*Published in Partnership with the LSE’s Conflict Research Programme.

Summary by the LSE report editors of the presentation given by Professor Raymond Hinnebusch at the London School of Economics Political Economy and Governance in Syria 2018 conference.

To better understand the reconstruction process in Syria, we must position it within the larger context in which it has been wrought. Namely, that of the conflict and the way in which it restructured both the economy and the regime, in part by proving the latter’s resilience. This has had far reaching implications on reconstruction which can, through its depiction within the context of conflict, be seen as a continuation of the power struggle, albeit through other means. This has deterred reconstruction from functioning as a form of restorative justice and placed significant risks on the process.

Syria’s war economy has seen massive capital flight, checkpoint taxation, increased dependency, a growing economy of looting, extortion and sieges. Under these conditions, new actors have thrived. A conflict society reflects the lack of social cohesion. War has been civilianised through the recruitment of a large number of the civilian population into militias. Sectarianism has been instrumentalised on both sides and deepened by the “security dilemma” of political polarisations along sectarian lines. The regime is remarkably resilient. It adapted to the conflict by adopting more violent, exclusionary, neo-patronage methods. As the tide turns, it undertakes to claw back lost territory from the opposition.

Reconstruction, thus, has consolidated the regime’s position as a result of three main factors: The consolidation of crony capitalists through private-public partnerships for reconstruction; the redistribution of control over strategic areas through the introduction of new property laws; and the creation of secure zones, to be redeveloped as upscale housing for regime loyalists, which will also recentralise power. Decentralisation will also have implications on the reconstruction process. Since 2011, state control has largely contracted. The Syrian government lost control over some areas to the opposition, which subsequently created their own governance bodies and mechanisms. Not withstanding, centralised state control over the regime’s own territories has also been fragmented and replaced with local governance bodies due to the inability of the centralised state, economically, politically and administratively, to exercise power. This leads to a patchwork of power-sharing arrangements.

Reconstruction will also be structured and curtailed by the geopolitical and geo-economic powers with influence in Syria. Geo-political powers, such as the Iranian-Russian coalition, have superior political advantage but fewer economic resources. And those that have geo-economic power lack the political leverage. The phenomenon of foreign interference will intensify following the defeat of IS, in a race to fill the power vacuum in the areas that were under IS control. Overlapping spheres of influence between foreign powers will create insecurity and partition, effectively deterring any form of integrated reconstruction effort and hardening ethno-sectarian fault-lines.

The role of the US is more of that of a spoiler. The US can’t win the political-military battle but is in a position to use geo-economics to obstruct reconstruction. However, many new war profiteers have thrived as a direct and indirect result of US sanctions, through sanctions busting, smuggling and so on.

Russia has strong strategic stakes and is well situated to both push reconstruction ahead and to act as a broker between regional actors and warring factions on the ground. Russia prioritises the reconstruction of state institutions, particularly the army and the security- intelligence apparatus. It does this to impose a modicum of order and curb, disband or incorporate the lawlessness of militias which are detrimental to political security and economic recovery. Its aim is not the rule of law but rule by law, essential to the kind of stability and predictability needed for economic revival and investment. Russia’s resources are limited. The companies most prepared to invest in the conflict are energy companies and others run directly by the oligarchs. Russia’s diplomacy is geared towards attracting other investors via some minimally acceptable political settlement that would enable the return of some refugees, enough to entice funding support for this from European states and international organisations.

Iran’s stake is geo-political. Its presence in Syria is mainly to deter Israel and keep its Saudi rivals out. Constrained by US sanctions on its own economy, Iran is attempting to recoup some of its previous investments and loans to the Syrian regime by ensuring the regime’s survival through reconstruction concessions. The Revolutionary Guards, who own the largest construction firms in Iran, have signed major economic reconstruction contracts with the Syrian government.

Turkey’s stake ends with the Kurdish people. To that end, it has occupied predominantly Kurdish areas in Northern Syria, trained and recruited local police forces, and set up local councils which operate vital services and schools (where the Turkish language is taught). Turkish companies supply electricity and services to large swathes of areas along and beyond its borders. More than 100,000 Syrians, residing in Syria, currently receive their salaries from the Turkish government. Going back to the previous point made concerning the fragmentation of reconstruction, Turkey here epitomises the kind of politicisation and conditions that affect reconstruction.

To conclude, there are numerous impediments to the reconstruction of Syria’s economy. Those (both governments and organisations) willing to play a role in the reconstruction process should be wary not to further damage social cohesion, debilitate Syria’s sovereignty, reinforce war profiteers and the war economy, or consolidate the regime’s authoritarian structure. Governments with an interest in stabilising Syria and ensuring that the war is not reproduced should come together and wearily discuss how that can practically be achieved.