From Syria to Gaza: A blueprint for rebuilding the Middle Easthttps://en.majalla.com/node/324534/business-economy/syria-gaza-blueprint-rebuilding-middle-east
From Syria to Gaza: A blueprint for rebuilding the Middle East
A strategy to rebuild post-conflict Arab economies is slowly taking shape despite Israeli intransigence. It’s an enormous task, but the cost of inaction is higher.
Lina Jaradat
From Syria to Gaza: A blueprint for rebuilding the Middle East
Syria’s new top diplomat has settled into his role with such remarkable ease that it is hard to imagine that, until very recently, he was a key member in one of the country’s biggest armed militias, deemed a terrorist outfit by much of the West.
In the two months since assuming the post of foreign minister after the collapse of Bashar al-Assad’s regime, Asaad al-Shaibani has headed several official delegations on regional diplomatic tours. He has also moved around quietly.
With great fanfare, he headlined an event with former British Prime Minister Tony Blair at the World Economic Forum in Davos and appeared at Dubai’s World Government Summit. However, an unannounced appearance in Saudi Arabia may have been the most significant.
On 16 February, al-Shaibani was flown discreetly to the ancient town of AlUla. There, he sat for hours in a closed meeting that could help reshape the future of Syria and the region. In the room inside Al-Maraya (the world’s largest mirrored building) were the finance ministers of all the Gulf Arab states, plus top officials from the International Monetary Fund (IMF), the World Bank, and major Arab development funds.
One item was on the agenda: how to help rebuild the region’s war-ravaged economies. Afterwards, Saudi Arabia and the IMF said participants agreed to a broad plan to help rebuild post-conflict economies, with a focus on Syria. It will start with a thorough survey of the damage, the rebuilding of state institutions, and the mobilisation of funds.
Al-Assad's ouster put Syria at the heart of an ambitious push to stabilise a troubled region that was, until recently, firmly under Iran's influence
Syria's integral role
Al-Assad's ouster put Syria at the heart of an ambitious push to stabilise a troubled region that was, until recently, firmly under Iran's influence. Lebanon and the Gaza Strip are also on the agenda, but Syria's political reset makes it a promising starting point.
The interim government, headed by President Ahmed al-Sharaa, has approached potential backers, signalling that Syria will no longer play host to radical Islamists or Iranian 'advisors'.
Officials who have met al-Shaibani in private were impressed with his command of the details regarding the rebuilding of Syria's economy. This includes ending sanctions and rebuilding key state institutions such as the central bank.
"The government has gone out of its way to engage with us, and we're not going to say no to that," said Prince Khalid bin Bandar, Saudi Arabia's ambassador to the UK, at an event in London organised by SRMG Think, a consultancy, on 21 February.
"We are trying to help where we can and bring people along. The quicker we get to a new Syria, the more likely we can help it move down a direction that is positive for everyone."
The Saudi approach to coordinating Arab and international support reflects a belief that aid should not be seen as "charity" but rather as a necessary act to avert future instability. Collaboration with institutions such as the IMF reflects another conviction: that help should come with reforms to avoid a repeat crisis.
A man looks out to the devastation while clearing rubble and debris from a house at the Yarmouk camp for Palestinian refugees south of Damascus on December 22, 2024.
There is much to be done: Syria's civil war has battered its economy and destroyed its state institutions, Lebanon's economic crisis is even worse, while Gaza lies in ruins, with Palestinian statehood further away than ever.
Looking at Iraq for lessons doesn't necessarily inspire confidence. Here, more than two decades after the US invasion, the economy is still struggling, and Iranian-backed militias remain a powerful influence. Lebanon's reconstruction after the 1975-1990 civil war was largely fuelled by unsustainable borrowing.
And then there is Donald Trump. The US president can claim some of the credit for ending the war in Gaza and Lebanon, yet his "predictable unpredictability" is already unsettling allies, not least by his fantastical proposal to take ownership of Gaza and expel its residents.
One Gulf insider described Trump's intervention as like "sucking the air out of the room". Trump has challenged Arab powers to come up with their own proposal for the Strip and its residents, and this will be the subject of an emergency summit in Cairo in March.
