Damascus Puts Destroyed Factories on the Auction Block
04 October 2021

Damascus Puts Destroyed Factories on the Auction Block

04 October 2021

Table of Contents

In-Depth Analysis


On 28 September, the Government of Syria Ministry of Industry issued a call for proposals offering up 38 destroyed or damaged factories for investment by “companies and individuals from the private sector and friendly countries.” Most of the affected factories were previously owned by the state, such as the General Corporation for Cement and Al-Sharq for Food Products. Others, however, were under shared public-private ownership, such as the storied Ghraoui Chocolate Company. According to the Ministry, investors will be required to rehabilitate the facilities, which it said remain important to the national economy. Under current conditions, industrial investment in Syria is a gamble on an uncertain future, not a sound business plan, but it offers a glimpse of an evolving strategy to keep the Syrian national economy afloat by soliciting outside support for services once tightly controlled by the state.


Damascus Puts Destroyed Factories on the Auction Block


A call for bets

Syrian industry needs a shot in the arm. The manufacturing sector has suffered an estimated 3 to 4.5 billion USD in damages, and two thirds of public factories have been destroyed. Yet analysts have dismissed the latest announcement as a mere publicity stunt, akin to other recent high-profile ventures to promote national production that have fallen flat, such as the Year of Wheat campaign to restore Syria to food sufficiency (see: Syria Update 21 December 2020). Indeed, risks abound. Security challenges persist across the country. The national economy is highly sanctioned, which has compounded an economic crisis that impedes the import of materials and industrial inputs. Chronic energy shortages have ground life to a halt — to say nothing of the impact on electricity-reliant industrial activities. The regulatory environment is also in flux. The Government’s behaviour toward the country’s elite business class casts particular doubt on Syria’s attractiveness to outside investors. The recent crackdown on a wide range of small, medium, and large businesses is merely the latest in a series of cullings that famously began with the sacking of Rami Makhlouf, once Syria’s most influential businessperson, in 2019 (see: Syria Update 27 September 2021). Recent weeks have also witnessed protests among Aleppo businesspeople, coinciding with widely circulating, albeit exaggerated, reports concerning the flight of industrialists due to service shortfalls that have hampered business. 

Picking sides, domestically and abroad

As of writing, no investor has publicly stepped up to gamble on Syria’s industrial economy. One day after the announcement, on 29 September, Serbian Ambassador to Damascus Radovan Stojanovic met with Syrian Prime Minister Hussein Arnous and Minister of Petroleum and Mineral Resources Bassam Tomeh to discuss the possibility of expanded economic cooperation in shale oil, gas, and mineral resources, mainly phosphates. Syrian state media cheerfully touted the visit as evidence of Europe’s interest in doing business in Syria, yet the visit brought with it no concrete pledges and no foreign capital.

In the long term, two types of investors are most likely to respond to the Government’s call. First, there are many in Syria who now sit on capital that is trapped inside the country, including war profiteers and sanctioned individuals. Samer Foz, who recently became the country’s main sugar supplier, is the most notable. Such individuals may be keen to invert the dictum expressed by the American Civil War novelist Maragaret Mitchell, who noted that there are “two times for making big money, one in the up-building of a country and the other in its destruction. Slow money on the up-building, fast money in the crack-up.” War profiteers who have enriched themselves during Syria’s destruction may now be seeking long-term returns through diversification into the industrial sector. Investing in industry may also present an opportunity to solidify their position in the post-war economy and social sphere by expanding their patronage and employment networks. That said, there are less risky means of laundering war economy lucre, such as speculation in the private real estate market, which does not require risky engagement in state finances. Indeed, war economy speculators have already driven Syrian real estate prices through the roof. Ultimately, it is possible that the Government of Syria may pressure loyalist businesspeople to invest in the manufacturing sector, much as it has essentially forced the whales of Damascus to make capital injections into a special Central Bank fund. Although these individuals hold capital, they may not necessarily control it (see: Syria Update 25 September-1 October 2019).

