Let us analyze Iran’s current demographics, which – as happens everywhere – is at the basis of the labor force complexion and of the public investment volume, as well as productivity and private spending.
During the first years of Islamic revolution, soon after the advent of the regime, there was a 2.5 million increase in births. In the 2000s, the annual increase of newborns was only one million approximately, while currently there is a phase of further reduction in births.
There is also migration – another decisive factor in demographics – which, as already noted, is always at the basis of every country’s economic structure.
According to the 2016 population survey, the latest effective one carried out by the ayatollah regime, as many as 1.8 million Iranians -i.e. 2.2% of the current 82.407 million people – are of foreign origin.
Hence the presence of a wide share of young or very young people.
As can be easily inferred, this leads to a high rate of unemployment and youth unemployment, in particular.
As often happened in the past, there is also the regimes’ tendency to push the excess of working age population out of the country, also by means of war.
Considering the official data of September-October 2018, in the Shiite Islamic Republic of Iran the average unemployment rate is 12.2%.
According to the latest data, however, women’s unemployment rate is already equal to 19.8%, while the unofficial statistics of real unemployment among young people alone was 28.40% in the first quarter of 2018, with regional peaks of 35% and even 38% in some peripheral areas.
Another secondary, but inevitable effect of youth unemployment is the brain drain, as a result of which every year 150,000-180,000 graduates leave Iran.
A hidden tax that deprives Iran of 50 billion tax revenue, in addition to the loss of public (and family) costs for higher education.
Nevertheless, after 2015 – the year of the JCPOA with P5 + 1, i.e. China, France, the Russian Federation, Great Britain and the United States, as well as Germany’s participation – there was a significant economic growth that, however, did not facilitate Iran’s access to Iranian capital and assets which had been frozen due to sanctions.
Iran’s total frozen assets are still between 100 and 124 billion US dollars, with approximately 50 billion dollars which have recently been refrozen in the United States alone.
Hence the sanction phase has been characterized by a real collapse of the Iranian economy.
From a GDP growing by a yearly 6% in 2010, in 2015 – exactly the year in which the JCPOA was signed – Iran certified a mere 1.5% GDP increase.
In 2016, as a result of the lifting of some sanctions against it, the GDP grew by 12.5% and by over 4% in 2017.
Hence a record growth in 2016 – due to the JCPOA -but later considerable growth rates were still recorded, certainly higher than the miserable growth rates of the European GDP in those same years.
Before the US unilateral withdrawal from the nuclear deal with Iran, international banks had also predicted a 4.8% increase of Iranian GDP in 2018.
The current rate is instead 1.8%.
Sanctions, especially those regarding currency, always reach the target.
Currently, however, the US unilateral sanctions do not excessively affect Iran’s military system, which is mainly based on domestic technologies and patents and does not fear to be significantly damaged by the embargo and sanctions against it.
Nevertheless, since the announcement of the US withdrawal from the nuclear deal last July, the value of the Iranian currency has halved. So far the riyal has even lost 80% of its value as against the dollar.
Moreover, due to some natural disasters, Iran is currently forced to import much food from abroad, just now that its currency is worth ever less.
Moreover, as always happens, the great devaluation has led to high inflation: currently the Iranian inflation rate is realistically about 24%, while the Iranian government reports a 10.2% rate.
Iran has still approximately 90 billion US dollars of reserves, with the extraction of 3.79 million barrels / day (data of June 2018), but production will certainly decrease, considering the new partial sanctions imposed by the USA.
To the delight of Saudi Arabia, above all, whose crude oil production has a direct inverse correlation with Iran’s.
At strategic and military levels, if Iran wants to organize a war action, its first step will be the Strait of Hormuz.
Over 30% of the maritime oil traffic transits through this waterway (i.e. 18.5 million barrels / day),considering that it is the most used route by all the Arab exporting countries.
Nevertheless, the Strait of Hormuz which, at its narrowest, has a width of 33 miles, is also the waterway used for most Iranian oil exports. This significantly limits the possibility of a generalized block of the Strait of Hormuz, not to mention the fact that the headquarters of the US Firth Fleet is at short distance from Manama, the capital of Bahrain.
Obviously the only relatively credible threat of blocking the Strait of Hormuz is enough to make the oil barrel price rise significantly – and therefore this is what really matters.
Hence there is a direct link between the pursuit of the Iranian natural strategic goals and the increasingly difficult situation in Iran, subject to new and certainly not negligible unilateral US sanctions.
The more Iran wants, the more it will be punished on the markets and in the international geopolitical system.
Both the current US sanctions of last November and those imposed before the JCPOA, regard precious metals, the acquisition of US banknotes, or of technologies directly or indirectly linked to oil extraction or weapon manufacturing, as well as to the operations of oil transport and storage.
Obviously all payments to Iranian institutions or individuals cannot be made through US banks.
Hence, while a direct confrontation between Iran and the United States is currently unlikely, tension between the two countries is still conceivable – an escalation that also implies, at certain stages, war or semi-war operations.
A further variable of this scenario is Iran’s use of indirect or “hybrid war” strategies in the areas near Hormuz, or in any Middle East region where Shiites or the Iranian Armed Forces – above all, the Pasdaran – can start a war of attrition with the typical methods of hybrid war, guerrilla warfare, proxy war or strategic friction.
In particular, the ships of the Arab countries which are Iran’s “enemies” will be attacked by Iran in various ways, even without the possibility of identifying the attackers.
It is a highly likely scenario, but only if the Shiite republic feels to be encircled or under attack by Israel, the USA or the Middle East Sunni powers.
