Time to rebuild Syria?

The UN Special Envoy for Syria, Staffan de Mistura, holds a welcome ceremony for delegates attending the Syrian peace talks at the Palais des Nations in Geneva, Switzerland, on February 23 (XINHUA)

Since the Syrian ceasefire agreement took effect at the end of last year, peace talks, involving representatives from the UN, Iran, Russia, Jordan, Turkey and the United States, have gradually made progress.

The peace talks have signaled to the outside world the prospect of the Syrian situation easing and helped create a positive atmosphere for Syria's reconstruction. The Syrian Government has recently expressed its attitude to nation building on many occasions. In a public speech, Syrian President Bashar al-Assad said there will be no place for the EU to participate in the reconstruction unless the EU changes its policy on the Middle East. Later, in an interview with Syrian TV, Economy and Foreign Trade Minister Adib Mayaleh said "to be allowed to take part in the process of Syrian reconstruction, these countries [that supported illegal armed groups on Syrian territory] will have to apologize to the Syrian people and publicly admit they have made a mistake," while stating that countries such as Russia and Iran have priority.

Syrian rebuilding is a castle in the sky no longer. After the Syrian Government army retook Aleppo last December, it became foreseeable and inevitable that the Syrian Government would gradually regain control of the large urban areas in the west of the country and force the opposition out into the western rural areas and the unpopulated region in the east. Furthermore, the military victory has endowed the Assad administration with a great advantage in negotiations with opposition forces and, to a certain degree, has helped reduce the intensity of national conflict. Against the backdrop of the situation easing, it has become possible for the Syrian Government to implement its rebuilding blueprint on the territory which is back under its control.

Unclear prospects

Nevertheless, Syria's efforts for rebuilding inevitably face major challenges. The still unclear prospects for the Syrian situation, the fragile economic environment and possible external interference are all potential threats to the reconstruction process.

After the second round of Astana peace talks, Kazakh state media reported that the new dialogue hadn't helped much to narrow the differences between the Syrian Government and the opposition groups. The two sides refused to have face-to-face talks, and representatives of the Syrian opposition declared that the latest talks had not achieved any concrete outcome. The Syrian Government, meanwhile, accused the opposition of arriving late, which the government said showed the opposition's negative attitude toward the talks. The restarted Geneva peace talks also encountered some difficulties: While they were underway, suicide bombers carried out an attack inside fortified government compounds in the major Syrian city of Homs, and this became another focus of argument between the Syrian Government and opposition forces in Geneva. The unstable situation has thus cast a shadow over the prospects for the peace talks.

Before the outbreak of the Syrian civil war, oil exploitation and agriculture were the two major pillars of Syria's economy, with oil and agricultural produce as the country's major exports. Syria's domestic infrastructure system is relatively complete, with mid- to large-scale land, sea and air transportation networks. However, the Syrian crisis has almost destroyed the national economy. From 2006 to 2010, Syria's average annual growth rate remained around 5 percent. But in 2012 and 2013, Syria's GDP plummeted by 22.4 percent and 24.8 percent respectively, which means the country's economy contracted over 40 percent in just two years. It also faces severe inflation, currency devaluation and loss of foreign currency reserves.

In 2011, Syria's farming produce exports amounted to $2.3 billion, accounting for 22 percent of the country's total exports. The civil war led to a stagnation of agriculture exports through a large loss of agricultural workers and severe damage to farmland and infrastructure. Syria's wheat yield has declined from 4.8 million tons before the war in 2011 to 2.02 million tons in 2014, while its cotton yield declined from 800,000 tons to 160,000 tons over the same period. In addition to making up for the population loss caused by the war, restoring Syria's agricultural industry will be a painstaking process.

Syria's oil production has also declined sharply. Daily output was 9,000 barrels in 2014, just 2 percent of the level before the war. Though the Syrian Government has now recovered some oil fields, the country's oil output barely stands at 32,000 barrels per day, about 10 percent of the pre-conflict production level. As the war has severely damaged Syria's oil and gas exploitation industry, including the related storage and transportation facilities, it is nearly impossible to restore them in a short period of time. At present, only one gas field is under the control of the Syrian Government. Taking into account the U.S. and EU sanctions on Syria as well as its shortage of equipment, the country will find re-establishing its oil production capacity very challenging.

Currently, economic activity in Syria's coastal area has recovered to a certain extent. Northwest Syria's agricultural region is largely under the control of the government.

The Economist Intelligence Unit, the research and analysis division of The Economist Group, has forecasted that Syria's GDP growth in 2017 may reach 3.1 percent and its economy could sustain a mild recovery provided that the country's security situation remains stable.

A potential spanner in the works

Undoubtedly, external forces, the most uncertain factor threatening the country's economic recovery and rebuilding, will continue to play a vital role in the development of the Syrian crisis.

On the one hand, two major, intertwined conflicts comprise the Syrian crisis: the conflict between the Syrian Government and the opposition forces; and the conflict between anti-terrorist forces and terrorist groups such as ISIS. Syria's neighbors such as Russia, Iran and Turkey have already become heavily involved in the fight. Now that Donald Trump has taken office, Washington is also making new plans to combat ISIS in Syria. The outside world is paying close attention to whether or not the Trump administration will send ground forces to the northern part of Syria. If this comes to pass, it will inevitably trigger new changes for the region and mess up Syria's improving situation. On the other hand, the rebuilding will become another gaming ground among big powers. Syria used to be very attractive for foreign investment before the civil war due to its favorable geographical position. Considering its current financial condition, the nation's rebuilding cannot dispense with foreign investment—from Russia and Iran in particular at this point.

The war-torn nation has recently strengthened its economic cooperation with Iran by signing multiple economic and trade cooperation deals involving agriculture, power and oil and gas storage and transportation during Syrian Prime Minister Imad Khamis's Teheran trip in January. Iran also promised to provide Syria with new loans and oil import quotas. Syria's move to enhance cooperation with Iran also shows its high reliance on foreign assistance for economic recovery and national rebuilding. The World Bank estimates that rebuilding Syria requires more than $200 billion. As the assistance from Russia and Iran is far from enough, the Syrian Government will have to seek more foreign investment and economic aid from further afield.

The author is an associate professor at the University of International Relations