Second, private capital may attract insiders from “friendly countries.” Although new investment from Serbia is not guaranteed, it is among the countries from which investments in Syrian natural resources — primarily phosphates — have already been made (see: Syria Update 2 November 2020). Real estate has also attracted foreign private investment, and Iranians are reported to be among the biggest buyers. All told, Russia and Iran are the actors most likely to gamble on Syria’s eventual rehabilitation, and they have already taken control over the most attractive oil, gas, and mineral resources that remain in Government-controlled areas. Realising a return on an investment in manufacturing requires a commensurate political commitment to the Assad regime’s long-term stability and economic recovery that few foreign investors are likely willing to stomach. With these allies eager to reap gains after years of support during the war, manufacturing may be among the most attractive investment opportunities Damascus can still offer. 

Ultimately, the economic significance of such investments and their impact on livelihoods should not be exaggerated. Even if factories were rehabilitated, the Government is currently unable to supply the electricity necessary for production. And even if the energy deficiency were resolved and factories began producing food, widgets, and construction materials, it is doubtful that impoverished Syrians would be able to buy them.


Whole of Syria Review

Putin and Erdogan Discuss Syria (and Antibodies) in Sochi

On 29 September, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan met in Sochi for their first face-to-face meeting in 18 months. Although neither party shared a detailed agenda for the meeting, it was expected that the discussion would touch on escalating violence in northwest Syria, as well as Russian support to Turkey via the TurkStream gas pipeline and the S-400 missile defence system. The summit comes amid a violent month in Syria’s Idleb Governorate, where Russia has renewed bombardments along frontlines with the opposition, conducting over 200 strikes in 24 days. Rumours have circulated that the Russian attacks presage a full-fledged assault by Syrian Government and Russian forces to retake the strategic M4 highway in southern Idleb. For its part, Turkey ramped up its troop presence in northern Syria in the days leading up to the meeting. 


Neither leader spoke to the press following the three-hour closed-door session; however, on 29 September, Russian and Turkish officials separately alluded to a vague commitment to maintain the status quo in Syria’s northwest. In lieu of transparency on issues closely linked to the fate of millions of civilians in northern Syria, the two leaders’ feud over who possessed the most COVID-19 antibodies was well-reported in the hours following the meeting.

Business as usual

The parameters of the so-called status quo remain to be seen, and the meeting did little to quell the threat of instability in Syria’s northwest. Instead, it can be expected that both Turkey and Russia will continue to use the Syria file, and more specifically the frontlines in the north, as a political wedge on broader, regional issues of interest. In the current dynamic, Turkey is keen to avoid a renewed refugee influx along its southern borders while the Syrian Government’s interests in the M4 highway override its desire for a full retaking of Idleb. 

Personal relations between Putin and Erdogan have developed into one of the most important factors shaping the trajectory of the protracted crisis in Syria, which is but one aspect of a complex regional partnership between the countries. Since surviving a coup attempt in 2016, Erdogan has hewed closer to Russia, yet Putin has been keen to emphasise that Erdogan is a junior partner (see: Syria Update 13 January 2020). Turkey is now reliant on Russia for the S-400 missile defence system — which Ankara has embraced despite the toxic impact on relations with its NATO partners, who use a competing American missile system — and Russian gas exported via the TurkSteam pipeline — which Turkey needs to keep its manufacturing sector humming and its population content, as surging energy prices threaten markets and stability across the globe. 

Russia has often used military pressure in Syria to create a better negotiating position; thus, its renewed shelling in Idleb in September could be an effort to pressure Turkey on a range of issues, including control of the M4 and regional affairs. Russia and Turkey have been known to make small concessions which do more to serve individual political interests than to establish detente along frontlines (for more on previous agreements between the two countries, see: ‘Land Swaps’: Russian-Turkish Territorial Exchanges in Northern Syria).

