The emerging Turkey-Syria-Iran alliance has Israel worried. The Gulf states are also trying to figure out what impact it may have on their security. I have been invited to a conference in order to address this topic this weekend. Saudi Arabia’s summit with Syria in Damascus recently was an effort to probe the ramifications of this alliance in the north. Since the conference, Saudi Arabia has been gratified to find that Syria Took a Position in favor of Saudi Arabia in its dispute with Shiite rebels in Yemen. This cannot please Iran. Tariq Alhomayed, the Editor-in-Chief of Asharq Al-Awsat, wrote:

We must also praise Damascus when it prioritizes the interest of Arab states, and supports Arab unity and the security of Arab lands. This is what happened on Wednesday when … Syrian President Bashar al Assad asserted to the Yemeni Foreign Minister Abu Bakr al Qirbi “Syria’s support for the unity of Yemen’s land and nation away from interference from any other states in its internal affairs…

A number of analysts were wondering what Saudi Arabia got out of its meeting with President Assad of Syria. The answer is Yemen. Yemen presents a number of dangers for Saudi Arabia. Read Matein Khalid’s Saudi Arabia’s Autumn of Risks in the Khaleej Times of 25 October 2009. He writes:

The civil war in Yemen has fast replaced Iraq and Lebanon as the high stakes focus of Saudi diplomacy. [It] has escalated into a national security nightmare for Riyadh. Hezbollah has once again checkmated Saudi ally Saad Hariri, the Prime Minister designate of Lebanon. The US… plans to withdraw troops from Iraq and exhibits no real enthusiasm to pressure Israel to halt its settlements or forge a credible military deterrent against Iran’s nuclear programme. Saudi Arabia distrusts the ruling cliques in both Baghdad and Damascus. Meanwhile, Saudi Arabia has faced setbacks in the international oil, money and banking markets that will force Riyadh to roll back its traditional cheque book diplomacy, the fabled “riyal politick”.

‘Iran is our friend,’ says Turkish PM Recep Tayyip Erdogan
We have no difficulty with Ahmadinejad – Erdogan
Warning to Europe not to ignore Turkey’s strengths
Robert Tait in Istanbul
The Guardian, Monday 26 October 2009

…..Recep Tayyip Erdogan had little doubt about who was a friend and who wasn’t.

Mahmoud Ahmadinejad, Iran’s radical president whose fiery rhetoric has made him a bête noire of the west? “There is no doubt he is our friend,” said Erdogan, Turkey’s prime minister for the last six years. “As a friend so far we have very good relations and have had no difficulty at all.”

What about Nicolas Sarkozy, president of France, who has led European opposition to Turkey’s bid to join the EU and, coincidentally, adopted a belligerent tone towards Iran’s nuclear programme? Not a friend?

“Among leaders in Europe there are those who have prejudices against Turkey, like France and Germany. Previously under Mr Chirac, we had excellent relations [with France] and he was very positive towards Turkey. But during the time of Mr Sarkozy, this is not the case. It is an unfair attitude. The European Union is violating its own rules.

“Being in the European Union we would be building bridges between the 1.5bn people of Muslim world to the non-Muslim world. They have to see this. If they ignore it, it brings weakness to the EU.”

Friendly towards a religious theocratic Iran, covetous and increasingly resentful of a secular but maddeningly dismissive Europe: it seems the perfect summary of Turkey’s east-west dichotomy.

Erdogan’s partiality towards Ahmadinejad may surprise some in the west who see Turkey as a western-oriented democracy firmly grounded inside Nato. It has been a member of the alliance since 1952. It will be less surprising to Erdogan’s secular domestic critics, who believe the prime minister’s heart lies in the east and have long suspected his Islamist-rooted Justice and Development party (AKP) government of plotting to transform Turkey into a religious state resembling Iran.

Erdogan vigorously denies the latter charge, but to his critics he and Ahmadinejad are birds of a feather: devout religious conservatives from humble backgrounds who court popular support by talking the language of the street. After Ahmadinejad’s disputed presidential election in June, Erdogan and his ally, the Turkish president, Abdullah Gul, were among the first foreign leaders to make congratulatory phone calls, ignoring the mass demonstrations and concerns of western leaders over the result’s legitimacy.

Talking to the Guardian, Erdogan called the move a “necessity of bilateral relations”. “Mr Ahmadinejad was declared to be the winner, not officially, but with a large vote difference, and since he is someone we have met before, we called to congratulate him,” he said.

