The Syrian opposition during a rally marking the 12th anniversary of their uprising against Damascus. AFP
The Syrian opposition during a rally marking the 12th anniversary of their uprising against Damascus. AFP
The Syrian opposition during a rally marking the 12th anniversary of their uprising against Damascus. AFP
The Syrian opposition during a rally marking the 12th anniversary of their uprising against Damascus. AFP


There is movement on Syria, but the direction remains unclear


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April 02, 2023

On Saturday, Russia assumed the UN Security Council presidency, which is rotated in alphabetical order among its members every month. Moscow takes over at a time when it is primarily focused on the war in Ukraine and its conflict with the West. Since 2011, however, the Syrian civil war has been a major Russian concern at the Security Council, where it has vetoed resolutions unfavourable to itself, sometimes paralysing the apex body in the process.

Over the past year, Moscow had outsourced its support for the Assad regime to Iran, with full consent from Damascus. Today, it appears that Russia seeks to restore its direct involvement in Syria, not just to maintain its military bases there, but also as part of its effort to strengthen ties to Turkey, challenge US objectives in the region, and build on recent overtures made by some Arab states towards Damascus.

Questions arise, however, as to the reasons and objectives for international engagement with Damascus at this stage; how countries such as Turkey and the US are thinking about Syria; and how all this affects smaller neighbours such as Lebanon, which hosts more than 1 million Syrian refugees.

In the coming week, the deputy foreign ministers of Russia, Turkey, Iran and Syria will meet in Moscow to agree on a deal that among others things would ultimately strengthen the Assad regime. Meanwhile, Turkish President Recep Tayyip Erdogan has invited Russian President Vladimir Putin to attend the opening ceremony of Turkey’s first nuclear reactor, built by Russia’s Rosatom, on April 27. The two leaders continue to discuss various issues, including Syria.

Russian President Vladimir Putin speaks with Syrian President Bashar Al Assad in Moscow last month. EPA
Russian President Vladimir Putin speaks with Syrian President Bashar Al Assad in Moscow last month. EPA
The war in Ukraine has benefited Damascus, with Moscow in dire need for successes elsewhere that can distract from its failures in Eastern Europe

I am told that Mr Erdogan may be close to acknowledging the Assad regime’s survival. If that is indeed the case, dealing with Damascus and accepting Russian conditions in Syria would be necessary for Mr Erdogan ahead of the Turkish presidential election in May.

The Assad regime has received support and goodwill from the region following the earthquake that struck Syria and Turkey in February. The tragedy seems to have further softened the Erdogan government’s stance towards a regime with which it has had serious differences for more than a decade.

The war in Ukraine has also benefited Damascus, with Moscow in dire need for successes elsewhere that can distract from its failures in Eastern Europe. Its leadership, it seems, needs to be seen to preserve Russia’s foreign interests, with Syria geopolitically and Iran strategically.

During Iranian Foreign Minister Hossein Amirabdollahian’s recent visit to Moscow, both countries agreed to complete their comprehensive strategic pact. Russian Foreign Minister Sergey Lavrov is expected to visit Tehran soon to sign the agreement. This isn’t surprising, given that Russia and Iran are allied militarily in both Syria and Ukraine.

But there are questions about Russian-Israeli relations, as Israel steps up its raids in the Damascus Governorate and other regions, targeting Syrian and Iranian military sites.

Meanwhile, the Biden administration’s policies on Syria appear incoherent. Sometimes, it issues threats to the Assad regime and reaffirms its objections to the latter’s rehabilitation. Other times, it issues temporary waivers for the Caesar Act imposed on Syria that would allow the regime to benefit from electricity projects, for example, believing that this would help Lebanon when in actuality it helps Damascus.

Amid all this, several Arab countries are gradually improving relations with the Assad regime.

Since suspending Syria in 2011, the Arab League is divided. Some member states have maintained distance from the regime, while others have initiated rapprochement with it, particularly in the aftermath of the earthquake, including by sending much-needed aid to the affected areas.

Syrian refugees at an informal tented settlement in Akkar, Lebanon in 2021. Reuters
Syrian refugees at an informal tented settlement in Akkar, Lebanon in 2021. Reuters

Confidence-building measures are no doubt important, and boycotting the Assad regime does not serve Syria’s opposition groups. But if the ultimate objective is to restore Syria’s unity and territorial integrity as a means to revive the country, then myriad challenges remain before this can be achieved.

The Assad regime will need to reach out to the many opposition groups and eventually agree to a new constitution. Also important is revitalising Syria’s relations with Lebanon, key to which is Damascus ending the violation of Lebanon’s sovereignty by putting a stop to the smuggling of various contraband into that country, and the obstruction of the return of Syrian refugees from it.

This is where the Biden administration can play a constructive role. Washington’s hand was evident in last year's demarcation of the maritime borders between Lebanon and Israel to allow exploration for oil and gas. It can do something similar on the Lebanese-Syrian border, which, of course, will also require Beirut’s political class to co-operate in good faith.

The UN appears largely absent from the Syrian theatre, having played no significant role there for years through its special representative. A divided Security Council, now with Russia at its helm, has not helped either.

For a truly united, stable and peaceful Syria to re-emerge, all the stakeholders involved, including the regional powers, need to show prudence as well as clarity on their policies vis-a-vis the country, and present a roadmap for their good-faith efforts in the broader Levant region.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: April 02, 2023, 2:11 PM