing demand for all sorts of consumer goods and services.
Risks of doing business in Syria, however, are profound. HTS’s capacity to govern remains untested, and its failure to form effective coalitions could plunge Syria back into conflict. Sunni Arab states, like Egypt, remain deeply concerned about the potential for HTS to inspire Islamist movements elsewhere. Western hesitation, too, poses a challenge – without clear diplomatic recognition, HTS may struggle to secure the funding and legitimacy needed to stabilise Syria, leaving it vulnerable to renewed instability. And until it proves itself, the United States and Europe will likely leave their extensive sanctions in place, which will limit Western financing, investment and trade – although many reconstruction and agricultural investments could potentially be allowed with permits and non-Western firms will likely step in.
The situation, above all, remains volatile. For this reason, we are working with our clients to map, monitor, and manage their geopolitical risks – and, equally importantly, identify trade and investment opportunities. If your organisation is navigating challenges in Syria or the broader region, we would be delighted to discuss how our services can support you.
Best regards,
Damien Bruckard
CEO, Geopolitical Strategy
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