“Later it was officially declared that he was elected, he got a vote of confidence and we pay special attention to something like this. It is a basic principle of our foreign policy.”

The gesture will be remembered when Erdogan arrives in Tehran this week for talks with Ahmadinejad and Ayatollah Ali Khamenei, Iran’s supreme leader, that will focus on commercial ties, including Turkey’s need for Iranian natural gas. Ahmadinejad has voiced his admiration for Erdogan, praising Turkey’s recent decision to ban Israel from a planned Nato manoeuvre in protest at last winter’s bombardment of Gaza.

Since the election, Iran has witnessed a fierce crackdown on opposition figures that has resulted in activists, students and journalists being imprisoned and publicly tried. Detainees have died in prison, and there have been allegations of torture and rape. Some of those alleging mistreatment have sought refuge in Turkey.

But Erdogan said he would not raise the post-election crackdown with his hosts, saying it would represent “interference” in Iranian domestic affairs.

He poured cold water on western accusations that Iran is seeking a nuclear weapon, saying: “Iran does not accept it is building a weapon. They are working on nuclear power for the purposes of energy only.”

Erdogan has overseen a dramatic improvement in the previously frigid relations between Turkey and Iran, which was viewed with suspicion by the pro-secularist high command of the powerful Turkish military. Trade between the two countries last year was worth an estimated £5.5bn as Iran has developed into a major market for Turkish exports.

Erdogan’s views will interest US foreign policy makers, who have long seen his AKP government as a model of a pro-western “moderate Islam” that could be adopted in other Muslim countries. They will also find an audience with President Barack Obama, who signalled Turkey’s strategic importance in a visit last April and has invited the prime minister to visit Washington. They are unlikely to impress Israel, which has warned that Erdogan’s criticisms risk harming Turkey’s relations with the US.

Erdogan dismissed the notion, saying: “I don’t think there is any possibility of that. America’s policy in this region is not dictated by Israel.”

He insisted that the Turkey-Israel strategic alliance – which some AKP insiders have said privately is over – remains alive but chided the Israeli foreign minister, Avigdor Lieberman, who he said had threatened to use nuclear weapons against Gaza.

Jerusalem Post: Lion’s Den: Turkey: An ally no more
Written by Daniel Pipes
Tuesday, 27 October 2009 19:42

“There is no doubt he is our friend,” Turkey’s prime minister, Recep Tayyip Erdoğan, says of Iran’s president Mahmoud Ahmadinejad, even as he accuses Israel’s foreign minister Avigdor Lieberman of threatening to use nuclear weapons against Gaza. These outrageous assertions point to the profound change of orientation by Turkey’s government, for six decades the West’s closest Muslim ally, since Erdoğan’s AK party came to power in 2002.

Three events this past month reveal the extent of that change. The first came on October 11 with the news that the Turkish military – a long-time bastion of secularism and advocate of cooperation with Israel – abruptly asked Israeli forces not to participate in the annual “Anatolian Eagle” air force exercise.

Erdoğan cited “diplomatic sensitivities” for the cancelation and Foreign Minister Ahmet Davutoğlu spoke of “sensitivity on Gaza, East Jerusalem and Al-Aqsa mosque.” The Turks specifically rejected Israeli planes that may have attacked Hamas (an Islamist terrorist organization) during last winter’s Gaza Strip operation. While Damascus applauded the disinvitation, it prompted the U.S. and Italian governments to withdraw their forces from Anatolian Eagle, which in turn meant canceling the international exercise.

As for the Israelis, this “sudden and unexpected” shift shook to the core their military alignment with Turkey, in place since 1996. Former air force chief Eytan Ben-Eliyahu, for example, called the cancelation “a seriously worrying development.” Jerusalem immediately responded by reviewing Israel’s practice of supplying Turkey with advanced weapons, such as the recent $140 million sale to the Turkish Air Force of targeting pods. The idea also arose to stop helping the Turks defeat the Armenian genocide resolutions that regularly appear before the U.S. Congress.

Ministers of the Turkish and Syrian governments met at the border town of Öncüpınar and symbolically lifted a bar dividing their two countries on October 13.

Barry Rubin of the Interdisciplinary Center in Herzliya not only argues that “The Israel-Turkey alliance is over” but concludes that Turkey’s armed forces no longer guard the secular republic and can no longer intervene when the government becomes too Islamist.

