Moscow collects its spoils of war in Assad’s Syria

At the state-run fertilizer plant near the city of Homs, gun-toting Russian mercenaries are on patrol, protecting a key element of Syria’s important phosphates industry.

President Vladimir Putin’s decision to throw Russia’s military weight behind Syria’s leader Bashar al-Assad helped turn the eight-year civil war in the regime’s favour. The Homs factory points to what Moscow received in return: a lucrative foothold in a key Syrian strategic resource.

Syria is estimated to have one of the world’s largest reserves of phosphates, which is essential to make fertilizers. And a company controlled by Russian oligarch Gennady Timchenko, a friend of Mr. Putin, appears to have built an increasingly dominant position.

Syrian state-owned media reported on March 2018 that the country’s People’s Assembly was set to ratify a contract for Mr. Timchenko’s company, Stroytransgaz Logistic, to operate the phosphate mine near the Syrian city of Palmyra.

According to such press reports, it is also partnering with state-owned General Fertiliser Company ( GFC) at the Homs plant and this year received a contract to run the port of Tartous, from where raw phosphate rock and fertilizer are shipped overseas. Iran, which also gave military support to the Assad regime, has been promised access to key industries, including rights to another phosphate mine.

Syria’s phosphates trade is not illegal — but it is shadowy. One reason, say, businesspeople, is that according to contract terms reported by Syrian state-owned media, some profit from the sale of the resource ends up in the hands of the Assad regime, an international pariah for its brutal conduct during the civil war.

Phosphates are not subject to US, European and UN sanctions that have hurt the country’s other industries, notably its oil sector. But the fear of dealing with sanctioned entities ensures that foreign companies are generally wary of Syrian exports.

Mr. Timchenko and Stroytransgaz were also sanctioned by the US for “materially assisting” Russian government officials following the 2014 invasion of Crimea. When it was reported last year that phosphates traded under the Stroytransgaz deal had reached Greece, it prompted questions in the European Parliament.

Executives at other phosphate companies say that to circumvent the reluctance to deal with Syria, their teams label raw Syrian phosphate as Lebanese, even though there are no phosphate mines in Lebanon.

The true extent of relabelling is unclear, but EU data show phosphates worth €2m arrived in the Netherlands from Lebanon in 2018. According to one person who clears goods at the Syrian border, a regular flow of phosphate-loaded trucks crosses into Lebanon.

Lebanese and Syrian customs documents seen by the Financial Times show two near-6,000-tonne shipments of phosphate fertilizer were transported from the Lebanese port of Tripoli in May and June. The first vessel, Raouf H, later docked at the Greek port of Nea Karvali, according to data from Marinetraffic.com.

Shipping documents for the second vessel, Tenacity, also show Nea Karvali as the cargo’s discharge port. There are several fertilizer plants in the surrounding Kavala municipality.

Cedar Marine Services, the Lebanese company that operates Raouf H, did not respond to a request for comment. Tenacity’s operator could not be reached for comment. Greece’s statistical authority told the FT it would search for import data covering phosphates and fertilizer, then stopped responding to messages.

Syria’s phosphate exports jumped this year, despite the obstacles. Data from CRU, a commodity research firm, showed exports would hit 460,000 tonnes this year, from 328,000 tonnes in 2018. The data may not include all exports. In 2010, exports were 3.1m tonnes but crashed to zero in 2016 as civil war raged.

People with knowledge of the trade said current phosphate exports were from stockpiles, and that no fresh mining had started. Stroytransgaz appears to have rights to mine Syrian phosphate but it is unclear whether it has actually begun mining.

Stroytransgaz has won dozens of contracts to build energy infrastructure and logistics projects in Russia and other countries with strong ties to Moscow. Mr. Timchenko is an old friend and judo sparring partner of the Russian president. The pair worked together during Mr. Putin’s time in the St Petersburg administration in the 1990s.

Mr. Timchenko’s connections to the Kremlin and the fact he has already been sanctioned make him a rare industrialist able and willing to oversee Russian involvement in Syrian phosphates, fertilizer industry executives and analysts say. “It’s a simple bit of business for [him],” said one. “It’s low cost and the market is there.”

Stroytransgaz told the FT it “had nothing to comment on” as it and its subsidiaries had no contracts in Syria, although Syrian state media reported in April that the group’s engineering arm had won a 49-year investment contract for the Tartous port.