While Russia is conducting a controversial and risky military operation in Syria many observers wonder why Putin takes this risk, are Moscow’s interests in the region that important? What the benefits or possibly prevented losses could be of backing the Assad regime? Russia’s double bet on Damascus with a military move can make a difference in the war but it may also trigger an economic backlash at home.

In fact, military support of Assad targets at least several goals at once. Russia had solid motives to intervene which are based on geo-political strategy on the Middle East chessboard and pure economy interests as well. First, Moscow clearly hopes to make the West shift from its sanctions and isolation policy over Kremlin’s aggression against Ukraine and capturing Crimea. In that context Russia wants to presents itself as a global player fighting terrorism and a power which is indispensable to resolve the Syrian crisis.

Second, Russia made a long-term decision to join a strategic union with Iran. However, when it comes to a sectarian conflict between Turkish, Saudi, and U.S.-backed Sunni groups on one side and Shi’a forces led by Iran, Damascus and Hezbollah, it’s a very risky game for Kremlin as Russia’s own Muslim population is predominantly Sunni.

Third, Russia hosts in Syria its only naval base in the Mediterranean, at Tartus. There is no doubt that Moscow doesn’t want to lose it. At the very beginning of the conflict in Syria a high military commander in Russian army stated that the base in Tartus was essential for Russians. In fact, it’s a part of Moscow’s strategic and geo-political interests. At the same time the neighbouring town of Latakia hosts Russia’s largest foreign signals intelligence station and a new air facility.

Fourth, Russia defends its economic interests as it has valuable military contracts and energy investments that could be lost if Assad is ousted. Back in 2011 Moscow had considerable arms trade and nearly $20 billion of investment projects, according to The Moscow Times. These projects are covering infrastructure, energy, tourism, nuclear power plant, and oil and gas exploration.

According to Russian state agency RIA Novosti, Moscow had lucrative arms contracts with Assad regime worth roughly $4 billion. They include MiG-29 fighters, Pantsir surface-to-air missiles, artillery systems and anti-tank weaponry. Syria has been a consumer of Russian weaponry since Soviet era, and the arms trade intensified after Assad and Putin came to power in 2000.

Russia accounted for 78 percent of Syria’s weapons purchases between 2007 and 2012, according to the Stockholm International Peace Research Institute. Russian arms sales to Syria reached $4.7 billion in 2007-2010. Syria ordered to Russia more modern weapons that would further improve its combat capabilities. In 2008, Syria agreed to purchase MiG-29SMT fighters, Pantsir S1E air-defence systems, Iskander tactical missile systems, Yak-130 aircraft, and two Amur-1650 submarines from Russia. It made Damascus Moscow’s seventh-largest client.

Before the war, Syria had one of the largest arsenals of tanks not only in the Middle East. The Syrian arsenal included about 1,700-1,800 T-72 tanks of different modifications. The overall number of tanks, including T54/55s and previous versions of the T-62 in stock, was close to 4,500. Additionally, there were thousands of armoured personnel carriers, fighting and other light-duty armoured vehicles, and thousands of tube artillery pieces, including hundreds of 122-mm 2S1 and 152-mm 2S3 self-propelled howitzers. Syria also had a considerable stock of Soviet-made tactical and short-range missiles, Scud short-range attack missiles and Tochka-U tactical missiles.

But a considerable part of Syrian regime’s tanks, armoured vehicles, and artillery guns have been lost in war. Air defence units and the Air Force have sustained heavy losses too. Most of them were the result of seizures of air bases in northern and eastern regions of Syria, as well as of intensified mortar attacks on runways and aircraft parking areas and the use of man-portable air defence missile systems against planes and helicopters during take-off or landing.

Russia’s exports to Syria were worth $1.1 billion with a stuff of 80 Russians working in Syria in 2010. Russian Stroytransgaz was building a natural gas processing plant 200 kilometres east of Homs in the Al-Raqqa region and the company was involved in technical support for the construction of the Arab Gas Pipeline.

The company Stroytransgaz belongs exclusively to a wealthy Russian businessman Gennady Timchenko, Putin’s close friend. Stroytransgaz operates in Syria since 2000 and it has at least four projects there, The Rufabula web-site writes. The Russian company has got a contract for construction of the Arab Gas Pipeline length of 319 km and a gas processing plant №1 (South Middle Area Gas Exploitation Project), 75 km southeast of Raqqa and 200 kilometres east of Homs in the area of large deposits of hydrocarbons.

It appears that the main subcontractor of Stroytransgaz in Syria is a local company HESCO. George Hashravi serves as its head, the same businessman mentioned by Turkish President Recep Tayyip Erdogan, who blamed Hashravi for illicit oil trading with ISIS extremist group. HESCO company web-site hescoco.com is under reconstruction. But it’s possible to find some pages in Google cache.

The documents say that the Syrian company HESCO over 15 years builds oil and gas infrastructure in Syria, Algeria, Sudan, United Arab Emirates, and everywhere it is the subcontractor of the Russian Stroytransgaz. It tends to be an overseas branch of the Russian company. In Syria HESCO cooperated as well with the Russian Tyazhpromexport. We could find that this company has operated the first gas processing plant in Homs, which was launched in 2009, and gas distribution station in Palmyra, completed in 2004.

Russian company operates as well the “Northern Project”, the second gas refinery, designed for production and processing of five gas fields to the south-east of Raqqa, and the gas pipeline between Aleppo, Homs and Idlib. Four facilities in total. The first of them is under the control of Assad regime in Homs. Two others now are in the territory controlled by ISIS. But the pipeline passes also through the territory controlled by the moderate Syrian opposition, although the final point is controlled by the government.

