Syrian trade fair shows road to recovery still strewn with debris of war

* Annual trade fair was shut for years amid fighting

* Western sanctions grip Syrian economy

* Government leans on trade ties with Russia and Iran

By Angus McDowall and Kinda Makieh

DAMASCUS, Sept 7 (Reuters) - Syria's government is showcasing its ambitions for economic recovery and engagement with foreign business at a trade fair, but glimpses of devastated districts nearby show how far off full-scale reconstruction remains.

While companies from Syria's allies Russia and Iran are present in numbers, others are sparse, deterred by Western sanctions and continued ostracism of Syria as it prepares to attack the last rebel bastion in a seven-year-old civil war.

"Today the Syrian army forces have gained a lot of momentum ... We think this year (the trade fair) will be very successful. A lot of companies that were not in Syria last year came," said Samer al-Debs, head of the Damascus Chamber of Industry, as the fair opened on Thursday night.

Although South Korean cars are now trundling off assembly lines in Syria, and there is electricity in Damascus for 20 hours a day, whole towns lie in ruins and millions are sheltering abroad as refugees.

While global attention focuses on northwest Syria, where the army is preparing to attack the last active stronghold of armed rebellion - at the risk of triggering a humanitarian crisis, according to the United Nations - Damascus is experiencing its first peaceful summer in years.

President Bashar al-Assad retook the last insurgent enclaves around the capital this spring through heavy bombardment after years of siege, ending frequent rebel mortar fire on the city centre.

Last year, one such mortar round struck the entrance to the Damascus International Trade Fair as it opened for the first time in five years, killing six people during an event the government had heralded as a move towards economic revival.

SHRAPNEL MARKS

The shrapnel marks are still visible, but the only sound of an explosion on Thursday came from distant de-mining operations in an area recaptured months ago.

On each side of the road to the fair - the main highway from Damascus to its international airport - lie districts that were recently on the front lines, and where most buildings seem little more than concrete husks, their roofs caved in.

Inside the trade fair, companies display goods imported from dozens of countries, including Japanese electronics and South Korean Kia cars assembled in Syria under licence.

Still, in a sign of the fraught international realities surrounding the war, the countries with most companies present are Russia and Iran – Assad's closest military allies, themselves also subject to Western sanctions.

In the Iranian pavilion, stalls displaying delicate silk carpets stand next to others advertising industrial and agricultural equipment.

"There is technical, scientific and industrial capability in Iran and it is in line with the demands present in the Syrian market," said Iranian Ambassador Javad Turk Abadi.

Across the aisle in the Russian pavilion, one company was selling armoured bulldozers for clearing unexploded bombs in city rubble, and another was seeking contracts for electricity cables in a country where the power network has been ruined.

FLAGS

The geopolitics are also clear in the flags along the highway – which include not only those of Russia and Iran but also those of Venezuela and North Korea, two countries at odds with the United States and much of the West.

Attending the opening ceremony along with Syrian Prime Minister Imad Khamis was the leader of Abkhazia, a breakaway Georgian republic recognised by few countries apart from Russia and Syria. Its flag, and that of another Russian-backed Georgian breakaway republic, South Ossetia, fly near the entrance.

Western countries have said they will not aid reconstruction without a political solution to the conflict, but as Assad reclaims more rebel territory with Russian and Iranian backing, the prospect of any deal with opposition groups is receding.

They have also said they will not ease sanctions; the difficulty of trading with Syria is a constant refrain among companies at the trade fair.

Money transfers are very difficult, complicating payments for import or export, and foreign companies fear inadvertently doing business with sanctioned individuals or entities.

Despite that, Syrian businesses appear to be finding ways around the sanctions and growing, as the past few years of army advances have brought Syria's most populous areas back into a large contiguous zone of government control.

"Sanctions are always a problem. We're finding ways around it ... we adapted ourselves to the situation," said Fares Shehabi, head of the Aleppo chamber of commerce and industry, who is himself on a European Union sanctions list for his support for Assad.

(Reporting By Angus McDowall and Kinda Makieh; writing by Angus McDowall; Editing by Kevin Liffey)

2018-09-07 11:09:09

© 2018 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.