The second event took place two days later, on October 13, when Syria’s Foreign Minister Walid al-Moallem announced that Turkish and Syrian forces had just “carried out maneuvers near Ankara.” Moallem rightly called this an important development “because it refutes reports of poor relations between the military and political institutions in Turkey over strategic relations with Syria.” Translation: Turkey’s armed forces lost out to its politicians.

Thirdly, ten Turkish ministers, led by Davutoğlu, joined their Syrian counterparts on October 13 for talks under the auspices of the just-established “Turkey-Syria High Level Strategic Cooperation Council.” The ministers announced having signed almost 40 agreements to be implemented within 10 days; that “a more comprehensive, a bigger” joint land military exercise would be held than the first one in April; and that the two countries’ leaders would sign a strategic agreement in November.

The council’s concluding joint statement announced the formation of “a long-term strategic partnership” between the two sides “to bolster and expand their cooperation in a wide spectrum of issues of mutual benefit and interest and strengthen the cultural bonds and solidarity among their peoples.” The council’s spirit, Davutoğlu explained, “is common destiny, history and future; we will build the future together,” while Moallem called the get-together a “festival to celebrate” the two peoples.

Bilateral relations have indeed been dramatically reversed from a decade earlier, when Ankara came perilously close to war with Syria. But improved ties with Damascus are only one part of a much larger effort by Ankara to enhance relations with regional and Muslim states, a strategy enunciated by Davutoğlu in his influential 2000 book, Stratejik derinlik: Türkiye’nin uluslararası konumu (“Strategic Depth: Turkey’s International Position”).

In brief, Davutoğlu envisions reduced conflict with neighbors and Turkey emerging as a regional power, a sort-of modernized Ottoman Empire. Implicit in this strategy is a distancing of Turkey from the West in general and Israel in particular. Although not presented in Islamist terms, “strategic depth” closely fits the AK party’s Islamist world view.

As Barry Rubin notes, “the Turkish government is closer politically to Iran and Syria than to the United States and Israel.” Caroline Glick, a Jerusalem Post columnist, goes further: Ankara already “left the Western alliance and became a full member of the Iranian axis.” But official circles in the West seem nearly oblivious to this momentous change in Turkey’s allegiance or its implications.

The cost of their error will soon become evident.

‘Turkey-Israel ties could head for breakup’
By Herb Keinon, Jerusalem Post, October 23, 2009

The crisis in Israeli-Turkish relationship could deteriorate to the point of a breakup, former US ambassador to Israel Martin Indyk said on Wednesday. In an interview with The Jerusalem Post, Indyk, currently the Brookings Institute’s vice president for foreign policy, said that the “three ….

Asked what he thought Israel could do to prevent a further deterioration of ties, Indyk laughed and said he had an “all-purpose solution to every problem that has to do with Israel – make peace, and everything will be all right.”

He said that if Israel would pursue negotiations on both the Palestinian and Syrian tracks, “it would be a lot easier to deal with this type of collateral damage, and with issues like the Goldstone Report. But you can’t beat something with nothing.”

If you have nothing moving on either the Palestinian or Syrian tracks, he said, “It’s like the old bicycle metaphor: If you are not peddling forward you fall off.”

Opportunities Fade Amid Sense of Isolation in Gaza
By: Ethan Bronner | The New York Times

A Syrian Drought
By: Rachelle Kliger | The Media Line

Fate of new Syria bourse hinges on reform
Khalid Oweis, Reuters

There is still an ideological struggle in Syria between old conservative thinking, which wants to rely on the public sector, and economic openness,” he …..
DAMASCUS – The head of the Damascus Stock Exchange urged the government on Tuesday to boost the nascent bourse by offering shares in public companies and shaking off the legacy of a command economy stretching back four decades.

While avoiding the word privatisation, still a taboo in Syria, Mohammad Jleilati told Reuters that restructuring public enterprises and selling stock in the most viable of them was crucial for Syria’s market reforms and for the 11-company bourse.

But he acknowledged that an economic slowdown in the wake of the global financial crisis and a drought that has displaced hundreds of thousands of people inside Syria would make it difficult for government to proceed with reforms to a public sector employing 1.2 million people.

“When we studied widening the ownership of public companies, with the state retaining a major share, the General Labour Union told us, ‘You’re destroying the country’,” Jleilati said.

“The government had taken a decision to move to a market economy, but it also decided not to use shock therapy,” said Jleilati, an official in the ruling Baath Party before being appointed to head the bourse, which opened in March.

Syria’s labour unions, as well as the government, are controlled by the Baath Party, which took power in a 1963 coup, banned opposition and imposed emergency law and Soviet style economic policies that turned once-wealthy Syria into an economic backwater…..

