Syria’s agony is imposing serious costs for neighbors in terms of refugees, lost trade and dampened investment.

Author: Justin Keay

In late September, Cyprus’ Energy minister, Yiorgos Lakkotrypis, and Egypt’s minister of mineral resources, Tarek el-Molla, signed a major agreement for transport of Cypriot natural gas to Egypt for consumption and re-export. They also agreed to speed talks on construction of a pipeline linking the countries.

“Cooperation in the oil and gas sector between the two countries will enhance relations between Cyprus and Egypt,” the two ministers said in a statement. “And [it] will also further unlock and promote the potential of the eastern Mediterranean as a whole.”

For weary observers of the Levant, the agreement—further discussed in mid-October by the leaders of Egypt, Cyprus and Greece at a top-level meeting in Cairo, where cooperation in energy, agriculture, tourism, shipping and commerce was also reviewed—came as something of a relief. Much like last year—and one might say, the year before—these are grim times for the Levant.

“It is impossible to view the Levant right now outside the context of the Syrian war,” says Ayham Kamel, senior analyst for the Levant at Eurasia Group. “There can be no hope of a return to stability until there is some sort of resolution to the conflict.”  The good news—that the terrorist group Daesh (or ISIL) has been losing both territory and manpower—has been overshadowed by Russia’s growing involvement in support of the Assad regime. Fighting in Aleppo and other areas shows little sign of abating, while efforts to mediate a ceasefire have stumbled.

Syria’s economy is in ruins. According to a recent report by the Fitch Group, the economy contracted 25% each year in 2012 and 2013. All components of GDP have continued to contract, especially exports (with most of the country’s oil infrastructure either destroyed or immobilized), which have lost 80% of their value. The economy is expected to contract by at least a further 4% a year going forward; its overall size is expected to be about what it was in the early 1990s by 2020.

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