In the 1990s and early 2000s, Syria witnessed a relative boom in Arab investments, particularly from the Gulf states, led by the Kuwaiti Al-Kharafi Group.
However, this phase did not last long, as the former Syrian regime gradually abandoned this partnership, shifting toward the Iran-Russia axis, resulting in disastrous political and economic consequences and culminating in stifling regional isolation.
Today, amid the rubble of war and blockade, Syria is re-establishing itself as an investment and geopolitical player, with a vision open to the Arab and international spheres.
Al-Kharafi and Gulf Investments in Syria: A Missed Opportunity
The late Kuwaiti businessman Nasser Al-Kharafi entered the Syrian market through a massive portfolio of projects in the tourism, industry, and duty-free sectors:
* Kiwan Tourism Project in Damascus ($217 million): One of the largest hotel projects in the capital, it includes a five-star Intercontinental Hotel, a conference center, and commercial and entertainment facilities.
* Prominent Hotels: Development of the Grand Bloudan Hotel, Sheraton Aleppo, and the Four Seasons Hotel.
Clarification regarding the relationship between the Kharafi Group and the Four Seasons Hotel in Damascus: Prince Alwaleed bin Talal, through his company Kingdom Holding, is the primary investor in the Four Seasons brand, but is not necessarily the direct owner of each hotel bearing the name. The Four Seasons Hotel Damascus was built as a joint venture between the Syrian Ministry of Tourism (through the General Organization for Tourism), the Kuwaiti Kharafi Group (which financed the majority of the construction), and Four Seasons International (the hotel operator/manager).
The Kharafi Group developed and financed the real estate project and was the main investment partner in the Four Seasons Hotel Damascus.
Four Seasons International was contracted to operate the hotel under a management contract, which explains the presence of the "Four Seasons" name, even though Prince Alwaleed did not directly own it.
Later, after the outbreak of war and the regime's involvement in sanctions, the Four Seasons officially withdrew from the hotel in 2019. The hotel's name was changed to the "Four Seasons Hotel Damascus under National Management," effectively placing it under regime control.
* Industrial investments: Glass, plastic, and cement factories were part of plans to support the local industrial infrastructure.
* Partnerships in duty-free shops at airports and border crossings, in partnership with the General Organization for Free Zones.
However, these projects faced an unstable investment environment, especially after Rami Makhlouf, a businessman closely linked to the regime, began expanding at the expense of his Gulf partners. He used the security and legal tools of the regime to exclude them and seize vital sectors, most notably duty-free shops, which became platforms for smuggling and parallel financing.
From Partnership to Acquisition: The Policy of Cutting Bridges with the Gulf
While the Gulf states were sending their investors and companies to Syria, the former Syrian regime was pursuing a strategic choice that opposed its Arab axis, preferring an alliance with Iran and Russia at the expense of regional balance. This trend was reflected in:
* Hostile political rhetoric toward the Gulf and the Cooperation Council.
* Deepening economic cooperation with Iran at the expense of Gulf investments, through preferential deals, joint banks, and monopoly companies.
* Increasing political and economic dependence on Russia after 2011, when the country was opened to Russian investment under unjust terms, particularly in the energy and port sectors.
The Duty-Free Issue: From Kharafi to Dashti
After seizing control of the duty-free shops, Rami Makhlouf announced in 2011 a fictitious sale of his shares to Kuwaiti investors, in an attempt to circumvent international sanctions.
However, the termination of the contracts in 2020 constituted an explicit announcement of the withdrawal of the Kharafi Group and the rest of the Gulf partners.
Later, the duty-free shops contracts were transferred to his brother, Ihab Makhlouf, through a new company in partnership with Abdul Hameed Dashti, a Kuwaiti politician close to the Syrian and Iranian regimes. This partnership was viewed as an attempt to provide external legitimacy to a monopolistic investment, without any real change in the structure of control or the mechanism of exploitation.
It was only natural that this policy would lead to the withdrawal of Gulf investors, not only for security reasons, but also due to a loss of confidence in the regime's will to protect capital and its preference for ideological partners over economic ones.
Economic and Political Implications
This rupture led to:
* A decline in Arab investments in Syria by approximately 80% over the past decade.
* The collapse of the tourism and industrial sectors, in which the Gulf had been a key partner.
* Regional political isolation, which kept Syria outside the Arab consensus for years.
* The erosion of foreign exchange reserves and the spread of corruption and favoritism.
Today: Syria Repositions and Offers New Visions
With the changing political landscape after 2023 and the fall of the former regime at the end of 2024, the new Syrian government, led by President Ahmad al-Sharaa, has begun to reshape its relationship with the Gulf and the Arab world. This effort seeks to restore Syria's geopolitical and economic standing, especially after the announcement of the lifting of sanctions. This effort is being undertaken through serious steps such as:
* Restoring diplomatic relations with the Gulf states, including Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain.
* Launching a new investment vision based on transparency, capital protection, and providing unprecedented facilities in the fields of tourism, energy, transportation, agriculture, and technology.
* Encouraging Syrian and Arab investors, particularly from the Gulf states, to return. This is evident in the visit of a high-level Kuwaiti delegation led by Bader Nasser Al-Kharafi to Damascus to discuss new investment opportunities.
* Attempting to end the monopoly mentality and the exclusion of economic actors not affiliated with the government.
Will Syria regain investor confidence?
The story of the Kharafi Group in Syria is not only an example of what was lost due to the choices of the former regime, but it is also a reminder of what can be achieved if the country returns to a normal Arab investment environment.
Today, with new trends opening up to the Gulf and the world, Syria has the potential to become a global power.It presents a real opportunity to return to its rightful geopolitical position as a strategic bridge between Asia and Europe, and as a promising regional investment hub.
By Hafaf Antonios Maqdisi
Zaman Al Wasl
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