In fact, the Yemeni Houthi rebels have already attacked Saudi Aramco ships, during their crossing of Bab el-Mandeb Strait. If Saudi Arabia responded in the same way, this would give rise to a “small war” in the Strait, which is precisely what Iran wants, without ever directly creating the opportunity.
Approximately 5 million barrels / day transit through Bab el-Mandeb Strait to the Mediterranean, and the other way round.
Hitting these routes, without direct actions by the Guardians of the Revolution or by the less trusted Artesh, could be a possible option for Iran.
In so doing, however, Iran would antagonize Europe which, indeed, count for nothing strategically and militarily – but this could set a precedent for a US military action, with or without its regional allies.
Hence if we put in place a series of international financial, political and military pressures, we can think that – in the future – the USA can sit back to the negotiating table with Iran.
Currently, it seems that the United States is leaving the Iranian affair to Saudi Arabia and Israel – but probably it will not be enough.
Hence, according to the basic ideas of Iran’s current leadership in power, the negative reaction to the growth of Iran’s power does not depend on its threatening nature, but on the fear for the growth of a new Middle East actor, namely Iran.
Therefore, again according to the Iranian ruling class, only by pursuing the goals of Iran’s great autonomy and of an evident and significant power projection, will it be possible – in the future – to have an acceptable level of security for Iran and a good level of geoeconomic stability.
The Iranian leaders’ strategic-military theory, however, places both conventional and unconventional threats on an equal footing.
Nevertheless, according to Iran’s leadership, Iran’s expansion is related to the mere security and stability of the country and has exactly no expansionist aims.
This is what Iran’s leaders maintain. But how can peaceful expansion of commercial networks and routes be pursued if currently Iran has to move between potential or overt enemies?
Hence, as the Iranian leaders maintain, if their economy is further put in crisis, the Iranian government will start bilateral or trilateral negotiations with its neighbouring countries, thus creating transport, financial and commercial networks, besides the stable exchange of labor force, national currencies, goods and services.
The Iranian leaders think that, in this vast region, their country could arrange its new economic development, outside the framework of relations with the USA and, possibly, with the weak EU.
In other and even much clearer words: railways, roads, trade and IT networks between Iran and the Lebanon, Iraq and Syria.
This is one of the implications of the decisive role played by Iran in the Syrian war.
In terms of national defense, the Iranian Shiite leaders believe that the most important course of action in this sector is the establishment of excellent relations with the United Arab Emirates and Qatar, while a Saudi-Turkish axis is also emerging in the Iranian decision-makers’ minds.
A new Turkish-Iranian axis organized by the Russian Federation, leading to peace between Iran and Turkey – peace that regards Syria which, however, in the Turkish leaders’ view, could lead to a financial and oil alliance between the two countries, an alliance to which Russia would not be alien.
Furthermore, according to the Iranian leaders, the fight against Daesh-Isis was an operation to make Iran’s borders safe, especially with the Pasdaran’s interventions in Syria and Iraq.
The other strategic project pursued by the Iranian leaders is a stable and strong alliance with the Russian Federation.
From Iran’s viewpoint, all its recent military operations – even using the new scenario created by the “Arab springs” – have exploited the chaos spread by ISIS, for example in Iraq, with a view to creating a stable corridor between the Iranian territory and some Iraqi areas, exactly as it is happening in Syria in the new green line between Iran and Hezbollah’s Lebanon.
A geopolitics of “corridors”, which are at first military and then economic corridors.
Assad is therefore crucial for all Iranian projects, since he can link Iran with the Mediterranean.
With possible threats, especially asymmetric ones, by Iran, which could be launched from the Lebanese coast not only against the “traditional” opponents (Israel and the USA, of course), but also against the whole transit of goods to the Southern coasts of the EU which, obviously, has not yet realized it.
There will be Iranian naval bases on the Lebanese coast in the future.
Hence, within all this conceptual mechanism, we can see Iran’s current and future choices in the field of military and foreign policy:
1) increase of commercial ties with the countries bordering on the Shiite republic, through agreements including monetary, export, labour and financial support arrangements to leave the dollar area, as China and Russia do;
2) use of these relations for creating an “external circle” useful for Iran’s defense, with obvious needs to use remote positions for missiles and for anti-aircraft artillery, with the future establishment of a sort of “Shiite NATO”, which could be linked to the Shanghai Cooperation Organization (SCO);
3) creation of a balance between the loss of Iranian positions in the US market and the opening up of new opportunities in the European and Middle East markets, with the Iranian economic expansion to Azerbaijan and Uzbekistan;
4) future expansion of proxy wars in Yemen and, possibly, also in Saudi Arabia, possibly with an Iranian “seduction” operation vis-à-vis Manama and other Gulf Emirates, obviously in addition to further strengthening the link between Iran and Qatar;
5) probable direct threat to Israel, through Hezbollah, so as to verify the Israeli relations with European countries and the USA. The basic question of Iranian leaders is always the same: will Europeans, or even Americans, be willing to “die for Jerusalem”?
6) Planned mounting of tension in Bab el-Mandeb Strait, but with short demonstrative actions, of which Iran itself will be the first to observe their impact on the oil market and on the military structure of the Middle East;
7) Iran’s probable future creation of a sort of “Shiite common market”, but also open to other Sunni countries, which – however – will go along Khomeini’s traditional policy line: to expand the “revolutionary” Iran in the Central Asian axis, by unifying many countries having Shia minorities, such as Uzbekistan, the Hazarasin Afghanistan, Azerbaijan, and the Shia minorities in Pakistan, to which Iran could ensure social peace. A possible future strategy for Iran will be strengthening Shiite minorities so as to later deal with their Sunni governments.
