In theory, the aftermath of the earthquake that has primarily affected southern Turkey and northern Syria could offer new opportunities for the Syrian government to cement acceptance of its rule by both its Turkish neighbour and by the wider international community. Yet it is important to be clear about what 'normalisation' actually means and how far it can go. The earthquake aftermath seems unlikely to lead to a major shift in the status quo in Syria but rather only reflects temporary exemptions out of humanitarian concerns. In turn, there will still be few returns and too many risks for those considering investment and business in Syria for purposes such as reconstruction.
Understanding the Status Quo
One can speak of a 'status quo' in Syria that has existed since spring 2020, whereby the country has become de facto divided between four main enclaves as the main conflict lines have become frozen. The largest of these enclaves- encompassing around two-thirds of Syria– is the area controlled by the Syrian government, spanning central, western and southern Syria and including the country's most important population and industrial centres (Aleppo and Damascus). The second most important enclave in terms of size is the north and eastern region controlled by the 'Syrian Democratic Forces' (SDF), a coalition of groups dominated by the armed wing of the Kurdish 'Democratic Union Party' that is linked to the Kurdistan Workers' Party (PKK). The other two enclaves are parts of the northwest region controlled by various insurgent groups, and a small pocket at Tanf in the eastern desert on the border with Iraq, also controlled by an insurgent group.
Each of these enclaves has its own foreign patrons: the government areas have Russia and Iran, the SDF and Tanf areas the United States, and the northwest Turkey. It is the understandings and relations between these foreign patrons that ultimately determine whether there will be a major military escalation or not, though in this regard not all foreign powers wield the same level of influence. In particular, it is relations between Turkey and Russia that are most important.
For example, the last major round of fighting took place in early 2020 when Russia backed an offensive by the Syrian government focused on the northwest province of Idlib, resulting in substantial losses for the insurgents there. In response, Turkey, concerned about a potential massive new influx of refugees into its borders, significantly reinforced its military presence in the area, and negotiated a new ceasefire with Russia that has more or less held since that time despite routine skirmishes across the frontlines that do not result in real shifts in territorial control.
Similarly, when Turkey has carried out operations against the SDF that is deemed a security threat by Turkey for its links to the PKK, it has done so with Russian approval and against the objections of the United States, contrasting with Turkish threats over the past several months to launch a new operation that has so far failed to materialise in the face of a firm Russian veto.
In general, this new status quo has led to a sharp reduction in conflict intensity in comparison with previous years. For instance, if one takes the metric of civilian deaths recorded by the Syrian Network for Human Rights, the network claims to have documented 1057 civilian deaths in 2022. For 2016, its reported toll was 16,913 civilians. Yet each of the different enclaves still face considerable problems of management of internal security, such as routine assassinations and other small-scale attacks in the southern Syrian province of Deraa that is under government control and borders Jordan, which is concerned about this instability as well as growing quantities of illicit drug shipments coming out of Syria.
Talk of Syria-Turkey 'Normalisation'
While Turkey remains the most important host of the Syrian political opposition to the Bashar al-Assad-led government in Damascus and is also an important backer of multiple insurgent factions in the northwest, the priorities have generally shifted since around late 2016 (when Turkey launched its first ground incursion into Syria against the Islamic State group, likely with Russian approval). Instead of trying to force regime change through military pressure and actively pushing for a political transition. Turkish concerns across the political spectrum have shifted gears towards 'national security' interests such as preventing further inflows of Syrian refugees and combating the perceived threat of the SDF on its southern border.
For its part, Russia has long sought to tilt Turkey away from the orbit of relations with Western countries in the NATO alliance, and has become increasingly dependent on Turkey amid its general international isolation caused by the decision to invade Ukraine. Russia has thus tried to leverage the gradual shift in Turkey's priorities and encourage a rapprochement between Damascus and Ankara, based on the idea of shared interests and cooperation when the opportunity arises.
Amid growing popular disillusionment with the state of the Turkish economy (with forecasted inflation at 42.5% for this year, higher than official estimates), rising anti-refugee statement inside Turkey and a desire to secure Russian approval for a new Turkish operation against some SDF-held areas, multiple comments by President Erdogan and other leading Turkish officials have pointed in the direction of a desire for rapprochement despite the strong objections issued by insurgent factions in northwest Syria to any notion of 'reconciliation' with Assad.
The first tangible step in this direction of rapprochement was a meeting held at the end of December 2022 in Moscow between the Turkish and Syrian defence ministers and intelligence chiefs. The recent earthquake that has killed tens of thousands of people in southern Turkey and northern Syria is also seen by Russia as an opportunity for the Syrian and Turkish governments to cooperate and move the rapprochement further.
