Syria and Ukraine: Two Fronts, One Global Ripple

The conflicts in Syria and Ukraine are unfolding on vastly different stages, yet their interconnected effects are shaking the foundations of the global order. These are not isolated geopolitical dramas—they are part of a broader narrative, one where economic vulnerabilities, energy dependencies, and emerging market fragilities converge.

The Network of Alliances: Shifting Sands in Syria

The Syrian conflict, long a nexus of alliances and rivalries, now operates under the shadow of Ukraine. As Russia diverts resources and attention to its war with Ukraine, the balance of power in the Middle East is reshaped:

• Russia: Stretched thin, its capacity to sustain influence in Syria wanes. This retreat opens opportunities for others but leaves uncertainty in its wake.
• Iran: Eager to fill the void, Iran’s ambitions clash with Assad’s resistance to becoming a proxy, while its rivalry with Israel intensifies.
• Turkey: Seizing the moment, Turkey asserts itself as a critical player, balancing aggression against Kurdish forces and strengthening ties with Gulf States to construct a vital energy corridor to Europe.
• The United States: While focused on Ukraine, it maintains support for Kurdish forces in Syria, creating friction with NATO ally Turkey.
• Israel: Acting decisively, Israel leverages Russia’s diminished role to escalate strikes against Iranian assets in Syria, deepening its coordination with the United States.
• Gulf States: With reconstruction on the horizon, they cautiously engage with Assad while aligning with Turkey to secure energy interests.

These alliances and rivalries form a web of overlapping tensions, shifting the dynamics of power and influence in the region.

Proxy Groups in the Conflict

The Syrian conflict is as much about proxy warfare as it is about state actors. These groups complicate the dynamics, serving as extensions of larger powers and pursuing their own agendas:

1. Hezbollah (Iran-backed): A powerful Shia militia operating in Syria to bolster Assad’s regime and protect Iranian interests. Often targeted by Israel due to its proximity to the Golan Heights.
2. Kurdish Forces (SDF/YPG): Backed by the U.S., these groups have been pivotal in fighting ISIS but are in direct conflict with Turkey, which views them as a terrorist threat.
3. HTS (Hayat Tahrir al-Sham): A Sunni Islamist group that controls parts of northern Syria. Formerly linked to al-Qaeda, it’s opposed to both Assad and ISIS, complicating the rebel landscape.
4. ISIS Remnants: While diminished, ISIS still operates in pockets, using insurgency tactics to destabilize the region.
5. Syrian National Army (Turkey-backed): An umbrella group of opposition forces supported by Turkey, aiming to counter both Assad and Kurdish ambitions.
6. Shia Militias (Iran-backed): These include groups from Iraq and Afghanistan, deployed by Iran to bolster its influence and Assad’s regime.

These proxies amplify the complexity of the conflict, making it not just a battle between states but a multi-layered struggle involving ideologies, ethnic groups, and external sponsors.

Economic Fragility and Global Macro Indicators

USDTRY( Turkish Lira Red), USDRUB (Russian Rubble in Black)

The conflicts in Syria and Ukraine are more than territorial disputes—they are symptoms of deeper systemic fragility, especially in the global economy.

• Currency Devaluation and Dollar Scarcity:

As the global flow of dollars tightens, emerging markets face growing pressure. This scarcity could escalate into a broader financial crunch, triggering higher transaction costs and inflation worldwide.

• Unwinding the Carry Trade: The shift in Japan’s monetary policy signals a retreat from the carry trade, amplifying flows toward the U.S. dollar. This has cascading effects on currencies like the Brazilian Real, which often act as canaries in the coal mine for broader economic crises.
• Supply Chains and Inflation: The disruption of supply chains, reminiscent of 2022, looms large. The ripple effects of these conflicts could amplify inflationary pressures, pushing the global economy into a new phase of uncertainty.

Energy: The Pivotal Chessboard

Energy lies at the heart of these conflicts:

• Syria’s Role: As Europe seeks alternatives to Russian energy, Syria becomes a strategic pivot in the race to establish new energy corridors.
• U.S. Shale Production: The United States’ dominance in gas production reshapes the energy landscape, diminishing the leverage of traditional oil powers.
• Turkey’s Position: Geographically and geopolitically, Turkey emerges as a linchpin, holding immense strategic value in the transition to a gas-centered energy economy. In game theory terms, Turkey’s “Shapley value” is rising—it is indispensable in shaping the future energy architecture of the region.
• Saudi Arabia Gambit: Saudi Arabia's ultimate strategy is to flood the oil market, driving down prices in the short term. This calculated move aims to weaken competitors while maintaining its oligopolistic control over the market in the long run.

The Global Context: Why It Matters

These interconnected conflicts highlight the fragility of our global systems:

1. Dollar Scarcity: Emerging markets face growing challenges, with conflicts acting as triggers for broader financial stress.
2. Inflationary Risks: Disruptions to supply chains and energy markets could recreate the conditions that fueled global inflation in 2022.
3. Energy Transition: The reconfiguration of energy routes and partnerships will shape the economic future of entire regions.

Connecting the Dots

In both geopolitics and leadership, the ability to see the whole network is what separates reactive players from strategic leaders. The conflicts in Syria and Ukraine are a stark reminder that no crisis exists in isolation. They demand a deeper understanding of interconnected systems—economic, political, and strategic.

As these dynamics unfold, the true challenge lies in adapting to the evolving landscape. Whether on the battlefield or in boardrooms, those who can map the network, anticipate ripple effects, and balance competing priorities will emerge as leaders in an uncertain world.

Thanks for reading, 

Guillermo Valencia A

Cofounder of Macrowise

December 11th, 2024