Hence, many signals will be sent to us by Iran in the coming months and years.
The battle for leadership of the Muslim world: Turkey plants its flag in Christchurch
When Turkish vice-president Fuat Oktay and foreign minister Mevlut Cavusoglu became this weekend the first high-level foreign government delegation to travel to Christchurch they were doing more than expressing solidarity with New Zealand’s grieving Muslim community.
Messrs. Oktay and Cavusoglu were planting Turkey’s flag far and wide in a global effort to expand beyond the Turkic and former Ottoman world support for President Recep Tayyip Erdogan’s style of religiously-packaged authoritarian rule, a marriage of Islam and Turkish nationalism.
Showing footage of the rampage in Christchurch at a rally in advance of March 31 local elections, Mr. Erdogan declared that “there is a benefit in watching this on the screen. Remnants of the Crusaders cannot prevent Turkey’s rise.”
Mr. Erdogan went on to say that “we have been here for 1,000 years and God willing we will be until doomsday. You will not be able to make Istanbul Constantinople. Your ancestors came and saw that we were here. Some of them returned on foot and some returned in coffins. If you come with the same intent, we will be waiting for you too.”
Mr. Erdogan was responding to an assertion by Brenton Tarrant, the white supremacist perpetrator of the Christchurch attacks in which 49 people were killed in two mosques, that Turks were “ethnic soldiers currently occupying Europe.”
Messrs. Oktay and Cavusoglu’s visit, two days after the attacks, is one more facet of a Turkish campaign that employs religious as well as traditional diplomatic tools.
The campaign aims to establish Turkey as a leader of the Muslim world in competition with Saudi Arabia, the United Arab Emirates, and to a lesser degree Morocco.
As part of the campaign, Turkey has positioned itself as a cheerleader for Muslim causes such as Jerusalem and the Rohingya at a moment that Saudi Arabia, the UAE and other Muslim nations are taking a step back.
Although cautious not to rupture relations with Beijing, Turkey has also breached the wall of silence maintained by the vast majority of Muslim countries by speaking out against China’s brutal crackdown on Turkic Muslims in the troubled north-western province of Xinjiang.
Mr. Erdogan’s religious and traditional diplomatic effort has seen Turkey build grand mosques and/or cultural centres across the globe in the United States, the Caribbean, Europe, Africa and Asia, finance religious education and restore Ottoman heritage sites.
It has pressured governments in Africa and Asia to hand over schools operated by the Hizmet movement led by exiled preacher Fethullah Gulen. Mr. Erdogan holds Mr. Gulen responsible for the failed military coup in Turkey in 2016.
On the diplomatic front, Turkey has in recent years opened at least 26 embassies in Africa, expanded the Turkish Airlines network to 55 destinations in Africa, established military bases in Somalia and Qatar, and negotiated a long-term lease for Sudan’s Suakin Island in the Red Sea.
The Turkish religious campaign takes a leaf out of Saudi Arabia’s four decade long, USD 100 billion effort to globally propagate ultra-conservative Sunni Islam.
Like the Saudis, Turkey’s Directorate of Religious Affairs (Diyanet) provides services to Muslim communities, organizes pilgrimages to Mecca, trains religious personnel, publishes religious literature, translates the Qur’an into local languages and funds students from across the world to study Islam at Turkish institutions.
Turkish Muslim NGOs provide humanitarian assistance in former parts of the Ottoman empire, the Middle East and Africa much like the Saudi-led World Muslim League and other Saudi governmental -non-governmental organizations, many of which have been shut down since the 9/11 attacks on New York and Washington.
Saudi Arabia, since the rise of crown prince Mohammed bin Salman in 2015, has significantly reduced global funding for ultra-conservatism.
Nonetheless, Turkey is at loggerheads with Saudi Arabia as well as the UAE over the killing of journalist Jamal Khashoggi; Turkish support for Qatar in its dispute with the Saudis and Emiratis; differences over Libya, Syria and the Kurds; and Ankara’s activist foreign policy. Turkey is seeking to position itself as an Islamic alternative.
Decades of Saudi funding has left the kingdom’s imprint on the global Muslim community. Yet, Turkey’s current struggles with Saudi Arabia are more geopolitical than ideological.
While Turkey competes geopolitically with the UAE in the Horn of Africa, Libya and Syria, ideologically the two countries’ rivalry is between the UAE’s effort to establish itself as a centre of a quietist, apolitical Islam as opposed to Turkey’s activist approach and its support for the Muslim Brotherhood.
In contrast to Saudi Arabia that adheres to Wahhabism, an austere ultra-conservative interpretation of the faith, the UAE projects itself and its religiosity as far more modern, tolerant and forward looking.
The UAE’s projection goes beyond Prince Mohammed’s attempt to shave off the raw edges of Wahhabism in an attempt to present himself as a proponent of what he has termed moderate Islam.
The UAE scored a significant success with the first ever papal visit in February by Pope Francis I during which he signed a Document on Human Fraternity with Sheikh Ahmad al-Tayeb, the grand imam of Egypt’s Al-Azhar, the revered 1,000-year-old seat of Sunni Muslim learning.
The signing was the result of UAE-funded efforts of Egyptian general-turned-president Abdel Fattah Al-Sisi to depoliticize Islam and gain control of Al Azhar that Sheikh Al-Tayeb resisted despite supporting Mr. Al-Sisi’s 2013 military coup.
To enhance its influence within Al Azhar and counter that of Saudi Araba, the UAE has funded Egyptian universities and hospitals and has encouraged Al Azhar to open a branch in the UAE.
