July 1, 2010 - Alertnet - FACTBOX-Key political risks to watch in Syria

DAMASCUS, July 1 (Reuters) - Israeli accusations in April that Syria sent long-range Scud missiles to the militant group Hezbollah revived fears of conflict between the two countries.

Syria's ties with Iran could also drag it into a wider confrontation over Tehran's nuclear programme.

Another challenge is the economy, with U.S. sanctions on Syria over its support for Hezbollah hampering efforts to raise living standards and find jobs for a population growing at 2.5 percent a year.

Following are key Syria political risks to watch:

WAR BETWEEN SYRIA AND ISRAEL

Secretary of State Hillary Clinton said U.S. officials have raised the suspected transfer of sophisticated weapons to Hezbollah with Syrian President Bashar al-Assad, who "was making decisions that could mean war or peace for the region."

Israel's foreign minister warned in February that Damascus would be defeated in any future conflict and Assad would lose power. Diplomats in the Syrian capital say Israel has passed several messages to Syria's ruling hierarchy that Syria risks Israeli attack over arms supplies to Hezbollah.

Syria responded publicly that Israeli cities could be attacked in any war, but later said that seeking peace with the Jewish state remained its priority.

Although miscalculations remain possible, neither side has an interest in igniting war, with Syria acknowledging Israeli military superiority and Israel content that Syria has kept the front on the Golan Heights quiet since a 1974 ceasefire.

The ceasefire was reached a year after Syria launched a failed war to retake the strategic plateau, which Israel occupied in the 1967 Middle East War.

Syria did not retaliate in 2007 when Israeli planes attacked a complex in eastern Syria that the CIA said was a nuclear site. Damascus denied that it was a nuclear facility and said it reserved the right to respond.

What to watch:

-- A limited Israeli strike on Syria. Israel could attack what it could term as suspected weapons supplies to Hezbollah to force Damascus to think again about backing the group.

Syria may not respond to an isolated Israeli attack but would find it hard to sit idle if Israel hit high profile sites.

-- U.S. position. Syria said it is willing to work with the United States on containing insurgents crossing into Iraq and Washington may not want to undermine that by backing an Israeli attack on Syria.

The Hezbollah weapons row, however, has held up the despatch of a U.S. ambassador to Damascus by at least six months, diplomats in Damascus said.

-- Israel-Iran confrontation. Syrian officials have said that their struggle with Israel is separate from any conflict between Iran and Israel over Tehran's nuclear programme.

But if Israel attacks the Islamic Republic then Hezbollah guerrillas could retaliate on behalf of their Iranian patron. The risk of a regional war increases if Israel presses with its accusations against Damascus and Israeli cities come under Hezbollah attack for the second time since 2006.

RESUMPTION OF SYRIA-ISRAEL PEACE TALKS

Syria, which has close ties to Iran, Hezbollah, and the Palestinian Islamist group Hamas has said that its relations with Middle East players would change if a peace deal with Israel that would return the Golan was signed.

Israeli Prime Minister Benjamin Netanyahu has shown interest in peace with Syria but balked at its core demand for a return of the Golan Heights. Ehud Barak, his defence minister, has suggested this price might be worth paying to curb Iran.

Assad is almost bound by the legacy of his father, the late President Hafez al-Assad, who turned down a deal after almost 10 years of U.S.-supervised talks because it would not have restored the whole of the Golan to Syria.

Four rounds of indirect talks between Syria and Israel that were being mediated by Turkey broke down in December 2008 during the Israeli invasion of Gaza strip. Assad said the two sides had been close to a breakthrough.

Turkey's own relations with Israel, which had cooled significantly since the Gaza conflict, were thrown into turmoil when Israel stormed Turkish-backed aid ships bound for Gaza in an operation which left nine people dead last month.

Assad said the incident increased the chance of war. "But realistically you had this danger before the raid because we had ... other evidence about the intentions of this (Israeli) government, about the intentions towards peace," he said.