Jleilati pointed to mostly loss-making state industrial companies employing around 270,000 people as an example of the challenges facing any attempt to clean up the public sector.

“We have been studying how to reform these companies for the last 20 years. International experts were recruited and told us realities we know. We achieved absolutely nothing. There needs to be a political decision,” Jleilati said.

“I studied in the former Eastern block and ended up throwing the books of Marx and Lenin in the garbage. There is still an ideological struggle in Syria between old conservative thinking, which wants to rely on the public sector, and economic openness,” he added.

The Syrian government also owns 20 construction companies, notorious for delays in delivering projects, that employ an estimated 150,000.

The electricity, water and telecom landline networks are also in the hands of the state, though a holding company controlled by Syrian tycoon Rami Makhlouf, a cousin of Bashar al-Assad, is negotiating to build and operate a 250 megawatt power plant.

Six of the 11 companies on the bourse are subsidiaries of foreign banks, all Arab.

U.S. sanctions on Syria have largely kept Western investment away since 2004.

Jleilati said seven companies, on top of the quoted 11, have applied to list, including a hotel company controlled by Othman al-Aidi, a Syrian businessman living between Syria and France who is well connected with the two governments. The small bourse trades three days a week, up from an initial two, despite a 2 percent limit on stock price movement, which Jleilati said could rise to 5 percent in the next two months. Volume was $430,000 on Tuesday, with 21,215 shares changing hands, compared with single-digit activity when the market was launched in March.

Brussels buckles, Damascus deliberates
Guardian (GB): 2009-10-25

After five years of patient negotiation, Syria is finally getting what it wants from the EU. Earlier this month Brussels announced that it would sign the long-awaited association agreement with Damascus as soon as 26 October. The agreement, which …

The benefits of an agreement for Syria are obvious: greater access to EU markets, increased aid and support for cultural, health and social programmes. Yet how does Brussels benefit?….

The EU’s primary motivation behind the treaty, and the desire to rush it through, is political. Despite being the greatest trade partner to the Middle East, and ploughing huge quantities of aid into the region (notably the Palestinian Authority), the EU is increasingly impotent in affecting its politics. Nicholas Sarkozy has led a renewed desire to correct this, both by pushing his idea of a Mediterranean Union and his personal goal of increasing France’s traditional influence in Syria and Lebanon. The treaty with Damascus therefore represents a chance to re-establish the Union’s clout in the region, and the sooner the better – perhaps indicating French fears that an EU consensus on Syria might not last….

Why then, is Syria suddenly reluctant to sign? Numerous answers present themselves. Firstly, this could simply be a short-term punishment for Europe’s unilateralism in announcing that Syria would sign the treaty without first consulting Damascus. Syria’s delay in signing might be a warning to Brussels not to take it for granted and to avoid being portrayed as a European vassal.

Alternatively, there might be some truth in Syria’s official explanation that it needs more time to study the document. The agreement has come to primarily represent a diplomatic victory for Damascus in its bid to end isolation, and it is possible that ministers haven’t yet considered how much of Syria’s sovereignty might be compromised by the details. While fellow Euro-Med signatories may have escaped scrutiny over human rights and good governance, there may be realistic fears that, with its human rights “emergency break”, Brussels will actually act on any future violations.

Finally, and in relation to this, stalling might be an attempt to renegotiate certain aspects of the treaty, especially the awkward human rights clauses. Following its recent détente with Saudi Arabia and visa-free agreement with Turkey, Damascus may be feeling confident enough to push the EU harder than before….

Foreign Investment In Syria Grows
Oxford Analytica, 10.26.09

Government efforts to open up the economy bring increase.

The UN Conference on Trade and Development (UNCTAD) World Investment Report, published last month, showed a year-on-year increase of 70% in foreign investment in Syria for 2008, highlighting the government’s efforts to open up the economy.