Obstacles to Normalisation
It is important to consider whether the Russian encouragement of Syrian-Turkish meetings and potential opportunities for cooperation such as dealing with the aftermath of the earthquake can lead to real normalisation in the sense of full restoration of diplomatic relations. A look at the bigger picture suggests otherwise for the near and medium term, even though the two sides may seek to take other steps that restart and deepen economic ties short of normalisation, such as working together to open up land routes and highways in Syria like the M4 for trade.
One important impediment towards proper normalisation is the fact that the Syrian government (for understandable reasons of national sovereignty) wishes to restore its full control over Syrian territory, and as such would like the Turkish side to agree to the idea of a withdrawal of its troops from the northwest regions (Idlib and its environs in particular). This withdrawal however would almost certainly trigger a new offensive, as the insurgent factions in Idlib and its environs are most intransigent about any notion of 'reconciliation'.
After all, when the Syrian government has reclaimed control of other insurgent-held areas in Syria such as Damascus countryside and Deraa, the option has been offered for those who did not wish to remain to go to the area of Idlib and its environs, which have essentially served as a dumping ground for elements deemed irreconcilable. A new offensive would likely lead to displacement of a large number of people, many of whom would probably wish to seek refuge in Turkey. Currently, there is no indication that any actors on the Turkish political spectrum (including Erdogan's domestic opponents who have long been keener on talking to Assad) are actually willing to entertain such a risk.
Similarly, some Turkish officials have raised the idea of cooperation with Damascus against 'terrorism': almost certainly meaning a joint campaign to be launched against the SDF. Yet such a prospect is also remote for the time being, as the Syrian government is unwilling to accept what would effectively mean expanding the zones of Turkish occupation within its territory. The government instead prefers for the SDF to come to an understanding with it, which would mean merging into the Syrian armed forces and largely giving up its enclave of autonomous rule in the north and east of Syria.
In turn, the SDF is still unwilling to accept making such concessions to Damascus, as it is committed to a vision of a federal Syria and does not wish to give up its territorial gains, which came at considerable cost as part of the U.S.-led coalition campaign against the Islamic State. In this context, the continued U.S.-backing for the SDF provides some further basis for the SDF not to give in to Damascus' demands. If the U.S. maintains its presence, then the SDF calculates that it can maintain its project in some form.
In sum, the obstacles to real Turkey-Syria normalisation are greater than the potential common interests and opportunities, even as said opportunities and interests may lead to concrete actions short of normalisation in which the two sides work together.
Sanctions and Humanitarian Exemptions
A dynamic rather distinct from the question of Syrian-Turkish rapprochement is the imposition of sanctions by the United States and European Union against the Syrian government. While some Western sanctions against Syria predate the war, they have grown since the outbreak of the war and are now chiefly seen as a form of leverage for Western countries to try to extract substantial political concessions from the government if not pressure it into accepting a political transition, especially as Western support for insurgent groups has ceased (with the exception of the insurgents of the Tanf pocket under U.S. protection, who are officially supported in a counter-Islamic State capacity and not to fight the Syrian government). The most impactful actual sanctions are arguably the U.S. sanctions on Syria's banking sector, which have led to a general reluctance among banks worldwide to deal with Syria's financial sector.
The most recent sanctions legislation of note was the U.S. Caesar Act, signed into law in December 2019 and named for a pseudonymous Syrian military photographer who defected and revealed evidence of thousands of detainees who were tortured to death. The Caesar Act's most notable aspect is not the imposition of new sanctions but rather the deterrent effect embodied in the threat to impose sanctions on any foreign businesses that might "enter into business with or otherwise enrich" the Assad-led government. This includes a requirement to impose sanctions on "foreign persons" who facilitate the government's acquisition of "goods, services, or technologies" that support its military activities, aviation, oil and gas industries, besides mandating sanctions on those who engage in "reconstruction."
As such, some regional actors like the United Arab Emirates and individuals therein keen to normalise relations with the Syrian government and cement its acceptance on the international scene might be deterred from investing and doing business in government-held parts of Syria.
International banks and other companies generally seek to err on the side of caution with regards to existing sanctions and the threat of sanctions, as can be seen (for example) in how crowdfunding website GoFundMe initially suspended fundraisers for Syria in the aftermath of the earthquake, despite the Caesar Act's exemptions for "bona fide humanitarian assistance or activity."