The UAE effort paid off when the pope, in a public address, thanked Egyptian judge Mohamed Abdel Salam, an advisor to Sheikh Al-Tayeb who is believed to be close to both the Emiratis and Mr. Al-Sisi, for drafting the declaration.
“Abdel Salam enabled Al-Sisi to outmanoeuvre Al Azhar in the struggle for reform,” said an influential activist.
The Turkey-UAE rivalry has spilt from the geopolitical and ideological into competing versions of Islamic history.
Turkey last year renamed the street on which the UAE embassy in Ankara is located after an Ottoman general that was at the centre of a Twitter spat between Mr. Erdogan and UAE foreign minister Abdullah bin Zayed al-Nahyan..
Mr. Erdogan responded angrily to the tweet that accused Fahreddin Pasha, who defended the holy city of Medina against the British in the early 20th century, of abusing the local Arab population and stealing their property as well as sacred relics from the Prophet Muhammad’s tomb,. The tweet described the general as one of Mr. Erdogan’s ancestors.
“When my ancestors were defending Medina, you impudent (man), where were yours? Some impertinent man sinks low and goes as far as accusing our ancestors of thievery. What spoiled this man? He was spoiled by oil, by the money he has,” Mr. Erdogan retorted, referring to Mr. Al-Nahyan.
Who Will Rebuild Syria: Extremely Loud & Incredibly Close
After raging for eight years, the violent phase of the Syrian civil war seems to be reaching its final stages, with Idlib as the last holdout. Recently, leaders of Russia, Iran and Turkey held talks in Sochi to discuss securing peace in Syria and preventing a large-scale military assault on Idlib, Syria’s last rebel enclave. World leaders have also discussed the the reconstruction of the war-torn country. Russian President Vladimir Putin urged European Union countries to help rebuild Syria, arguing that it would lead to a faster return of refugees from Europe to their country. His efforts have so far been unsuccessful as EU countries refuse to participate in a rebuilding process that involves Bashar Al-Assad. Arab states are considering readmitting Syria into the Arab League and have shown interest in investing in the country’s reconstruction. However, the United States is pressuring the Gulf states to hold back on restoring relations with Syria and investing in its reconstruction. As such, it seems that in addition to Russia, China, Iran, and India are best poised to invest in and benefit from the country’s rebuilding. Former United Nations Special Envoy to Syria, Staffan de Mistura estimates the cost of Syria’s reconstruction to be 250 billion USD, while the Syrian government estimates the number to be 400 billion USD. Either way, the cost is too high for the Syrian government to finance on its own without the help of its leading businessmen and international partners and allies.
How the Civil War Changed Syria’s Economic Environment
However, during the eight years of ongoing civil war, some prominent faces in Syria’s economic arena have disappeared, giving way to new actors who have positioned themselves and their businesses to benefit from the vacuum created by the civil war and, therefore, became highly influential, obtaining access to Al-Assad’s ‘inner circle’. Some of Bashar Al-Assad’s inner circle members were forced to flee the country, defect to the opposition, or remain neutral—thus losing their favourable position in this inner circle. This applies not only to the decision-making process, but also to the country’s internal economic process. The International Crisis Group’s Peter Harling argues that the war “forced large families to exile or to shut their businesses down and allowed a new generation of wheeler-dealers to emerge.” However, most of these actors and their assets have been sanctioned by the West due to their relationship with, and involvement in projects linked to the Syrian government. This creates a hurdle on the way to Syria’s reconstruction as many businessmen find their own funds—as well as international funds, companies and suppliers—inaccessible.
Economic Sanctions as an Obstacle
Economic sanctions have been successful in limiting the activity of Syria’s economic actors. It didn’t put them out of business as they have developed methods to bypass sanctions. Among those is establishing a close relationship with the Syrian government based on a system of ‘favors’, in which businessmen provide the government with some financial services in return for access to lucrative projects across the country. This poses several obstacles in the face of the country’s reconstruction. How independent are these businessmen from the government as economic actors best poised in terms of access and financial resources to rebuild the country? Given their proximate relationship to the Assad government, it is unlikely that they will gain access to foreign funds needed for the country’s rebuilding. Moreover, do their interests lay in rebuilding infrastructure and improving citizens’ living standards? Or will they rather pursue lucrative projects that are not entirely related to infrastructure, and therefore, will not bring significant benefit to the majority of the population? Furthermore, given the nature of the political and economic process in Syria, foreign companies will need to partner with local Syrian actors who have close ties to the government to be able to effectively invest and participate in the rebuilding process. However, these partnerships are restricted due to economic sanctions. As such, it is important to identify these local actors, their relation to the Syrian government and what initiatives towards rebuilding the country they have taken thus far. The most prominent and currently active businessmen in Syria can be divided into two groups: the ‘old guard’ who have been able to withstand local and external pressures and remain operable, and the ‘new guard’, who saw in the civil war the opportunities to gain access to financially beneficial economic sectors and projects.
Syria’s Most Prominent ‘Old Guards’
Rami Makhlouf is at the top of the ‘old guard’ list. Even under Western sanctions, he is still successfully operating in the country. This is in great part due to his relation to Al-Assad: he is a cousin from mother’s side. Following the outbreak of the war, Makhlouf stated that he would turn to charity and no longer pursue projects that can generate personal gain. However, Makhlouf still has close ties with leading businessmen in the country and is active in several economic sectors, including telecommunications (he owns mobile network company Syriatel), import/export, natural resources, and finance. Moreover, the Makhlouf empire has branches in some European countries, and a team of lawyers creating shell companies and bank accounts to bypass economic sanctions. Therefore, even if at times he is not the face of projects, it is highly likely that Makhlouf is somehow still benefiting from his relations with other businessmen and his numerous shell companies.
