Russian President Vladimir Putin recently floated a proposal to Israeli Prime Minister Benjamin Netanyahu, envisioning a reduced Iranian military footprint in Syria – where Russia, Israel and the US all have interests – in return for the US scaling back its ramped-up sanctions on Tehran. The offer might reflect growing Russian-Iranian competition as the two scramble to reap the monetary benefits of Syria’s key economic sectors and of reconstruction, estimated to cost more than $250 billion. While the Trump administration considers the policy dilemma the proposal presents, Moscow-Tehran tensions over the future of Syria are a worthwhile dynamic for Washington to exploit.
Simmering under the surface alliance between Syrian President Bashar Al Assad’s top backers, Russia and Iran, is a ferocious competition for contracts to rebuild Syria’s devastated infrastructure and to dominate its extractive industries. The benefits go well beyond a financial reward for Russia’s oligarchs and Iran’s Revolutionary Guard cronies: the winner could have significant influence over the levers of the Syrian state and by extension, much of the Middle East, for decades to come.
Iran would like to replicate its domination of neighbouring Iraq’s economic sectors. Its military intervention and proxies averted disaster for Mr Al Assad and, until recently, it enjoyed preferential treatment in Syria’s economy as it attempted to recoup the estimated $6 billion per year it spent propping up the regime. Unsurprisingly, since 2014, the Syrian government has consistently issued tenders for the exclusive bidding of Iranian companies at a rate of one to three per month. The past few years also witnessed sweeping memorandums of understanding granting Iran rights in the lucrative telecommunications, phosphates and agricultural industries.
This summer, however, that well of exclusive contracts appears to have dried up as Moscow aggressively pursued contracts in the same sectors, notably agricultural equipment, phosphates extraction and energy facility repair. The phosphates in particular, worth in excess of $200 million a year, could be a cash cow for Russia. Prior to the war, Syria had supplied one-fifth of European phosphate imports, which were revived in December 2017.
Moscow seems determined to secure those contracts at Tehran's expense. In February, Russian officials raised concerns about Iranian investment and alluded to a strategy of siphoning trade and reconstruction deals away from Tehran. Where Iran has secured memorandums of understanding that failed to come to fruition, Russia has signed contracts and started operations in the lucrative mining and energy sectors. Syrian businessmen have told the Financial Times that regime officials are stalling Iranian requests with paperwork and discussions in the hopes of "wait[ing] them out".
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So why is Mr Al Assad reportedly spurning his long-time partner in Tehran in favour of Mr Putin? After all, Iran brought in tens of thousands of Shia militants to prop up the regime during the seven long years of war. The success of those troops was bolstered by Russian airstrikes but Iran provided the desperately needed ground forces.
Mr Al Assad seems to have concluded that Moscow is now the more useful economic and diplomatic partner after major offensive military operations have ended. Russia’s economy is nearly three times the size of Iran’s and overall, endures less incapacitating sanctions from the West than its rival. Although Tehran and Damascus have posited plans for joint bank accounts to circumvent western sanctions, it remains unclear whether they will materialise or work. Furthermore, Russian companies have better technology to offer the Syrians.
Politically, Mr Putin has consistently defended Syria on the world stage and spent months attempting to woo wealthy Gulf Arab and European countries to commit much-needed reconstruction funds. Russia is the only ally Mr Al Assad has that can pressure the West to “normalise” his regime and bring Syria back into the international fold, away from the pariah status that Iran suffers.
The US could have an important role to play in this growing Russian-Iranian dynamic. Mr Putin’s proposal would see Iran diminish its military presence in Syria in exchange for a reduction in the sanctions the US ramped up after withdrawing from the 2015 nuclear deal earlier in the year. While it is not clear what, if anything, the Russian contribution would be, the proposal fulfills two key Russian objectives, simultaneously diminishing Iranian influence in western Syria while making it easier for Russian companies to invest in Iran.
The Putin proposal, which senior US officials have privately confirmed but not publicly responded to, presents the Trump administration with a dilemma. Accepting it and giving the Iranian government breathing space just as sanctions begin to bite detracts from their priorities of renegotiating the nuclear deal and ending Iranian ballistic missile development. Rejecting it means foregoing an opportunity to work in tandem with Russia and Israel to roll back Iran’s outsized regional presence.
These are difficult choices but ultimately, if Russia wants to outbid Iran in securing a leading role in post-war Syria and in projecting influence in the Middle East, this must not be achieved at US expense or a change in US foreign policy priorities. The Trump administration would do well to reject Mr Putin’s proposal and exercise strategic patience, waiting as sanctions take a greater toll on the Iranian economy and as Russia risks further military entanglements in Syria.
Ultimately, Mr Al Assad’s bickering backers won him the war but cannot secure him the peace. Russia and Iran cannot stabilise Syria and secure hundreds of billions in reconstruction funds without the backing of the US, together with its European and Arab allies. So if Mr Putin wants a deal, he will probably have to forget about sanctions relief for Tehran and focus instead on a genuine political transition in Syria.
Firas Maksad is director of the Arabia Foundation and an adjunct professor at George Washington University’s Elliott School for International Affairs. Sarah Lord, a research associate at Arabia Foundation, also contributed to this column