Rival Syrian Delegations Vie for Assurances and Legitimacy with US Visits

On 29 September, a delegation of the Syrian Democratic Council (SDC), the political wing of the Syrian Democratic Forces (SDF), met in Washington with Joey Hood, the Principal Deputy Assistant Secretary of State for Near Eastern Affairs, and Ethan Goldrich, the State Department’s newly-appointed top official on Syria. Following the meeting, Ilham Ahmad, the Executive President of the SDC, stressed the continuation of the cooperation between the SDF and the international coalition to defeat terrorism and stabilise the region. Hood stated that the US is committed to sustaining political and military support for the Autonomous Administration and the SDF, and will continue to engage in infrastructure rehabilitation projects and provide economic support. Ahmad, during a roundtable discussion hosted by the Washington Institute on 27 September, re-stated that the SDC is ready to engage in negotiations with Turkey — if the latter is willing to address the issue of its occupation of Syrian territory — and with the Government of Syria — if it is willing to accept a decentralised national political system. Ahmad added that although the SDC is grateful to the Kurdistan Workers’ Party (PKK) for its counterterrorism efforts in Syria and Iraq, its members are not formally included under the umbrella of the Autonomous Administration.

It is worth noting that Goldrich met with a number of members of the National Coalition for Syrian Revolutionary and Opposition Forces (Etilaf) on 30 September and reaffirmed US support for the political solution and the application of UN Security Council Resolution 2254. Multiple media sources confirmed that the US is currently sponsoring indirect talks between the Etilaf and the SDC in order to reconcile their competing visions for the future of Syria. Meanwhile, on the sidelines of the 76th Session of the UN General Assembly in New York, envoys representing each of Syria’s three main political powers — Syrian Foreign Minister Faisal Mikdad, Etilaf President Salim al-Muslat, and SDC President Ilham Ahmad — competed to expand their international diplomatic footprint and met foreign representatives.  

The Syria conflict’s diplomatic turn

Nine months into office, the Biden administration has yet to formulate a Syria policy, and America’s priorities in the protracted Syria conflict remain unclear as Washington’s attention drifts eastward to focus on regional competition with China. This has worried the US’s clients in Syria, especially after the rapid US withdrawal from Afghanistan. This uncertainty has driven America’s main beneficiaries in Syria, the Autonomous Administration, to push their interests in Washington, doing so with the backing of a Beltway community that sees countering Iran and suppressing the Islamic State as worthwhile goals that are achievable only through continued support to America’s Syrian partners.

Yet for the moment, international diplomatic momentum is clearly behind Damascus. The Government of Syria is closer than ever to achieving some level of diplomatic normalisation. Its greatest strength in this regard is the reality that its interests overlap with those of regional actors, as exemplified by the recent Arab Gas Pipeline deal (see: Syria Update 20 September 2021). Meanwhile, there is continuing talk of unifying the Etilaf and the SDC, both of which continue to seek international support to shore up their visions for Syria’s future. The contours of any united front between the dominant actors in northeast and northwest Syria are yet to be seen, and their starkly opposing visions and acrimonious history will be difficult to overcome. According to Turkey, for this to become a reality, the Autonomous Administration must end hostilities toward Turkey and cut ties with the PKK, an organisation that remains a driving political force in northeast Syria despite claims to the contrary by northeast Syria’s leaders. Kurdish political and military authorities such as Ilham Ahmad and Mazloum Abdi have voiced their openness toward a deal with Turkey (see: Syria Update 25 November 2020), but have been confronted by hardliners within the SDF, who are the de facto power brokers in northeast Syria and refuse to make necessary concessions (see: Syria Update 31 August 2020).