Mohammad Hamsho is another infamous old guard who currently serves as Secretary of the Damascus Chamber of Commerce, Secretary of the Federation of Syrian Chambers of Commerce and member of the People’s Assembly for Damascus. In 2018, Hamsho visited Tehran and met with Secretary General of Tehran Chamber of Commerce, Dr. Bahman Eshghi. During the meeting, both sides affirmed their determination to work on improving their economic relation, and signed a memorandum of understanding on cooperation between the two countries in various economic, trade, investment and production sectors. However, given that both countries are under sanctions, the magnitude of their economic cooperation is still hard to predict. Hamsho has been subject to US sanctions since 2011, but has been successful in having European sanctions lifted in 2014 on the grounds that there was insufficient evidence of his involvement with the regime. Two prominent Syrian businessmen who landed on the EU’s latest list of sanctioned individuals, published on January 21, 2019, are Nader Qalei and Khaled Al-Zubaidi. The two are leading actors operating in Syria with investments in the construction industry. One of their most significant investments is in the construction of Grand Town, a luxury tourist project. The Syrian government has granted Qalei and Al-Zubaidi a 45-year agreement for this project in exchange for approximately 20% return on revenue. According to the Council of the EU, Qalei and Al-Zubaidi benefit from and/or support the regime through their business activities, in particular through their stake in the Grand Town development. One of the most prominent actors in the country’s media sector is Majd Sleiman, otherwise known as the ‘intelligence boy’, son of Hafez Al-Assad’s cousin. Sleiman is currently the chief executive director of Alwaseet Group, one of the largest media groups in the Middle East and North Africa region. At the age of 25, he was already running several businesses and had established regional and international connections in the Middle East, Africa, East Asia, Europe and the United States. Even though Sleiman is active in the media and publishing sector, which is considered unprofitable, his companies received significant amounts of money from British accounts. This could be indicative of potential money laundering for the Syrian regime through British banks, via Sleiman.
Syria’s Most Prominent ‘New Guards’
With some families falling out of Al-Assad’s favors, and others exiled or unable to operate due to economic sanctions, a few savvy businessmen found an opportunity to fill the newly created vacuum and establish ties with the Al-Assad government by providing it with much needed services. Most prominent among these ‘new guards’ is Samer Foz, a leading Syrian businessman, known for his ruthlessness in conducting business. In fact, in 2013, Foz served a six month jail sentence for killing a Ukrainian/Egyptian businessman in Istanbul, Turkey. Foz is involved in multiple sectors of Syria’s economy, including brokering grain deals, and a stake in a regime-backed joint venture involved in the development of Marota City—a luxury residential and commercial development project. After several of Al-Assad’s former business allies found themselves unable to continue their business activities, Al-Assad welcomed Foz to his inner circle. Moreover, after being heavily affected by the war, Syria’s agricultural industry suffered, and Foz positioned himself as one of the few businessmen with the ability to broker grain deals. As a result, he received access to commercial opportunities through the wheat trade. Through his investments in the food industry and some reconstruction projects, Foz made his way into the inner circle by providing financial and other support to the regime, including funding the Military Security Shield Forces. Notably, Foz maintains very close ties with Iran, as well as Russia and other Western and Arab countries such as Italy, the United Arab Emirates (UAE) and Lebanon.
Another relatively new name to the arena of businessmen in Syria is Mazen Al Tarazi. Al Tarazi resides in Kuwait and has launched several campaigns in an attempt to get into Al-Assad’s inner circle. One of his campaigns was named “Returning to Syria” in which he pledged to bear the cost of Syrians wanting to return to their country. Moreover, in 2014, he assigned a plane at his own expense to transfer Syrians from Kuwait to Damascus, and back to Kuwait so they can cast their votes in the Presidential election. In 2017, his attempts proved successful and he was granted an investment license for a private airline in Syria, as well as other projects including a deal with Damascus Cham Holdings for a 320 USD million investment in the construction of Marota City. The Syrian Palestinian businessman benefited from his public support of the Assad government. In fact, according to Syrian media, Al Tarazi’s investment in Marota City is the first investment in Syria in which the investor’s share is greater than that of the public sector (51% of the project was owned by Al Tarazi and 49% by the Damascus Holding Company of the Damascus governorate). This investment, as well as his outspoken support for Al-Assad landed him on the EU’s latest list of sanctioned persons. The final businessman on the ‘new guards’ list is Samir Hassan, owner and agent of several companies in Syria, including Nokia and Nikon. After bad harvests due to war, he invested in imports of food supplies, in particular wheat, rice, sugar, and tea, and developed a close relationship with the Al-Assad family. During the civil war and against the background of improved relations with Russia, Hassan was named the Chairman of the Syrian-Russian Business Council, quite a prestigious position given the special relationship between Russia and Syria. Hassan’s investments in the food industry will also be vital during the reconstruction of Syria where he will be able to provide materials and products needed for reviving the agricultural sector, one of the greatest contributors to Syria’s Gross Domestic Product (GDP).
