The view from Damascus has improved recently. The twilight years of the Bush administration saw European and American politicians gradually end the White House’s diplomatic boycott to court President al-Asad. At the same time, indirect negotiations with the departing Israeli government of Ehud Olmert signalled that peace talks with Tel Aviv could soon be revived. Finally, on assuming power in January, Barack Obama spoke of engaging with pariah states and indicated a desire to promote a regional multi-lateral peace, perhaps in the shape of the 2002 Arab peace initiative. There were whispers in Damascus that a reengagement with the US and peace talks with Israel were a real possibility.

Unfortunately, the Israeli electorate did not read the script. The right-wing government of Benjamin Netanyahu elected in February, though stating its willingness to negotiate with Syria, has already ruled out returning the Golan Heights – Asad’s precondition for talks. The Syrian President has long wanted to tie any Israeli talks with a renewed engagement with the US, and waited for a compliant US administration to mediate peace negotiations. However, with Asad now facing an uncompromising partner in Tel Aviv and President Obama already showing more contempt for Israeli procrastination and inaction than his predecessors, this article considers how the Syrian-US-Israeli triangular relationship is changing and the consequences for peace negotiations.

Syria’s relevance to US Middle East policy since 9/11 has been curiously paradoxical, becoming both weaker and more important. Ostensibly, the Ba’ath regime has less regional power under Bashar than under his father, Hafez al-Asad. The armed forces have continued to decline following the collapse of their Soviet sponsor and are no longer anywhere near the ‘strategic parity’ with Israel that Hafez once dreamed of – a position emphasised by Israel’s unchallenged recent air raids deep into Syrian territory. Internationally, Syria was forced out of Lebanon in 2005 and has only recently circumnavigated the subsequent diplomatic boycott from Western powers. Financially, market reforms have been limited and, aided by US sanctions, the economy has developed sluggishly.

Yet in its relative isolation, Syria has found new levers to ensure it remains too great an irritation for Washington to ignore – a situation compounded by America’s increased involvement in the region. Now that containing Iran has emerged as a US priority, Damascus’ three-decade-long alliance with Tehran has become a useful bargaining chip for Asad. As Obama tries to stabilise and exit the Iraq quagmire, the extent to which Syria tightens its border to prevent the passage of insurgents has become another lever of negotiation. The degree of intervention in Lebanese politics since the 2005 withdrawal has similarly emerged as a bone of contention with Washington. Whilst continuing to press for an end to Syrian support of Hamas and Hezbollah remains a priority, Obama finds himself needing to engage with Damascus on a myriad of issues away from the exclusively Israeli track.

The shift in the international climate has prompted a change in priorities in Damascus as well. Whilst the return of Golan and the need for a ‘just peace’ with Israel remain a fundamental concern for the regime, immediate worries are economic. A limited embrace of the free market has failed to counter the impact on Syria’s economy of either the present economic crisis or US imposed sanctions. Whilst the orthodox view in Damascus has previously been that a peace with Israel would eventually bring an economic windfall from the US – though more in terms of investment than Jordan and Egypt’s direct aid – regime figures are now suggesting immediate capital with or without an Israeli peace is essential. Deputy Prime Minister and economic planner Abdullah Dardari recently admitted in an interview to Reuters that sanctions were having an impact and that the economy was not growing at the anticipated rate. With almost 20% unemployment, a bloated inefficient bureaucracy, and decaying infrastructure, Syrian policy planners seem now to recognise that mending ties with the US and the investment and ending of sanctions that comes with it, is of greater priority than negotiating with Tel Aviv.

Conversely, were Damascus able to secure US goodwill in the short term without negotiating with Tel Aviv, it might suit the regime domestically. Whilst the return of the Golan Heights will never cease to be a priority for the government, its continued absence provides an excuse to maintain authoritarian rule. The ‘war’ with Israel is used to justify the continued state of Emergency since 1963, the suspension of the rule of law and the delay in Bashar’s promised political liberalisation. Having promised ‘bread before freedom’ on coming to power in 2000, if US rapprochement and investment can secure greater material wealth, the status quo with Israel might prove a useful way of avoiding calls for domestic reform.

Much hangs on the approach taken by the new White House. Though Washington recently extended sanctions on Damascus for a further year, much to the dismay of pro-Obama figures such as Dardari, diplomatic contact is becoming more regular. Hillary Clinton and Senate Foreign Relations Committee Chair John Kerry have made several recent phone calls to Damascus, and Special Envoy George Mitchell is rumoured to be visiting soon. At the same time, whilst the administration seems more willing to force Tel Aviv into action than past US governments, pressure thus far seems to be limited to settlements and engaging with the Palestinians rather than the Syrians.

In the Syrians’ favour it seems that the administration is willing to renew contact and enter dialogue with Damascus without relating it to a renewal of talks with Israel. On the other hand, it is unlikely that the strong anti-Syrian pro-Israeli voices on Capitol Hill will allow sanctions to end without linking it to peace talks with Tel Aviv. Obama might be willing to overrule such critics and fully restore economic and diplomatic ties with Damascus anyway. Alternatively, he might adopt the same strong-arm approach to pressure Israel into negotiations with Syria as he seems to be adopting with their settlements in the West Bank. Yet to do so he will want something in return. Syria has successfully acquired a decent arsenal of bargaining chips with Washington in recent years. If negotiations are to progress with either Israel or the US, it needs to start playing them.