Syrian Reconstruction and Sino-Lebanese Ties

Lebanon hopes to profit from the reconstruction in Syria and the country that it’s most seeking to work within the process is China. Yet what remains to be seen is how willing the Chinese are to accept high-level risks when it comes to making large-scale investments in Syria that could benefit Lebanon.
Giorgio Cafiero
Giorgio Cafiero (@GiorgioCafiero) is the CEO of Gulf State Analytics (@GulfStateAnalyt), a Washington, D.C.-based geopolitical risk consultancy.
Syrian Reconstruction and Sino-Lebanese Ties

As the Syrian civil war gradually winds down, investors from around the world are looking for lucrative opportunities in the country’s reconstruction.

As the Syrian civil war gradually winds down, investors from around the world are looking for lucrative opportunities in the country’s reconstruction. Because the government in Damascus is likely to favor the countries that have stood by its side since the Syrian crisis broke out in 2011, China appears to have the diplomatic leverage and financial resources to drive the process of rebuilding and reconstructing Syria. Although China never became an active player in Syria’s civil war, Beijing has been a reliable defender of the Damascus regime at the UN Security Council while maintaining warm ties with Syria’s Ba’athist leadership.

Generally, the Chinese fund infrastructure projects in foreign countries via loans, typically requiring Chinese firms to do the construction work themselves. In the case of Syria, Chinese companies will have the advantage of being able to draw upon their experiences operating in post-2003 Iraq after they had secured lucrative contracts in that country’s reconstruction. For a large-scale reconstruction and trade operations in Syria, Beijing would need direct access to the country via the Mediterranean Sea.

Normally, China would be interested in the Syrian ports of Latakia and Tartus, but several logistical and political factors made it impossible for Beijing to utilize these Mediterranean ports. On the one hand, capacity-wise, the two ports can only handle limited logistical operations, and this does not meet the Chinese needs. On the other hand, these ports—and the Syrian coast in general—are at the center of increasingly hot competition between Russia and Iran for power and influence.

Since 2017, on several occasions, Moscow denied Tehran’s request to build a port on the Syrian coast or utilize an existing one to guarantee its solo influence there. However, last February, Assad agreed to give Tehran the right to use Latakia port, thus granting Iran direct access to the Mediterranean Sea. Almost two months later, Russia announced that it agreed with the government in Damascus to rent Tartus port for 49 years.

Given that China has been careful not to get caught in the middle of Russian-Iranian competition over the Syrian ports, Beijing had already secured the best available alternative which is the nearby Tripoli port in the neighboring Lebanon. Indeed, China has lately been paying close attention to Lebanon. Speaking at the China-Arab Banking and Business Forum earlier this year, Beijing’s ambassador to Beirut said that Lebanon has much potential to become a “charming pearl in the Belt and Road” initiative.

Tripoli, Lebanon’s second biggest city, has deep historic links to Syria and is located closer to the Syrian capital than Syria’s main deep-water ports in Latakia and Tartus.

Tripoli, Lebanon’s second biggest city, has deep historic links to Syria and is located closer to the Syrian capital than Syria’s main deep-water ports in Latakia and Tartus. Such historic ties and close geographic proximity to Syria make Tripoli even more of a logical place for Chinese investors seeking to access Syria’s areas of reconstruction.

Over the past few years, the port of Tripoli, located 30 miles from Syria, has been rehabilitated and expanded with the help of Chinese companies to prepare it to host the largest types of ships. The port was also equipped with sophisticated Chinese cranes capable of lifting and transporting more than 700 containers a day.

Hezbollah, a pro-Iran Lebanese Shi’a party, has blocked attempts to further develop the port in the Sunni-majority city more than once. However, the Islamic Development Bank recently granted the port a USD 86 million loan to further strengthen its role. Realizing that the port has the potential to become a major Mediterranean trade hub that links Beijing not only to Syria but also to the rest of the region, China opened a direct sea-lane to Tripoli port last year.

Lebanon is hopeful that opportunities to benefit from Chinese investment in Syria’s reconstruction can help the cash-strapped Mediterranean country’s economy recover following eight years of the Syrian crisis harming its foreign investment climate and overall financial health. The Lebanese are unquestionably preparing for large-scale investment from China. But the question is, would China commit to rebuilding Syria?

Last September, Syria’s state minister for investment affairs reiterated that Damascus will give priority to “friendly countries” such as China, Russia, and Iran in his country’s reconstruction process. According to UN estimations, reconstructing Syria would cost as much as USD 400 billion. China has the second biggest economy in the world, the world’s largest foreign currency reserves ever, and its contractors are leading the global construction industry. In this context, China enjoys certain advantages over Russia and Iran, leaving Beijing in a better position to lead the reconstruction process than either Moscow or Tehran.

Beijing can drive such a process only if the Chinese believe that they will gain enough from Syria’s reconstruction.

However, Beijing can drive such a process only if the Chinese believe that they will gain enough from Syria’s reconstruction. To be sure, there are no such guarantees when it comes to Syria. From a security standpoint, risks for investors are high. There is a lack of money, no sound legal infrastructure, widespread fuel shortages, an extremely weak rule of law, and other major crises that will continue preventing investment opportunities from emerging in “post-conflict” Syria.

Thus, while Lebanon may have some hope about betting big on China’s investments in Syria’s reconstruction and making the port in Tripoli pivotal to Chinese interests in Syria, the Chinese will likely be discouraged from investing in the reconstruction process until a concrete political solution to the Syrian civil war is reached. Unfortunately, such a settlement may not be reached for a long time.