Trends in investments of Syria’s Businessmen
In general, businessmen involved in the Marota City and Grand Town projects have found themselves under Western economic sanctions. Most of Syria’s prominent businessmen have invested in these projects thanks to their connections with the government. In addition to some of the figures mentioned above, Anas Talas, Nazir Ahmad Jamal Eddine, Khaldoun Al-Zoubi, Hayan Mohammad, Nazem Qaddour, Maen Rizk Allah Haykal and Bashar Mohammad Assi have been recently sanctioned primarily due to their participation in the construction of Marota City. The Marota City and Grand Town projects are not essential for the country’s reconstruction, as they represent luxury residential and commercial projects and do not contribute to rebuilding the damaged infrastructure. However, several of the mentioned businessmen have been investing in infrastructure-related industries, such as the metal and steel industry, as well as the electrical and food industries. Recently, Hamsho bought “Al Sewedy Cables” factory, previously owned by Egyptian businessman Ahmad Al Sewedy, which produces electrical cables, towers, columns, transformers and circuit breakers, as well as a foundry (metal melting) factory that produces material for construction. Hamsho was able to acquire Al Sewedy’s company after it defaulted on loans given to it by the Islamic Bank of Syria and was sold in an auction. Foz has also been investing in former businessmen’s assets as he secured the ‘empires’ of two Syrian millionaires previously in Al-Assad’s inner circle. Emad Hamisho, previously known as the “economic shark” of Syria, and his family were sanctioned by the Syrian Ministry of Finance in 2013 after defaulting on a loan of 3.8 million Syrian Pounds he had borrowed from the real estate bank. In 2014, the sanctions were lifted without any clarifications on whether Hamisho had settled his account with the ministry or not. In 2018, the Ministry of Finance issued a new decision to sanction the assets of “Hamisho Minerals.” Foz saw an opportunity in it and swooped in. He entered into a partnership with Hamisho and created a new company where he heads the board of directors. Moreover, after a series of tightening measures initiated against him by the Syrian government in the early phases of the civil war, Imad Ghreiwaty decided to gradually transfer his investments abroad and resign from his position as the head of the Union of Chambers of Industry. His assets included a cables company, “Syria Modern Cables”, which Foz bought in 2017. Notwithstanding the manner of purchase, these initiatives are important for the country’s rebuilding, and are profitable for the investors, as they will provide construction material necessary for the reconstruction phase.
Financing Syria’s reconstruction
It is evident that rebuilding Syria will be largely controlled by Al-Assad’s inner circle of businessmen who have preferential access to investments and are best positioned to receive projects and tenders in the upcoming period. However, a few businessmen will not be able to rebuild the country on their own, and even the country’s most prominent and richest businessmen will find themselves limited in their activities due to imposed economic sanctions. While Syria’s allies are willing to help, and have already begun cultivating and consolidating relationships with local actors to gain access to the Syrian market, they are also facing certain limitations. Iran and Russia are constrained by economic sanctions of their own, whereas India and China are reluctant to invest unless they receive security guarantees to insure and protect their investments in Syria. Therefore, while both local and external actors are willing and seek to invest in the lucrative industry of Syria’s rebuilding, they are faced with many obstacles, including economic sanctions. The irony of the matter is that actors who have access and finances to invest in rebuilding Syria cannot do so since their access depends on their relationship with Al-Assad—a relationship that has provided them with opportunities and finances, and landed them on international economic sanctions lists that now restrict their ability to operate at their full capacity. With the United States and European Union unwilling to foot the bill, it remains to see whether the Gulf States will overcome Western pressures, restore ties with Al-Assad and invest in rebuilding Syria.
First published in our partner RIAC
Hamas in Egypt
The issue of Sinai and its jihad is increasingly important, also considering Hezbollah’s new strategy in Southern Lebanon, as well as the current deployment of Iranian, Syrian, Russian and various Sunni and jihadist forces between the Golan Heights and the Bekaa Valley, on the border between Syria and Israel.
The “sword jihad” in the Sinai peninsula, however, dates back to many years ago.
In 2011, precisely at the peak of tension both in the West and within some of the so-called “moderate” Islamic forces operating in the Maghreb region, during the various national “Arab springs”, the Ansar Bayt Al-Maqdis group (ABM) was created in the Sinai peninsula.
As was easy to foresee, unlike what CIA believed at the time, the destabilization of the old regimes had strengthened and not weakened the jihadist organizations.
ABM was the new network of exchange, training, intelligence and fundraising of the local jihad that, for the first time, played its own autonomous role.
For all the organizations of the Egyptian-Palestinian “holy war”, the opportunity of Mubarak’s fall was too fortunate to be missed.
In the void of power (and of welfare for the Sinai populations), the newly-established ABM easily succeeded in winning the local populations’ support.
It should also be noted that, albeit always careful in its approach – except in the strategic void occurred with Morsi’s government linked to the Muslim Brotherhood, which lasted from June 30, 2012 to July 3, 2013, when the coup of the Head of the military intelligence services, Al Sisi, ousted him from power – Egypt was interested only in the security of Sinai’s oil networks, not in the support of local populations.
Even currently, with the emergence of Sinai’s jihad, Egypt bears the brunt of its strategic oversight and the poor social and political analysis of the peninsular system around its canals.
Nevertheless Al Sisi-led Egypt has very little money- hence some simplicity in its analyses is quite understandable.
The activity to make the Sinai networks safe had already started as early as Mubarak’s time and has continued until the current government of Al Sisi, who knows all too well that – after the “cure” of the Muslim Brotherhood -he cannot completely trust his own police forces or his intelligence services, and hence is thinking of somehow “delegating security” for the Sinai peninsula also to third parties.
At that juncture, however, the news was spread that the Israeli forces were using precisely Palestinian elements to collect primary intelligence on the Sinai’s Isis, one of ABM current developments.
ABM was one of the first groups outside the Syrian-Iraqi system to swear allegiance to the “Caliph” Al Baghdadi.
Israel used those intelligence networks only to support Egypt in its specific local war on terror, considering that Daesh-Isis still had at least 2,000 active elements in the peninsula that, for the time being, were not specifically targeted to the Jewish State.
