Israel Matzav

Russia to Syria: 'Nyet'

The government of Bashar al-Assad is trying to egg the Russians into another cold war with the United States and its allies. But according to both Meir Javedanfar and Guy Bechor, the Russians have responded to Syria's war-mongering with a strong rebuke. Russia's economy is too intertwined with the West.

Despite his efforts, it is unlikely that Assad can get the Cold War revival that he seeks. First and foremost, Russia of 2008 is far more different than Russia of 1988. Its economy is far more intertwined and dependent on Western capital and trade. This was demonstrated recently when foreign investors pulled their money out of Russia in the wake of the Georgia conflict at the fastest rate since the 1998 ruble crisis. According to the Financial Times, Russian foreign currency reserves dropped by $16.4 billion in the fist week of the conflict with Georgia. This was one of the largest absolute weekly drops in ten years, which put pressure on the ruble and on foreign confidence in the Russian economy.

These days, thanks to trade with the West and high energy prices, Russians are used to the good life. “If the Georgians were smart, instead of attacking South Ossetia, all they needed to do was to threaten to bomb the Gucci shop in Moscow,” quipped a Russian businessman I know, who travels regularly between Israel and Russia. “Russians would have agreed to their annexation of South Ossetia in no time.”

Joking aside, Russia’s leadership is all too aware that economic misery could cost them votes and popularity at home. This is why they will not allow their relations with the EU and the U.S. to deteriorate too drastically by entering into another Cold War.

Unfortunately for Assad, the same goes for Russia’s relations with Israel. Level of trade and diplomatic relations between Russia and Israel, compared to the days of the USSR, have increased astronomically. Russia now hosts hundreds of thousands of its citizens who lived in Israel, have Israeli passports, and are now back living in their land of birth. Many more of its citizens live in Israel. Israeli companies have offices and have invested in the Russian economy,. They have also been instrumental in the high tech and jewelery industry. Today, Russians visit Israel in record numbers. The level of bilateral trade between them is estimated to stand at more than $2 billion — and is rising. Russia would have very little to gain by supporting Syria, at the cost of making Israel into its enemy. Furthermore, with the emergence of China as a superpower, maintaining relations with as many sides as possible is considered crucial to Moscow’s foreign policy.

Bechor's description is even more stark.

The Syrian leader was stunned when the Russians slapped him in the face. Putin and Medvedev’s answer to his request was “not interested.” They have no interest in embarking on a new cold war. The slap was even worse because the Russians refused to sell advanced missiles to the Syrians, and added a few conditions: Firstly, they will be selling Syria defensive weapons only, rather than offensive ones. Secondly, they will not be selling Syria arms that would change the status quo of full Israeli supremacy over Syria. Thirdly, everything they sell will be paid for in cash, in advance.

The Russians know very well that Syria’s economy is unstable. They know that the Iranians help the Syrians with payments, but they also know that Iran itself is facing great difficulties. Assad swallowed the insult and returned to Damascus.

Why was there no chance for Assad’s “golden package” to begin with? Because Russia is not the Soviet Union. What Assad’s generals failed to grasp is that by invading Georgia Russia caused itself economic and political damage that would take years to repair. Russia is a capitalistic country that relies on its economy, and the economy responded with immense anxiety to the Georgia events.

The investors who lifted the Russian economy are simply running away now: $12 billion were taken out of Russia in the past two weeks. The Russian stock exchange’s RTS index declined by 32%, and the Russian Ruble was depreciated. Russia had no ability to continue this conflict.

Moreover, at this time Russia is closely associated with Israel no less so and possibly more so than with Syria. A million and a half former Russians reside in Israel, and Israel’s high-tech industry is highly important for the Russian economy. The world in the era of globalization (a word that Syria is still unfamiliar with) will not go back to being black and white, and no Russia babushka will be waiting for Assad with a magic solution.

Sounds great, doesn't it? Unfortunately, Javedanfar reports what goes for Syria doesn't necessarily go for Iran.

Russia’s cold shoulder to Syria’s hopes for a new Cold War should not worry Iran too much. Its case is different than that of Damascus. Tehran has much larger gas and oil reserves. For now, its economic situations is not dire as Syria’s is. Furthermore, China supports Russia’s stance in the UN vis a vis the Iranian nuclear program. This means that Russia does not have to make any dramatic changes in its relations with Tehran. Even though they would prefer it, Iran’s leadership can live without a Cold War between Russia and the West. For Syria’s leader, it will be much more difficult.

Maybe. On the other hand, I wonder what would happen if Russia were threatened with expulsion from the G8 unless it plays along with sanctions on Iran. Hmmm. Maybe that's why Assad is laughing?

posted by Carl in Jerusalem @ 3:06 PM