Trade. Among the key drivers for foreign investment, Syria’s trade policy is significant. The latest UNCTAD World Investment Report underlines the government’s increasing determination to attract investment through the normalization of diplomatic ties and the re-establishment of trade relations with the West. This strategy dovetails with the U.S. policy of pursuing constructive engagement with Syria as a means of achieving a solution to the Arab-Israeli conflict. The next stage in this procedure will be the removal of U.S. sanctions against Syria; assuming congressional support, sanctions against Syria will probably not be renewed next May. Domestic economy. Underpinning these initiatives is the domestic economic situation, most obviously, the running down of Syria’s oil reserves: –Governments have traditionally met investment costs through internally generated revenue. –Investment in Syria, along with the rest of the region, has traditionally been limited to the petrochemicals and refining industries. However, in 2008, it targeted the financial, tourism, retail and real estate sectors, as well as hydrocarbon projects. Low base. Nonetheless, the increase comes from a low base. The UNCTAD report indicates that Syria, despite increases in year-on-year investment, still trails other countries in the region in terms of investment inflows: –The vast bulk of outside investment still goes to Saudi Arabia ($38 billion), the UAE ($14 billion) and Qatar ($6.7 billion). –Even among the non-oil-producing countries, Syria still languishes toward the bottom of the list, outstripped in 2008 by Lebanon ($3.6 billion), Tunisia ($2.8 billion) and Morocco ($2.4 billion). Deterrents. There are several reasons for the overall low level of investment: —Poor governance. Research by the World Bank has shown that, in Syria–and indeed across the region–poor governance and administration is a major deterrent for investors. —Bureaucracy. Investors are also deterred by government bureaucracy. For example, businesses seeking to import machines and equipment must gain approval from the Ministry of Industry. —Interference. Investors are also deterred by the continuing degree of government interference in the economy. Although under Decree No. 8, most sectors are open for private investment, the government can–and does–interfere at any stage of production. —Export restrictions. Likewise, closer diplomatic ties between Europe and Syria, and the implementation of the Association Agreement, are unlikely to pave the way for significantly greater economic ties. The fact that possible Syrian exports to Europe, such as agriculture and textiles, will face European protectionism, will serve as a hindrance to European investment. —Political risk. Moreover, despite the improved diplomatic ties with the U.S. and Europe, Syria’s perceived high domestic and regional political risk will continue to undermine investment from these countries. Outlook. Investment will continue to come predominately from the Gulf oil producing nations which are comfortable with Syria’s political risk profile. Gulf investors also have the regional know-how and necessary contacts needed to carry out business in an environment where relationships are of crucial importance. They will maintain their focus on tourism, property and retail, which will enjoy healthy growth due to increasing demand. However, state control over the production process will undermine foreign, including Gulf, investment in industry. Chronic problems in the agricultural sector (such as drought and longer-term questions over the provision of water) will make this sector even less attractive to foreign investors. To read an extended version of this article, log on to Oxford Analytica’s Web site.

Jordan, Syria Cancel Border Levies by The Jordan Times

Jordan and Syria on Monday agreed to reciprocally exempt their citizens travelling between the two countries via land from any departure taxes paid at borders, effective January 1, 2010. … The two sides said the deal is meant to facilitate the flow of passengers and goods between the two neighbors.

Americans Join the Crowds on the Road to Damascus Tuesday, October 27, 2009 By Amy Kellogg

The ancient ruins at Palmyra, a popular Syrian tourist destination. DAMASCUS, Syria — The Syrian Ministry of Tourism invited journalists from Tehran to Tunis to check out its top attractions during a trip to the normally reclusive country. Fox News hopped a caravan and went along for the ride. The country’s capital city Damascus may very well be the oldest continuously populated city in the world. At least it lays claim to that title. By pushing tourism, the Syrian government celebrates the country’s past while trying to improve its present, not just economically but politically….. Tourism is up — 24 percent more Europeans visited this year. Though the bulk of the tourists to Syria are other Arabs, followed by Europeans, it turns out American tourists are among those on the road to Damascus these days….. At the ruins of Palmyra, which was at one point a colony of Rome until its beautiful headstrong Queen Zenobia threw off the Roman yoke, I met famed director Francis Ford Coppola. By the way, Palmyra, with its pinkish sandstone ruins that stretch endlessly across the desert, would make a phenomenal movie set. Coppola had been to a few film festivals in the region and told me he had always wanted to visit Syria, so he took the opportunity to come, he said, just as a tourist. But not any tourist. The red carpet was rolled out for the film legend, who had a private dinner with Syria’s first couple, Bashar and Asma al-Assad. He waxed positive about the country. “We have felt so warmly received. The people you meet are kind and welcoming. The city (Damascus) is fascinating for so many reasons, relating to history. The food is fantastic. The President, his wife and family are lucid, appealing and able to speak on so many levels. In this way he convinces me he has a vision for the country which is positive.”…. –However, the decline of oil reserves has adversely affected the government’s ability to do this, hence the need to attract foreign investment.