On January 11, 2019, for example, the Egyptian Armed Forces successfully hit and hence killed 11 terrorists, who were already making operations against the city of Bir-el-Abad in Northern Sinai.
It was even said that the Israeli intelligence had infiltrated the local Daesh-Isis. This was also confirmed by Egyptian President Al-Sisi himself who, in an interview with the American TV channel CBS on January 3, 2019, reaffirmed the existence of close cooperation between the Israeli intelligence services and the Egyptian forces in all the anti-jihadist operations in Sinai.
Clearly, the goal of ABM – which had meanwhile quickly converged into Al Baghdadi’s “Caliphate” –was the stable deterioration of relations between Egypt and Israel.
It should also be noted that the continued terrorist action against the oil and gas networks in Sinai forced Jordan to look for and buy oil and gas elsewhere.
Obviously the permanent insecurity of networks in Sinai slowed down and often blocked the prospects for expansion of the Israeli gas and oil in their connection both with Egypt and with the long Arab Pipeline network reaching Damascus and, through Turkey, the European market.
Hence, since 2013, with the successful coup staged by Al Sisi, the ABM – which was already part of the pseudo-Caliphate system – has been focusing on one goal: the fight against the Egyptian armed forces and power.
Hence Sinai’s new jihadist network is composed of Wilayat al Sinai, i.e. the pseudo-Caliphate network; some groups linked to Al Qaeda, such as Jund al Islam, a structure operating above all in Sinai’s Western desert, as well as Ansar al Islam and other groups, always active in Sinai’s Northern peninsula.
There are also militant groups that are explicitly linked to the Islamic Brotherhood, such as Hassm (the acronym of the “Army of Egypt’s Forearms”) and Liwa al Thawra, also known as “the Banner of the Revolution” which, however, operates above all in Egypt, between Alexandria, Cairo and Suez.
It should also be noted that last February both the Islamic “State” of Daesh-Isis and Al Qaeda itself uploaded a video in which Ayman Al Zawahiri harshly criticized the behaviour of the Muslim Brotherhood in Egypt and above all in Sinai.
Hence in 2014 Al Sisi militarized Sinai.
Although not much is known about it, it is a low-intensity war that has already exacted a toll of several thousand victims.
The ABM, renamed Wilayat al Sinai after its affiliation with Daesh-Isis, was still supported by much of Sinai’s population, while the economic crisis of the region worsened with the embargo imposed by Egypt, with a view to stopping oil smuggling and the widespread arms trafficking.
At that juncture, Al Sisi launched its great Comprehensive Operation Sinai 2018, a military action which began on February 9, 2018, and was organized between the Nile Delta and Northern and Central Sinai.
In fact, everything began after the attack on the Al-Rawda mosque of November 24, 2017. It should be noted that Al-Rawda is a mosque linked to the Jayiria Sufi sect, a mystic “order” widespread particularly in Sinai, especially in the Bir el-Abed area.
Thanks to the effective results of that great operation, Egypt also closed the Gaza border and the Rafah border that, however, has been recently reopened.
It is worth noting that the “great operation” had been launched shortly before the Egyptian political and presidential elections of March 2018.
Hence these are the terms of the equation: strong anti-Egyptian jihadist threat in Sinai; limited forces available to the Egyptian army and intelligence services and above all the issue of the International Monetary Fund’s loan to Egypt, which has strategic and military importance also in Sinai.
Therefore Al Sisi’s military credibility is one of the essential factors of his financial salvation.
In fact, in November 2016, the IMF granted to Egypt an Extended Fund Facility worth 12 billion US dollars.
All the applicative reviews, including the last one of February 4, 2019, have already been approved by the Fund’s board.
So far, however, the reforms implemented by Al Sisi’s regime have always been evaluated positively by the aforementioned board.
And also by many private investment banks, which could also take over from the IMF at the end of the Extended Fund Facility.
Hence macroeconomic stabilization but, first and foremost, resumption of the GDP growth.
Tourism, the primary sector of the Egyptian economy, has again started to perform very well. The same holds true for migrants’ remittances and for the product of the non-oil and manufacturing sector, which the IMF has identified as the key to Egypt’s future – a sector which is recovering and, anyway, is also growing steadily.
The social protection put in place by the Egyptian government, essential for “keeping the crowds under control” (and, often, also local jihadist terrorism) provides food for children, basic commodities and medicines, with a recent and significant increase of the liquidity available in the many smart cards already distributed to the poor people.
The takafol and karama programs, designed to support the poor families’ standard of living, already apply to over 2.2 million households, i.e. 9 million Egyptians.
Too many poor people and hence many candidates to swell the jihad ranks, with a very effective network now available, including para-Caliphates, Al Qaeda and all the rest, but especially the network of Muslim Brotherhood’s “young people”, who are refocusing on a “slow-paced”, but equally cruel, brutal and effective jihad.
Hence, without making it explicitly known to Israel, Egypt has already placed Hamas in the frontline of its low-intensity war in Sinai.
In late November 2018, the former ABM group in Sinai had also already seized a shipment of Iranian weapons, especially kornet missiles, that went from Iran to Hamas through the Gaza Strip.
For some years, however, the relations between the Palestinian Islamic jihad and Egypt have weakened, thanks to the well-known support that the Palestinian group of Gaza, also linked to the Muslim Brotherhood, has provided to the Sinai jihad. Hence currently the real strategic link lies in the structural clash between Daesh-Isis and Hamas in the Sinai peninsula.
Obviously, the primary goal of the Israeli secret services is always to get good intelligence on the Al-Baghdadi system in the peninsula, but Hamas does not certainly remain silent.