The Syrian Government Tightens Its Grip on Informal Trade and Social Media 

On 24 September, the Director of the Consumer Protection Department at the Ministry of Internal Trade and Consumer Protection stated that the Government will imprison individuals who trade dry bread for 3 to 7 years and levy a fine of 1 million Syrian pounds (about 285 USD), except for child offenders. Dry bread (i.e., stale, days-old bread) is sometimes used as a cheap alternative fodder for livestock. This development, coming amid a widening campaign to control Syrians’ behaviour, is also part of a decade-long struggle over bread production. The conflict, territorial divisions, shattered value chains, and water shortages have blunted wheat production in a country in which diets are heavily reliant on bread and roughly 90 percent of the population now lives in poverty. In addition to shortages, the quality of bread has also declined. Flour imported from Russia, the largest foreign supplier of wheat to Syria, is low-quality and needs sifting, cumbersome preparation, and costly additives such as sugar, pushing more costs onto bakers and, ultimately, buyers. 

Keyboard warriors?

This new legislation is part of a wave of laws that widens Government control and hearkens back to the worst excesses of Syria’s authoritarian past. It is not immediately clear whether the use of dry bread as animal feed has significantly driven up bread costs or disrupted livestock value chains, yet the threat of punishment is in line with Damascus’s longstanding efforts to control informal trade. It also follows a raft of legislation to micromanage and penalise citizens’ online behaviour. In September, the Head of the Cybercrime Department stated that emojis will be admissible as evidence of intimidation and violence, even when used unintentionally, and their use may be punishable under the country’s strict cyber-crime laws. Activists have criticised the widening of the Government’s already-expansive surveillance powers and increasing limitations on freedom of expression. Aid implementers should note that the content of public communications and beneficiary outreach may come under greater scrutiny as a result of the stated initiative. 

The UN Declares a New Death Toll for the Syria War, Admits Undercount

On 24 September, the United Nations Office of the High Commissioner (OHCHR) declared that 350,209 people have been confirmed killed in the conflict in Syria between March 2011 to March 2021. The new death toll, which is the first to be issued by the UN since August 2014, is based on a strict methodology requiring the full name of the deceased in addition to the date and location of death. The UN High Commissioner for Human Rights stated that this estimate therefore undercounts the total number of fatalities. The number includes civilians and fighters and one in every 13 victims was a woman or a child. The most intense bout of killing it documented was in the Aleppo Governorate, which became a flashpoint in the conflict in 2015, when 51,731 fatalities were recorded.

Lost in Numbers 

Reliable figures of any type are elusive in Syria. Groups involved in monitoring human rights violations in the country admit that it is difficult to obtain an accurate estimate of the war dead due to access issues, opacity on the part of parties to the conflict, and the large number of detained and disappeared individuals. While human rights groups have succeeded in collecting the names of many of the deceased, the documentation necessary for verification is often inaccessible. Using a less rigid methodology than the OHCHR, the Syrian Observatory of Human Rights estimates that more than 606,000 have died in Syria since 2011. Worryingly, the death toll in Syria continues to increase. In recent months, civilians in Dar’a have been shelled and forcibly displaced in a revival of the Government’s reconciliation strategy, and more communities in the south are likely to face a similar fate. Meanwhile, forced disappearances and the torture of civilians, including returnees, continue. A member of the UN Commission of Inquiry on Syria investigating war crimes recently told the UN Human Rights council that incidents of unlawful and incommunicado detention by Government forces remain “unabated,” adding that “this is no time for anyone to think that Syria is a country fit for its refugees to return” (see: Point of No Return? Recommendations for Asylum and Refugee Issues Between Denmark and Damascus).