What to Watch:

-- Turkish moves. Ankara is gaining influence in the Middle East after strengthening commercial and political ties with many Arab countries in the last few years.

-- U.S. role. Washington says it is seeking a Syrian-Israeli deal as part of a comprehensive Middle East peace, and it may push harder on the Syrian track if efforts for an Israeli- Palestinian deal continue to flounder. But Syria would have to assuage U.S. fears on the suspected arms transfer to Hezbollah.

HARIRI TRIBUNAL

A United Nations tribunal to try suspects in the 2005 assassination of Lebanon's former Prime Minister Rafik al-Hariri could put pressure on Syria.

The U.N. investigation into Hariri's killing first implicated Syrian and Lebanese officials, although it later held back from giving details of its findings.

Syria has denied allegations of involvement and its rulers are confident that they have passed through the worst consequences of the killing, which triggered the withdrawal of Syrian forces from Lebanon after a 29 year presence.

What to watch:

-- If the tribunal indicts any Syrian official it would likely renew pressure on Assad and reverse Syria's recent steps away from international isolation. Assad has hinted that only Syrian courts can try any Syrian suspects in the killing.

SYRIAN ECONOMY

Syria has taken measures to lift restrictions on business after four decades of failed Soviet style economic policies and hopes to attract $44 billion, or 83 percent of its GDP, in private investment over the next five years.

U.S. sanctions imposed in 2004 over Syria's role in Iraq and its backing for Hezbollah and Hamas have curbed Western investment. Together with a drought in eastern Syria, the sanctions have made the task of raising living standards and find jobs for the fast growing population even harder.

What to watch:

-- Economic pressures. More bad harvests and a rise in unemployment, officially 10 percent compared with independent estimates of 25 percent, might persuade the government to seek progress in other areas, including restarting talks with Israel.

-- A deal with Israel, however unlikely right now, would have a knock on effect on business sentiment and the prospect of a substantial inflow of foreign and expatriate capital.

-- The political system has withstood economic crisis in the past and remains under tight control, with the country under emergency law since the Baath Party took power in 1963.

OPPOSITION THREAT?

Since taking power in 1963, the Baath Party has maintained stability in the country of 19 million people by cracking down on dissent, but its control has been challenged in recent years by a series of violent events including a 2008 car bombing near a Damascus security complex which killed 17 civilians.

In 2006, Syrian forces killed eight men who tried to launch separate attacks on Syrian television and the U.S. embassy.

Syria's relationship with militants, including al Qaeda-linked groups, is complicated. The United States and other countries have long accused Damascus of allowing al Qaeda to use its territory to transfer fighters to Iraq and even Lebanon.

Syria denies those charges and points to a long track record of cracking down on Syrian Islamists. Damascus crushed a wave of Islamist violence by the Muslim Brotherhood in the early 1980s, culminating in a stand-off in Hama in 1982. Rights groups say thousands died in the army siege of the town.

The government has stepped up operations to contain armed Islamist militants emboldened by U.S. losses in Iraq and driven by a desire to avenge Israeli attacks on Palestinians.

Syria also faces periodic Western pressure to release political prisoners and allow more political freedoms in a country where all opposition has been banned for four decades.

Bashar al-Assad crushed the Damascus Spring, a movement of intellectuals and opposition figures that campaigned for democracy soon after he succeeded his later father in 2000, and jailed its leaders.

Opposition intellectuals were subjected to another round of arrests after trying to revive the movement in the aftermath of Syria's withdrawal from Lebanon in 2005.

What to watch:

-- Human rights activists say Syria holds thousands of political prisoners, mostly without trial, but analysts say these peaceful pro-democracy and human rights activists do not pose an immediate threat to the Baath Party's grip on power. * For political risks to watch in other countries, please click on [ID:nEMEARISK] (Editing by Dominic Evans, Samia Nakhoul and Lin Noueihed)