Syria-Russia, forward to the past

Russian consortium Intourist Sinara has launched the works of a new four-star tourist centre in Lattakia in Syria. The project was awarded to the consortium by the Tourism Ministry some two years ago. (photo: Syrian president Bashar al-Asad and his Russian collegue Vladimir Putin).

The construction works are expected to start in November 2008 and to last two years. The value of the project is some $50 million and will be developed on the beach of Joul Jammal, 5 km north of the centre of Lattakia, on an area of 50,000 sq m.

The project includes: a four-star hotel on six floors, a second hotel on 13 floors with 400 rooms, restaurants, bars, a spa, a swimming pool, fitness centres and 16 chalets on three floors. Kuwait's company Safir International Hotel Management will manage the complex.

The Intourist Sinara consortium is a joint venture between the two Russian groups Vao Intourist and Sinara Group and plans to invest in Syria due to its proximity to Turkey which is already an important destination of the Russian tourists.

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This news could be read aside this one published on 24th of June 2008 in the Oxford Business Group weekly briefing


Old Friends, New Ties
Syria, Volume 154
24.06.2008

Syria appears to be on track to return to the days of its political and economic alliance with Russia. Foreign direct investment (FDI) is flowing into the country and Russian firms are being given preference in a number of infrastructure projects crucial to the Syrian economy.

Russia is looking to rebuild its status as a power in the Middle East. As a part of this process, one of its first ports of call was Syria, a logical choice given that it is ostracised by the other main international player in the region, the US.

For its part, Syria is actively seeking both FDI and influential allies. It appears to have found both in Moscow.

As part of this new era of co-operation, the upper house of the Russian parliament ratified an agreement to write off 73% of Syria's Soviet-era debt and reschedule the remaining amount owed. Most of the debt was racked up by Syria in arms acquisitions in the years before the fall of the Soviet Union.

Under the agreement, Moscow wrote off $10.9bn in outstanding debt, with a further $1.5bn to be repaid in equal half-year tranches over a period of 10 years. The remaining $3.6bn will be paid back in Syrian pounds, to be transferred to the Russian government's bank account with the Syrian central bank.

Yet while Moscow is in line to have just over a quarter of the outstanding debt returned, it is expected that the funds will be channeled into joint projects between Syria and Russia. The focus of these projects is intended to be in the oil, gas, water and industrial sectors.

In an address to the Syrian-Russian Business Council on June 12, Abdullah Al-Dardari, Syria's deputy prime minister for economic affairs, said it was vital for the two countries to develop ties in the economic, commercial and industrial sectors.

Last year, bilateral trade was valued at $1bn, a strong increase on the $630m figure from 2006. Russia is Syria's main source of imports, with around 10% of foreign goods coming into the country originating from the federation.

Russian firms are also benefiting from the reluctance of some Western companies to get involved in the Syrian economy. With Washington's sanctions limiting the activities of companies from the US, Russian firms have been given the inside running in a number of major infrastructure and development programmes.

In early February, Russian construction firm Stroytransgaz commissioned the first stage of a 139km gas pipeline in Syria, part of a larger project running from the Jordanian border to the Al Rayan gas collecting station near the city of Homs.

The company is also building a $210m gas processing plant in Syria with a capacity of 2.5bn cubic metres and has commenced work on a second natural gas processing plant in the country's north. The second project, valued at $220m, was awarded to Stroytransgaz by Damascus without a tender being held.

Russian oil major Tatneft is also active in Syria, having won the rights to explore and develop a 1900 square km field in the province of Deir ez-Zor, investing $26m in the initial stage of the project.

Russian firms are bidding on tenders to upgrade the rolling stock of the Syrian state railway, much of it Soviet-made, while Damascus is encouraging other companies to bid on contracts to improve the country's electricity network and port facilities.

Russia is also starting to invest in the Syrian tourism industry, with the company Intourist-Sinara announcing in mid-June it would build a 900-bed four-star hotel complex on Syria's Mediterranean coast, with an opening date set for 2010.

With many doors closed to it, Damascus can see in Russia a friendly state that can provide much of what the Syrian economy needs, investment and heavy engineering know-how.