NES Water Forum Targets Turkey, Downplays Local Issues

Amid continuing politicisation of water issues in eastern Syria, on 27-28 September, Autonomous Administration authorities hosted an international water forum in Al-Hasakeh city. The forum was organised by the Euphrates Center for Studies and Rojava University and attended by a number of experts, INGO members, and Western officials, who convened to discuss drinking water shortages, Turkey’s construction of dams on the Euphrates River, and the broader weaponisation of water. Suleiman Arab, the Joint President of the Autonomous Administration’s Local Administration and Environment Committee, stated that the body respects international and regional water sharing agreements between Turkey, Syria, and Iraq, yet denounced Turkey for its water practices. The forum issued a number of recommendations including: 

  • Denouncing Turkey’s hydrological warfare and submitting a comprehensive report of Turkish violations to the UN, EU, and international and human rights organisations;
  • Filing a lawsuit against Turkey for its alleged violations of international law; 
  • Calling upon the international community to fulfil its humanitarian duties in eastern Syria; 
  • Calling upon the Autonomous Administration to engage in dialogue with local authorities in Iraq and Syria over water issues; and 
  • Developing awareness programmes and rationing measures for water usage on the local and regional levels.

Weaponisation and counter-weaponisation

The reduction of the Euphrates River to a critical level at the beginning of the year constitutes a regional crisis that has forced aid actors to navigate mounting tensions between Kurdish authorities in eastern Syria and their neighbours in Turkey. Writ large, the asymmetrical power dynamic between Turkey and the other countries within the Euphrates Basin (Iraq and Syria) has allowed Turkey to increase its share of water at the expense of its downriver neighbours, who are weaker and more fragmented. While Turkey and Iraq struck a water sharing agreement on 13 September that reaffirms the Turkish commitment to fair play, Ankara has few realistic options to negotiate with its southern neighbours in Syria. From its perspective, there is no legitimate government in Syria that is capable of forging a similar deal, neither in Damascus nor in northeast Syria.

Meanwhile, the Autonomous Administration is not entirely wrong to call attention to Turkish attempts to leverage water for political gain (seen most visibly in the frequent attacks on the Allok water station in Al-Hasakah), yet its exclusive focus on the weaponisation of water by Turkey is shortsighted. This approach completely overlooks local factors that play a significant role in deepening the water crisis (see: Syria Updates 10 May 2021), including overexploitation and mismanagement of water resources, contamination of surface and underground water, and lack of proper agriculture and energy regulations (the main water-consuming sectors in northeast Syria). Aid actors should be aware of broader regional water politics, particularly as climate change heightens the fragility of communities and exposes their programmes to greater risk, yet their primary focus should remain local water-use issues and mitigations that can build long-term resilience.


Open-Source Annex

Key Readings

The Open Source Annex highlights key media reports, research, and primary documents that are not examined in the Syria Update. For a continuously updated collection of such records, searchable by geography, theme, and conflict actor, and curated to meet the needs of decision-makers, please see COAR’s comprehensive online search platform, Alexandrina, at the link below..

Note: These records are solely the responsibility of their creators. COAR does not necessarily endorse — or confirm — the viewpoints expressed by these sources.

Syria’s Circassian minority divided, scattered by years of war
What does it say? The report tracks the experiences of several Circassian Syrians over the course of the conflict, highlighting internal and external struggles with political affiliation, displacement, and familial expectations. 

Reading between the lines: The Syrian Circassian community was impacted by the conflict in unique ways. The stories shared reflect the ways that the conflict has permanently altered Syrian society and, in many cases, familial relationships.

Source: Syria Untold
Language: Arabic with English translation
Date: 27 September 2021

Outcomes of Russian-American dialogue on Syria 

What does it say? The report outlines the details of two meetings between top American and Russian officials in mid-September, including between Presidents Biden and Putin, constituting a resumption of Russian-American dialogue rare during the Trump years.

Reading between the lines: While representing new territory for the two administrations, conversations largely went no deeper thanthe typical political sticking points between Russia and the US as related to Syria, namely Caesar sanctions, cross-border aid, and a lasting ceasefire in the northwest.

Source: al-Sharq al-Awsaat
Language: Arabic
Date: 28 September 2021

‘We lost hope’ Nearly 50 thousand industrialists emigrate in the past two weeks

What does it say? A member of the Aleppo Chamber of Commerce, Syrian industrialist Majd Shashman, reports that 28,000 industrialists left Damascus and 19,000 left Aleppo in the past two weeks alone, mostly en route to Egypt. 

