geopolitical risk ratings firm

Syria

Push for Foreign Action Faces Resistance
The civil war in Syria appears to have at least temporarily reached a point of stalemate, with neither rebel forces nor the military and allied militias capable of making a decisive push for territory that could potentially turn the tide in favor of one side or the other.  The most likely scenario for the next six months is the consolidation of the status quo, with the rebels maintaining a strong presence in rural areas of Syria’s north and east, including parts of the border with Turkey.  Reports of oil deals between the rebels and government officials in the Deir Ezzor area suggest that both sides have concluded that it could be some time yet before the battle lines shift again.
All of that assumes that the international community remains on the sidelines.  However, recent reports that the government used chemical weapons against civilians are a potential game-changing development, given US President Barack Obama’s assertion that the use of non-conventional weapons was a “red line” that, if crossed, would necessitate a response.
US Secretary of State John Kerry and French Prime Minister Jean-Marc Ayrault have beat the drum for a military response, but international opinion is divided.  Various sources have raised doubts as to responsibility for a Sarin gas attack in the Damascus suburbs that resulted in nearly 1,500 deaths, and British lawmakers have rejected the UK’s participation in any military action against the Syrian government.
For his part, Obama has called for a congressional vote on authorization to use military force.  It is unclear whether approval will be granted, and while Obama has suggested that he reserves the right to act in accordance with US interests, regardless of the outcome of a congressional vote, the administration is unlikely to proceed with air strikes if authorization is explicitly denied.  That said, if Obama wins authorization, he will no longer have an avenue for making a politically graceful retreat from his hawkish position, and the likelihood of some form of military action against Syria will increase significantly.
In any case, it seems doubtful that the narrow scope of action that the Obama administration is contemplating would have much of an effect on the situation on the ground.  Leaks about the government’s military plans (which are not necessarily reliable) suggest that the US is preparing to carry out air strikes aimed at destroying Syria’s chemical weapons delivery capability.  How that would accomplish the stated goal of “punishing” Assad’s regime for using chemical weapons, with the aim of discouraging the Syrian military from using them in the future, is far from clear.
Indeed, the US and European governments seem reluctant to take action that might tip the battlefield advantage decisively in the rebels’ favor, which is understandable, given the prominence of jihadist elements among the anti-government forces.  It is all but certain that the NATO countries will step up assistance if the pro-government forces appear headed for a victory, but broad-based NATO support for direct military intervention is unlikely as long as a military strategy lacks clearly defined objectives.
Forecast Summary

SUMMARY OF 18-MONTH FORECAST
REGIMES & PROBABILITIES *Military-Civilian 45% Democratic Transition 30% Assad
25%
RISK FACTORS CURRENT  
Turmoil Very High Same SLIGHTLY LESS MORE
Investment
  Equity Moderate SLIGHTLY MORE Same Same
  Operations Very High Same Same MORE
  Taxation Moderate Same SLIGHTLY MORE Same
  Repatriation Moderate MORE SLIGHTLY MORE MUCH MORE
  Exchange Moderate MORE SLIGHTLY MORE MUCH MORE
Trade
  Tariffs Moderate Same Same Same
  Other Barriers Very High SLIGHTLY LESS Same MORE
  Payment Delays High MORE SLIGHTLY MORE MUCH MORE
Economic Policy
  Expansion Very High Same Same MORE
  Labor Costs Moderate Same Same SLIGHTLY MORE
  Foreign Debt Low MORE MORE MUCH MORE
SUMMARY OF FIVE-YEAR FORECAST
REGIMES & PROBABILITIES *Military-Civilian 45% Reformist Coalition 40% Military
15%
RISK FACTORS BASE  
Turmoil High Same LESS Same
Restrictions
   Investment High SLIGHTLY LESS LESS Same
   Trade Moderate Same SLIGHTLY LESS SLIGHTLY MORE
Economic Problems
   Domestic Very High Same LESS SLIGHTLY MORE
   International High SLIGHTLY MORE Same MORE
   * When present, indicates forecast of a new regime

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