THE WAITING GAME

Jordan 2019 | REAL ESTATE & CONSTRUCTION | FOCUS

Jordan occupies the perfect position to aid in the reconstruction of Iraq and Syria, but investors must exercise caution and patience.

Jordan's geographic position would, in a sane, just world, make it the best candidate to help lead the reconstruction of Syria after eight years of civil war. Unfortunately, we do not live in a sane, just world. Prospects for reconstruction bids in Iraq, meanwhile, are much better, but still deserve caution. As much as the civil wars in both countries have ebbed in intensity, the prospect of renewed conflict still looms.

Jordan brings optimism to the table, despite these monumental challenges. Security and stability in Iraq and Syria would be a welcome relief for the Jordanian economy, which could benefit from trade opportunities. Plans are underway to construct a free trade zone at the border between Jordan and Iraq.

Especially in Syria, Jordan could become a conduit for projects that restore destroyed water, irrigation, and transportation infrastructure, a task the UN estimates could cost between USD250 billion and USD400 billion. Iraq, for its part, has seen one of its largest cities, Mosul, left in ruins by the campaign to rout ISIS militants there in 2017. Concrete, steel, and copper by the boatload will be necessary to rebuild, theoretically.
Jordan's big advantage in aiding reconstruction in Iraq and Syria lies in its geography, and not just its borders with the two countries. The port at Aqaba, on the Red Sea, also provides a link to the rest of the world through which to transport needed materials for reconstruction.

“In 2019, we will see increased cargo moving from Aqaba to Syria and Iraq," Maersk Jordan's managing director Rakan Madi, tells TBY. “With Aqaba's geographic location, its efficient port, and the facilities we offer as a country, we will have an advantage to bring more cargo via Aqaba. We are central for Iraq and Syria, giving Aqaba an advantage in supporting the restoration of Iraq's economy and hopefully rebuilding Syria."
“Hopefully" is about as good a prospectus as investors in Syria and Iraq can get, although Iraq benefits from being better integrated into the global economy than Syria. Doing business in Iraq is not going to run a firm afoul of sanctions on Russia or, probably, Iran.

In sharp contrast, signing contracts in Syria to help rebuild the country would be an act of defiance against the policies of the US and major European powers, who maintain that the reconstruction of Syria cannot happen until President Bashar Al-Assad steps down. There is also the difficulty of calculating the damage to reputation in being associated with a man who has ordered war crimes.

Assad, reports suggest, is not keen on participating in any reconstruction effort that comes with any kind of strings demanding human rights reforms or free elections. Incipient overtures by Gulf states to draw Assad further from Iran can only go so far. Assad's regime has at its disposal Hezbollah militias and Russian fighter jets as a guarantee of its continued existence as the nominal ruler of the country. That is loyalty petrodollars cannot buy.
According to a February 2019 report from Damascus in the Financial Times, the civil war has left scars on Syrian society that may make doing business much harder. Contracts are difficult to enforce anywhere, but in Syria the only way to get a business off the ground is by having connections to Assad or someone close to him. “All the strategic sectors were and will continue to be controlled by the government or government-related people," a business owner named Hassan told the FT. “You cannot get your rights without corruption."

Indeed, in the short term, Syria's outlook remains grim, despite the apparent defeat of the insurgency in a conflict that left at least half a million dead, 3 million injured, and 11 million more people homeless inside Syria or as refugees outside of it, with at least 660,000 in Jordan itself.
“Everybody has been saying that 2019 will be a dire year for Syria economically, and people are going to suffer as a result," Ahmed, an industrialist, told the FT.

But 2019 will not be the only year when Syrians will need help rebuilding. Indeed, that need will be there for decades to come, and diving into the fray given the current geopolitics retains levels of risk and uncertainty. While Iraq offers more immediately viable opportunities, for Syria, patience remains the best approach.