Saudi Arabia mediates World Bank support for Syria: Conditional gains ...Syria

Enab Baladi – Jana al-Issa

The Kingdom of Saudi Arabia is actively mediating to support the Syrian economy, primarily through its recent intention to pay Syria’s debts to the World Bank, as well as its potential hosting of a meeting aimed at restoring Syria’s support from the World Bank and the International Monetary Fund (IMF) in the near future.

On April 18, the Assistant Secretary-General of the United Nations and Director of the United Nations Development Programme in the Arab States, Abdallah al-Dardari, stated that officials would discuss key steps to restore support for Syria from the World Bank and the International Monetary Fund, indicating that a meeting regarding Syria will be held by Saudi Arabia and the World Bank during the upcoming annual meetings of international financial bodies in Washington, D.C., next week.

Al-Dardari considered this to be a signal to the rest of the world and the people of Syria that these major financial institutions are ready to provide support.

Days earlier, Reuters reported that Saudi Arabia plans to pay Syria’s debts to the World Bank, which amount to approximately 15 million US dollars.

Reuters noted that settling the debts paves the way for potential grants amounting to millions of dollars for reconstruction and other economic support for Syria.

Testing US’ position

Saudi Arabia’s movements within this framework represent direct assistance and are an application of its promises to provide possible support to Syria since the Riyadh conference in February. The benefits of this initiative mainly hinge on supporting the Syrian government and state, according to Dr. Abdul Monem al-Halabi, a professor of international finance and economics at Gaziantep University, to Enab Baladi.

Researcher Ayman Dasuki from the Omran Center for Strategic Studies, specializing in local governance and political economy, considered that the Kingdom of Saudi Arabia shows concern for Syria’s security and stability, reflecting its approach to enhancing regional stability through various forms of engagement to resolve conflicts and tensions, thereby reinforcing its role as a regional power that guarantees stability.

Another significant aspect, from Dasuki’s perspective, reflects Saudi Arabia’s understanding of the lessons from the past in dealing with Iraq following the removal of Saddam Hussein’s regime; it underscores the importance of positive engagement in dealing with changes in the region rather than retreating, aiming for change while neutralizing negative outcomes as much as possible.

According to Dasuki, the current Saudi engagement falls within the framework of indirect involvement through international and regional structures.

In the circulating initiative regarding paying Syria’s debts to the World Bank, Saudi Arabia seeks to test the American position on Syria without clashing with its sanctions and to frame its intervention as targeted assistance to support the Syrian state and restore its role both internally and externally.

The Saudi initiative faces technical challenges regarding the World Bank and its mechanisms for engagement with Syria, alongside political challenges specifically related to the American position and the new Syrian administration’s responsiveness to these initiatives and their reciprocal steps, as mentioned by Dasuki, adding that these challenges are manageable and can be overcome.

For his part, Dr. Imad al-Din al-Musabeh, an associate professor in the Department of Business Administration at the Arab East Colleges and an economist, considered the Saudi Arabian initiative toward Syria a step toward stability and recovery, reflecting its commitment to the region’s stability and support for its neighbors.

According to al-Musabeh, the goals of this strategic move are to:

The role of the World Bank

The World Bank is one of the specialized agencies of the United Nations that focuses on development, starting its activities by helping reconstruct Europe after World War II.

Reconstruction following conflicts is a primary focus for the World Bank due to natural disasters and humanitarian emergencies, and the subsequent rehabilitation needs of developing economies undergoing transitions.

However, the Bank has increased its focus on alleviating poverty as an expanded goal for all its operations, concentrating its efforts on achieving the Millennium Development Goals, which were adopted by UN member states in 2000 aimed at sustainable poverty alleviation.

Gains for Syria

As a result of the Saudi initiative related to restoring support for Syria from the World Bank, researcher Ayman Dasuki confirmed that there are benefits for Syria concerning directing expected financial support to revitalize the vital energy sector for citizens and the Syrian economy, as well as the potential opening of backchannel negotiations with the US administration through the World Bank to soften its position toward the new Syrian administration.

Moreover, regarding activating Syria’s participation in international organizations and the implications this has for investment climates and development, there are concerns about the restrictions and agendas that the World Bank might impose on Syria regarding economic management and the role of the state therein, as well as social support policies, according to Dasuki.

The economic team reportedly attending the annual meetings of the World Bank Group and the International Monetary Fund could explore possible support avenues from loans and facilities offered by the World Bank to enhance the investment environment and support small and medium-sized private sector projects, as Dr. Abdul Monem al-Halabi sees.

The American sanctions imposed on Syria and the ambiguity of the international position are among the significant potential challenges facing moves toward the World Bank, according to Dr. Imad al-Din al-Musabeh, who believes that these sanctions remain the biggest obstacle and require legal mechanisms to bypass them. Due to the international ambiguity, the initiative may face questions or reservations from some international parties, especially Western ones.

If support from the World Bank to Syria is restored, al-Musabeh believes that Syria will achieve numerous benefits, including regaining eligibility to borrow from the World Bank and obtaining vital grants and loans for development. This also sends a positive signal to international investors and supporters and enhances confidence in Syria’s recovery. Furthermore, this can be considered a crucial step towards reintegrating Syria into the global economy and achieving the desired stability and recovery.

Why countries turn to the World Bank

The overarching goal of engaging with the World Bank is to encourage investment of capital to rebuild and develop the member countries that require assistance in establishing massive projects that are costly and, in the long run, facilitate the development of the state’s economy, thus enabling it to face the chronic deficit in its balance of payments.

Assistance from the World Bank can be in the form of lending funds from its own resources or issuing loan bonds for international subscription.

Each member state of the World Bank contributes a defined subscription in gold or US dollars equivalent to 18% of its local currency, while the remainder stays in the state itself, although the Bank can access it at any time to meet its obligations.

In general, the World Bank lends directly to governments or provides guarantees needed for borrowing from another country or the international market.

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