Recognising the problems of 'overcompliance' and how they might impact relief efforts, the U.S. has thus temporarily broadened the humanitarian exemptions to imposition of sanctions, specifically allowing for six months the "processing or transfer of funds on behalf of third-country persons to or from Syria" that would otherwise be prohibited by Syria Sanctions regulations, even as the broadening of the exemption tries to ensure that the exemption should not benefit sanctioned individuals or the government. This broadening also follows an expansion of authorisations by the U.S. Treasury in November 2021 for NGOs to engage in humanitarian work in Syria, especially within the framework of 'early recovery' (which would include activities intended to restore health facilities, schools and bakeries).
Despite concerns about potential exploitation of the new exemptions following the earthquake, one should not interpret them as a major change in the position of the U.S. and other Western countries on the conflict. Rather, the exemptions are simply what they are proclaimed to be: a temporary measure for humanitarian purposes, intended to facilitate relief efforts where urgency is essential.
The notion of lifting sanctions as some sort of unilateral concession to the Syrian government- whatever legitimate concerns observers might raise about how sanctions impact the well-being of civilians in areas under the Syrian government's control- is seen as politically toxic and unacceptable, particularly as the United States and European countries that backed the opposition are more geographically removed from the region and do not feel any urgency to normalise ties with Assad. This is so if they have given up on the idea of militarily pressuring Assad into accepting a political transition. An apt comparison here would be with the status of the North Korean government: the U.S. and Western countries may not actively seek to change that regime and accept it is here to stay for the foreseeable future, but the North Korean leadership is not actively welcomed and embraced in the U.S. and European capitals. There is similarly no serious discussion about unilateral lifting of sanctions on North Korea.
Implications for Business and Investment
The upshot of this assessment is that the earthquake aftermath may serve as a facilitator for further cooperation between the Syrian and Turkish governments under Russian mediation that has been encouraging rapprochement, and there has been a clear broadening of humanitarian exemptions to sanctions. More broadly, Arab states in the region have shifted to the belief that there is a need for engagement with Damascus and greater action to address concerns such as provision of humanitarian aid. Yet these developments do not signal a major alteration in the status quo in Syria that has existed since spring 2020, whether in terms of territorial control between the different sides or the impositions and threats of sanctions that matter most for Syria's economy.
In this setting, the obstacles to reinvestment by those who had investments in the pre-war period and to those wishing to make new investments are significant and perhaps insurmountable except for those with the highest risk tolerance. Any notion of reconstruction coming from GCC countries is deterred by U.S. threats to impose sanctions, since the concept is explicitly marked out in the Caesar legislation. There is also very little reason to expect notable reinvestment by mainstream brands and companies, or that entities that provided loans to Syria pre-war such as the European Investment Bank (which suspended its loans to Syria in November 2011) will start lending to Syria again.
To illustrate this point about the dim prospects of reinvestment, consider as an example the business of fast foods. Local businesses have exploited their popularity to open imitation outlets in areas outside of Syrian government control (most notably in Idlib and north Aleppo) that are for the time being protected against any new major offensives and primarily conduct transactions in Turkish liras. Activity by small and medium-scale businesses of this sort could be seen as very much reflecting a continuation of pre-war trends. According to an estimate by researcher Samer Abboud in 2013, such businesses have constituted 95% of Syria's business community.
Conversely, there is no expectation for now that companies owning the prominent fast-food brands will return to government-held Syria under the new status quo. Besides the deterrence factor embodied in the latest American sanctions legislation and the fear of being tarred by association with the Syrian government, the reality is that the economic situation in government-held areas has only gotten worse since all major fast-food brands were shut down in Syria by late 2013.
This economic decline, which has accelerated since 2019, is foremost embodied in the decline of the value of the Syrian pound to a rate of around 7000 Syrian pounds to 1 US dollar today as opposed to a March 2011 exchange rate of 47 Syrian pounds to the dollar, which translates across the board to higher prices for goods and knock-on effects for businesses and consumer purchasing power.
The causes of this economic deterioration are likely multifaceted with sanctions playing some part and some sort of link with Lebanon's own severe economic crisis that has seen the Lebanese pound continue to plunge to new historic lows against the dollar. The problem is that the government has no effective solutions to escape this downward spiral. While it is likely that an easing of American and European sanctions and rapprochement steps with Turkey could reduce some of its economic woes, the former in particular cannot be expected under the status quo. As such, the business environment in Syria generally remains unconducive, with a vacuum that will only be partially filled, mainly by the Syrian government's most important allies: Iran and Russia.