In fact, in early January 2019, the Interior Minister of the Gaza Strip – obviously a Hamas leader – arrested as many as 54 aides of the Israeli forces who, according to Hamas, were operative of Shabak, the Israel Security Agency.
In Sinai, however, Isis still has a very close relationship with Hamas and is still the main carrier of arms smuggling in the Gaza Strip.
Currently, however, the real news is that the “Caliphate” has harshly broken with the Muslim Brotherhood’s group that rules in the Gaza Strip.
As a result, as previously said, Egypt has enlisted precisely Hamas in its fight against the so-called “Caliphate”.
Therefore also Qatar’s portentous funding granted only to Al Sisi’s regime is not useless here. This is an essential factor to understand the new strategic equation of both Qatar and present-day Egypt.
It was exactly in early January 2018, however, that the “Caliphate” openly declared war on Hamas.
Later, in March 2019, there have also been severe attacks on Israeli civilian positions, starting from the Gaza Strip.
The Israeli intelligence services have also ascertained that the specifically military wing of Hamas, namely the “Izz-ad-Din al-Qassam Brigades”, have already agreed with the Egyptian Armed Forces to fight the “Caliphate”, especially in the areas on the border with the Gaza Strip.
The Egyptian intelligence services have also notified Israel, the United States and Saudi Arabia of the fact that they know the military-financial transactions of the Egyptian regime with Qatar very well. They have also informed Russia that the agreement between Hamas and the Egyptian forces is designed to permanently “recovering” Gaza’s Palestinian group, while in October 2018 Egypt had also arranged a short agreement between Hamas and Israel to reduce tension between the two areas.
In essence, pending the forthcoming end of military activities in Syria, a new tripartite order is being created, in the Middle East, between Saudi Arabia, Egypt and the Emirates. All these three actors really want Israel to participate in the whole stabilization of the region.
This obviously implies the stable solution of the Palestinian issue, possibly with a new joint leadership –also different from the current one – and hence a new division of the areas of influence also within the Palestinian world.
Egypt wants to directly control the Gaza Strip, i.e. Hamas and the smaller local networks of Fatah and the Palestinian Jihad again in the Gaza Strip, but without forgetting the military and financial ties of these three organizations with Iran.
In the design of the new Arab tripartite agreement, Iran shall leave quickly.
Egypt is here imagining a sort of unification between the various groups of the old Palestinian resistance movement, with new organizations of political representation within the Gaza Strip and possibly also in the PNA’s Territories.
Nevertheless many problems will obviously emerge: the Palestinian National Authority, de facto expelled from the Gaza Strip, has had no news or ideas about the state of security in the Gaza Strip for at least ten years.
Egypt, however, does not want to put only in Hamas’ hands the whole issue of Sinai stability, as well as its sensitive, but fundamental relations with Israel.
Al Sisi is mainly observing – with extreme care – the role played by the number 2 leader of the PNA, Mohammed Dahlan, who has good relations with Hamas, but is still accused by Fatah of being “the one who lost the Gaza Strip in 2007”.
In any case, currently Egypt and Israel have excellent relations (Al Sisi and Netanyahu have regular phone conversations every week), while it should be recalled that it was exactly the emergence of the Sinai jihad that enabled Egypt to militarize the areas in which that had been forbidden exactly by the Peace Treaty with the Jewish State.
Another central issue is the cooperation between Israel and Egypt on energy issues.
Recently an agreement has been signed to enable Egypt to import Israeli natural gas to liquefy it.
Egypt absolutely needs the Israeli support, considering that – in this context – the struggle against Turkey was and still is an all-out struggle.
Nevertheless this new collocation of the military agreement between Egypt and Hamas has also put Israel in difficulty, which was not consulted, before this alliance, about the Gaza Strip.
The pact between the group of the Muslim Brotherhood in the Gaza Strip and Egypt became known to Israel only when Hamas pointed out to Egypt that there had been breaks in the “truce”, which the Israeli army still did not know in all its strategic value and relevance.
In any case, Israel has tripled the sale of electricity to the Gaza Strip, while as many as 11,000 trucks were sent from the Jewish State to support the population of the Gaza Strip.
Qatar alone provided over 15 million US dollars of aid to the political and humanitarian organizations of the Gaza Strip.
Indeed, Hamas wanted above all a refund or monetary support from Israel, but much greater than expected, at least for the funds that the PNA’s leader, Mahmoud Abbas, had decided autonomously to remove from the autonomous administration of the Gaza Strip.
As usual, the response was obviously a terrorist one, with bombs thrown at the IDF troops and the Jewish population outside the border.
Despite of the above mentioned stabilization projects, Hamas wants to make the most of the climate prevailing for the Israeli upcoming elections scheduled for next April.
Certainly the next target of the Palestinian groups will be the joint Israeli-US exercise scheduled for March 4 next.
It will be a very important military exercise: a United States European Command (USEUCOM) battery composed of Terminal High Altitude Area Defense (THAAD) missiles will be made operational, right on the border between the Gaza Strip and the Jewish State.
The THAAD system will soon be added to the Israeli defense systems, along with the Iron Dome, mainly operating against short-range missiles; the Arrow system, intercepting long-range missiles in their exo-atmospheric phase and David’s Sling to hit tactical ballistic missiles.
Both the THAAD and the Arrow systems are already included in the USEUCOM’s early warning network, using a series of radars located on a US base in the Negev desert.
A base that, however, already monitors any missile launch from Iran.
Obviously the THAAD network is a US implicit suggestion not to give in to the flatteries and blandishments of the Sunni treaty on the new areas of influence between Egypt, Saudi Arabia and Qatar – a treaty which is still written in the Sinai sand.
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