Reading between the lines: While likely a gross exaggeration, the statement reflects an ongoing exodus of Syrian industrialists since 2011, likely accelerated in recent months by ongoing electricity shortages, economic challenges, and crackdowns by the state, which have made small-scale industrial development increasingly infeasible.

Source: Sawt al-Asama
Language: Arabic
Date: 25 September 2021

Assad the outcast being sold to the west as key to peace in Middle East

What does it say? Damascus has witnessed an uptick in diplomatic interest in recent months, with engagement increasing even from states previously supportive of the Syrian opposition, such as Jordan and Saudi Arabia. 

Reading between the lines: While normalisation is ongoing, it shouldn’t be overstated. Even countries keen to establish contact are not likely to invest the millions needed for reconstruction, opting instead to focus on issues where renewed engagement directly serves their own interests.

Source: The Guardian
Language: English
Date: 26 September 2021

After six years of Russian airstrikes in Syria, still no accountability for civilian deaths

What does it say? Airwars estimates that Russian airstrikes have killed as many as 23,000 civilians, including nearly 5,000 children, since its entry into the conflict in 2015. 

Reading between the lines: The war in Syria has complicated the utility of UN systems in generating accountability for crimes committed by Security Council member states such as Russia.

Source: Airwars
Language: English
Date: 30 September 2021

The Assad Regime’s Business Model for Supporting the Islamic State

What does it say? The report maps the pre-war origins of the IS and highlights the Syrian Government’s approach of keeping the IS at arm’s length while benefiting from the instability the group sowed.

Reading between the lines: Rather than directly filling IS coffers, Damascus’s approach to the group was, and still is, pragmatic: the looming threat of an IS resurgence serves as a mechanism for social control for Damascus, even though the group no longer wields territorial control in Syria.

Source: Lawfare blog
Language: English
Date: 26 September 2021

The Assad Regime Earns Points in New York 

What does it say? Several countries used the 76th general assembly of the UN in New York to express interest in taking steps toward normalisation with the Syrian Government. The report highlights different state interests as well as several implications. 

Reading between the lines: The growing interest in normalisation with Damascus from countries like Jordan and Iraq could soon create tensions between Western governments like the US, which maintain a hardline sanctions policy, and their Arab allies.

Source: Al-Hurra
Language: Arabic
Date: 24 September 2021

Days after reopening travel, the UAE halves the cost of visas for Syrians

What does it say? Soon after reopening travel from Syria, the United Arab Emirates (UAE) significantly reduced the price of tourist visas for Syrians. A one-month visa dropped from 1,800 dirhams (about 490 USD) for men to 550 dirhams (about 150 USD) for both men and women, while three-month visas now cost 2,200 dirhams (a little under 600 USD).

Reading between the lines: Gulf countries have long been a destination for Syrians who can pay the costs of entry and living. While the new regulations open up the possibility for increased travel, the UAE is still a costly destination for middle-income Syrians.

Source: Business2Business Syria
Language: Arabic
Date: 23 September 2021

The Wartime and Post-Conflict Syria project (WPCS) is funded by the European Union and implemented through a partnership between the European University Institute (Middle East Directions Programme) and the Center for Operational Analysis and Research (COAR). WPCS will provide operational and strategic analysis to policymakers and programmers concerning prospects, challenges, trends, and policy options with respect to a conflict and post-conflict Syria. WPCS also aims to stimulate new approaches and policy responses to the Syrian conflict through a regular dialogue between researchers, policymakers and donors, and implementers, as well as to build a new network of Syrian researchers that will contribute to research informing international policy and practice related to their country. This publication was produced with the financial support of the European Union. Its contents are the sole responsibility of COAR Global LTD and do not necessarily reflect the views of the European Union. For more information see the European Union Delegation to Syria webpage.

© 2022 COAR Global LTD. All rights reserved. Licensed to the European Union under conditions.