Regional and international engagement with Syria and Lebanon has gathered pace, fuelled by a sense of urgency and a realisation that the cost of inaction could be higher, especially with US and Israeli talk of displacing Palestinians to Egypt and Jordan.
In Syria, foreign powers are stepping in. Türkiye is trying to replace Iran as an important foreign influence, not least to help rid northern Syria of its armed Kurdish militias, while Israel took advantage of the chaos to occupy more Syrian territory unchallenged.
An Israeli soldier takes a position in the Syrian town of Jubata al-Khashab, in the UN-patrolled buffer zone in the annexed Golan Heights, on 20 December 2024.
Unanswered question
How to rebuild Syria's economy is a key and as-yet-unanswered question. Since 2011, it has shrunk by 85%. The UN says nine out of ten Syrians now live in poverty. Inflation is sky-high, and much of the country gets less than three hours of electricity per day.
"What has happened in Syria is a literal regime collapse. There aren't even structures in place to determine what the long-term outlook will be," says Hani Sabra, a geopolitical analyst and founder of Alef Advisory, a New York-based consultancy.
The IMF plans to send a team to assess Syria's needs. Lifting the international sanctions imposed during the Assad regime will be a big step to unlocking aid money.
But Gulf aid will come with expectations, such as rebuilding state institutions, tackling corruption, and spending money efficiently. "We are going to do it in a measured way," Prince Khalid said. "For every bit of help, we want to see positive change."
The same approach will be followed in Lebanon, which is seen as a more complicated case than its larger neighbour, in part because of the toxic sectarian political structure that has caused so many problems for decades.
Another factor is Israel's refusal to withdraw fully from southern Lebanon, undermining Lebanon's new president and government. Analysts warn that Israel's continued occupation will only serve as a recruiting tool for Hezbollah, which will help it to rebuild.
Vehicles drive near damaged buildings in Beirut's southern suburbs after a ceasefire between Israel and Hezbollah took effect, Lebanon November 27, 2024.
Lebanon's in-tray
The initial cost of Israel's bombing of Lebanon and the associated damage has been put at $8.5bn by the World Bank. That includes $3.4bn in physical damage and $5.1bn in economic losses.
Lebanon was already in a sorry state, having defaulted on its debt repayments in 2020. This hit the currency and banks hard. A planned $3bn bailout from the IMF remains stalled due to Lebanon's failure to enact unpopular but necessary reforms to restore confidence.
The recent election of army commander Joseph Aoun as president and the appointment of top international jurist Nawaf Salam as prime minister has added much-needed impetus for reform. Yet entrenched political and financial interests will need to be taken on if things are to change and much-needed reforms are to be enacted.
Among the challenges is the restructuring of Lebanon's banking system, yet influential Lebanese bankers reject the IMF conditions because they would drive insolvent lenders out of the Lebanese market.
Alia Moubayed, a prominent Lebanese economist, says it's hard to separate Lebanon's economic woes from social and political challenges.
"The government can't mobilise resources for reconstruction without tackling the sovereign debt default, the losses of the financial system and the losses of the central bank,'' she says. "Both Lebanese citizens and external donors want to see good governance and accountability-related reforms to be enacted first."
That's a tough ask in a country where corruption is endemic. According to the latest Transparency International corruption index, 40% of Lebanese reported having to pay a bribe for public services. Out of 180 countries surveyed in the report, Lebanon came in 154th place.
The UN says it will cost $53bn and take ten years to rebuild Gaza and the West Bank
It starts with two states
As with Syria and Lebanon, Arab states see an Israeli withdrawal from Gaza as a necessary precondition for the return of the Palestinian Authority to lead the territory's reconstruction efforts. Israeli Prime Minister Benjamin Netanyahu has rejected that idea.
The UN says it will cost $53bn and take ten years to rebuild Gaza and the West Bank, but an Egyptian-led plan to rebuild Gaza will be presented to the Arab League next week. Arab officials and analysts have long argued that only the establishment of a viable Palestinian state would bring regional stability.
Saudi Arabia has made that a precondition for its normalisation of relations with Israel. "For us, it starts and ends with Palestine,'' said Prince Khalid. "We agree on a two-state solution, a government of Palestine, and then we can talk about everything else. But everything else is not going to happen without that."