It turns out that the facilities situated on the ISIS-controlled territory have been working despite the bloody war. Moreover, they are still being operated by HESCO (which leads to Stroytransgaz). Of course, in order to continue to operate, they had to “negotiate” with ISIS. And of course they had to pay off this move.

HESCO is under sanctions which were imposed for cooperation with ISIS. Syrian company’s head George Hashravi made an attempt to explain to the Counter Terrorism Project that he’s not cooperating with the extremist group and he has fallen victim of their activities. He claims that the company’s plant has to continue its work in ISIS-held territory in order to produce and provide electricity for all Syrian people. Although, Assad regime is forced to negotiate with ISIS, it appears to be harder to deal with “moderate rebels”, who become therefore primary target of the Syrian Army and Russian jets.

We have to mention as well Tatneft, which was the most significant Russian energy firm in Syria. This company began to pump Syrian oil through a joint venture with the Syrian national oil company in 2010. Tatneft planned to spend $12 million on exploratory wells in Syria near the Iraqi border. Russian steel pipe manufacturer TMK, gas producer ITERA, and national carrier Aeroflot also had considerable business interests in Syria.

It’s quite obvious that Russian companies in Syria are losing assets and profit because of the war. Kremlin is determined to avoid in Syria Libyan scenario in which NATO forces helped rebels to topple Moammar Gadhafi. Russia lost there an estimated $10 billion of contracts with Gadhafi’s regime, according to Russian media.

But Syria itself is not a major player on the global gas and oil market. Even in the early 2000s, Syria was producing a little more than 520,000 barrels of oil per day, which makes roughly 0.6 percent of world’s total production. Gas production in Syria was also not that large on global scale; it was about 9 billion cubic meters per year in 2010. So, the war doesn’t have any crucial impact on world’s oil and gas market. It leads us to the next point.

Fifth, in Syria Russia tries to defend its own gas export preventing a potential competing pipeline. Some observers report, that several Europe and Middle East countries desired a Qatari pipeline project that would link gas and oil fields of Qatar and traverse Saudi Arabia, Jordan, Syria, and Turkey before making its way to Europe.

Such pipeline would lead to a substantial reduction in the amount of gas that Europe is buying from Russia. With the development of the Qatari pipeline, Europe wouldn’t depend so much on Russian gas and, therefore, wouldn’t fear a new gas crisis between Russia and Ukraine. Europe’s concerns that its gas market may be held hostage to Russian gas giant Gazprom create tensions and push EU countries to look for diversifications of energy supplies. Indeed, a Qatari pipeline would be a disaster for Russia as it has a vital interest in controlling gas supplies to Europe, where Gazprom sells 80 percent of its gas.

Qatar has invested heavily in liquefied natural gas plants and terminals that enable it to ship its gas in tankers to world’s consumers. But liquefaction and shipping increase total costs and Qatari gas has lost in European markets to a cheaper pipeline gas from Russia, according to the Foreign Affairs.

That’s why, in 2009, Qatar proposed to build a pipeline to send its gas northwest via Saudi Arabia, Jordan, and Syria to Turkey, suggesting an investment of billions of dollars. When asked for their agreement, Syrian President Bashar al Assad refused to sign the plan because he wanted to “protect the interests of its Russian ally”, which is Europe’s top supplier of natural gas.

After rejecting the offer, Syria signed up to the Iran-Iraq-Syria pipeline that would carry Iranian gas from the Persian gulf through Iran, Iraq, Syria and Lebanon and then under the Mediterranean to Europe. This project is not directly beneficial to Russia’s Gazprom, but the pipeline would be owned and operated by Russian allies with whom Moscow can easily negotiate. The announcement of the Iran-Iraq-Syria pipeline deal came in 2011. The parties signed the documents in July 2012. Construction was planned to be finished in 2016, but the war and chaos in Syria ruined these plans.

Turkey, due to its geographical position, plays a key role in the construction of transport infrastructure between Europe and Asia. The country may start the construction of several pipelines in the coming years, which would be able to deliver gas from Iran, Azerbaijan and Turkmenistan to Europe. And a pipeline may be laid also to Turkey through Syria from Qatar.

Turkey is also a major consumer of Russian gas and Turkish president Erdogan claimed that he could look elsewhere for supplies. It was one of the motives which pushed Ankara to back Syrian opposition. An eventual removal of Assad would pave the way to the Qatar-Turkey pipeline which would ensure gas supplies diversification. The United States supports the Qatari pipeline as a way to balance Iran and diversify Europe’s gas supplies away from Russia.

To sum up, the Russian military operation in Syria aims to protect Moscow’s geo-political and economy interests, but in a short term it doesn’t promise any significant gains. At the same time it demands considerable expenses. With a more serious and long-term involvement in the war in Syria, Russia will face significant economic losses and domestic risks.

Russian economy has been already painfully hit by low oil prices, inflation, rouble devaluation and western sanctions over Moscow’s role in Ukraine conflict which is still going on. It suffers also a dramatic worsening of Turkish-Russian economic relations over the downed Russian warplane on Turkish-Syrian border.

However, Russia was forced to intervene as the Assad regime suffered a disastrous blow in the spring and the summer of 2015 after losing the city of Idlib in northern Syria and several other regions. It probably was a key factor which motivated Kremlin to get involved in the Syrian conflict on a military level. On the other hand, Russia wanted to act before the international coalition and its regional allies created a no-fly zone over Syria, which could mean the end of the Assad regime.

This publication was prepared by the volunteer of the InformNapalm international community MICHAEL.

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