Sects and balances: a violent flare-up in Syria

0:02The Economist

0:10Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer. And I'm Rosie Bloor. Every weekday, we provide a fresh perspective on the event shaping your world.

0:25For a long while, interest rates were so low that paying off a mortgage wasn't the smartest way to make your money work. But borrowing costs are rising and stock market yields are slowing. We go through the calculation homeowners should now be making. And businesses have long been jealous of the kinds of super sharp images that spy and military satellites take of Earth. Now some commercial operators are starting to take photos that are just as good and a lot cheaper.

1:01First up, though.

1:10Since the fall of Bashar al-Assad's regime in December, a key question has been how the Alawites would figure into Syria's sectarian patchwork. It's an ethnic group that practices an offshoot of Shia Islam, a group that the Assads and their loyalists came from, one that held sway over Syria for more than half a century. Would the rest of the country, now led by Ahmad al-Shara and his Sunni Islamist government, seek revenge on the Alawites for the crimes of a brutal civil war? Would the Alawites simply accept that their time in power, their self-determination, was over? Those questions are as live as ever, but recent days have revealed one thing about them.

1:52They won't be resolved without bloodshed. On Thursday, I was in the coastal city of Latakia. It's in this Alawite heartland of Syria. And I was meeting with some Alawite sheikhs, actually, for another story I was working on. And in the early afternoon, absolute chaos erupted. Gareth Brown reports on Syria and Lebanon for The Economist and was one of few, perhaps the only journalist, in Latakia last week. The people I was with cut short are meeting and they said they had to rush back to their villages in the nearby hills. and it became clear that the very substantial military operation was underway and this continued for several days and I spent two days in Latakia city and it was very difficult to understand what was going on.

2:35I could hear gunfire, explosions in the distance but we know there was extreme violence of a sectarian nature in the villages in the coastal area and in some of the cities too and the death toll is likely well into the hundreds perhaps even into the thousands. many civilians have been killed. And what do we now know about the violence? How much of what's going on has become clear? There's a lot of fog still regarding events on the ground, but what we know for sure is that it was started by a newly formed Alawite military council. This is a group of fighters still loyal to Bashar al-Assad, led by some of his old generals, who basically announced an insurrection.

3:16So on Thursday, they put out a distress call and security services from the new government went out to answer that distress call in a village near Latakia where I was. That convoy that went out to investigate the call was ambushed. More than 15 government fighters were killed. And then there was a coordinated series of ambushes on government posts and even hospitals by these pro-Assad fighters across the coastal region. We're talking about police stations, checkpoints. They even attacked a hospital in one of the cities. So this initial wave of attacks from Assad's forces prompted a huge response, not just from Syrians in the coastal area, but from across the country.

3:59And so within hours, it became very apparent that it was a very serious military operation going. So you say things are still quite foggy, but to be clear, this is sectarian violence between a number of sects, or that it also involves the government of Mr. Shara? Yeah, there was violence being perpetrated in different directions. You had some sectarian violence from pro-Assad fighters on local Sunni civilians, but also on local Alawites who wouldn't join them or support them in the insurrection. Then you had a wave of violence from Sunni fighters loyal to Mr. al-Shara against local Alawites, people who were seen to have supported the Assad forces or in some case they were just killed for being Alawite.

4:46And then you had this sort of civilian on civilian violence of Sunnis coming in from nearby areas, not part of the armed factions and also taking revenge on Alawite civilians. So this was pushing in several different directions. Al-Shadow's security forces are thinly stretched across the country. And because of this, there was this sort of call to arms, call to jihad, call for mass mobilization in the mosques in places like Idlib and Aleppo on social media. And thousands of people, some of them fighters, some of them just civilians, picked up their guns and rushed to the coastal areas in defense of the homeland.

5:21In Damascus, one radio host encouraged his listeners to cast the Alawites into the sea. And so there was a lot of very troubling rhetoric from all levels in all different directions coming from across Syria. And again, very unclear exactly what's happening kind of everywhere throughout Syria at the moment. But how do we know what we do now? Well, a lot of this violence was posted online on social media. These attacks were filmed by the people carrying them out. We've seen videos on social media of fighters forcing Alawites to bark like dogs sitting on their backs, riding them and then shooting them dead.

5:58And we've seen other footage of, you know, literally dozens of bodies with bullets to the head, which suggests summary executions, you know, lined up in villages outside of Latakia.

6:16there were also videos of the bodies of alawites being dragged behind cars through the streets so a lot of these really gruesome and shocking crimes were actually posted to social media filmed in some cases by the perpetrators themselves so what you're describing is a group of alawite secessionists who have been put down by other civilians, perhaps to a degree by Mr. Shara's forces. How much of this is just an Alawite issue and how much of it is a sort of cracking of the wider peace in Syria? I think the relationship between Mr. Shara and the Alawites has been a key sticking point in the last three months.

6:55You know, that is an especially fragile and difficult relationship because in the eyes of many Syrians, the Alawites are seen as intertwined with the previous regimes, crimes and cruelty. But there are wider sectarian crackings, if you like, underplaying here. You have a very nascent Alawite insurgency, which is killing civilians and attacking government positions and trying to destabilize the government. This turbulence in al-Shara's relationship is not just with the Alawite community, but it goes in multiple different directions. We've been talking here about what it is that Mr. Shara wants, but then what his forces have done.

7:29I guess the question is how much control he has over his forces in the first place. Well, I think this is a key issue. Al-Shara and HTS, they captured Damascus and the rest of the country actually with relatively little fighting. You know, the regime collapsed. They didn't really have to fight their way all to Damascus. And they have relatively few fighters. And many of the more extreme and radical groups are not directly loyal to Al-Shara. they're outside of his control i think there are definite capacity issues with his administration this incident in the coastal area required thousands and thousands of people to flood into the areas so there's a huge issue of capacity he hasn't been able to bring in all of the armed groups under the control of the ministry of defense negotiations on that issue have sort of got stuck in the detail.

8:20So if Al-Shadot is going to be able to prevent these things from happening in the future, indeed, if he wants to prevent these things from happening in the future, then he needs to build up his state capacity. He needs stronger, broader, more reliable security forces because at the minute, the government forces simply aren't able to control all of Syria. And in these vacuums, other actors, other militias, whether loyal to President Bashar or other groups, are filling that gap. Which brings us back to the question we had from the start about his ability to lead and to calm tensions and to unite Syria.

8:58Do you think this is evidence that that project is failing? When it comes to dealing with the minorities, al-Shara's strategy has been one of confidence building. Christians, Druze, Kurds, Alawites are deeply sceptical of him because of his past association with Al-Qaeda. And he was gradually building confidence with the various minority communities. And this is obviously a huge threat to that. He announced over the weekend a seven-person investigation committee. He's going to have 30 days to complete a report on what happened. And I think this report is hugely important. It's really his last chance in terms of building confidence, particularly with the Alawites, but possibly even other minorities.

9:42This investigation needs to be done transparently. It needs to be carried out with credibility. It needs to report back promptly and people need to be prosecuted for these crimes. There is so much scepticism and dare I say now fear within the Alawite community of Al-Shara and his rule. And it's very hard to see how that gets undone. So I think this investigation, which he announced, is critical. And if he can't win over the minorities, if he can't make the minorities in Syria feel comfortable, then he's going to struggle to get the international support that he desperately needs. Gareth, thanks very much for your time.

10:21Thanks for having me on.

10:38Having a mortgage can sometimes feel like a heavy weight. In recent years, though, some homeowners have been enjoying a lighter load. In Britain and much of Europe, you could get a fixed-rate mortgage for around 1%. Loans in America were little higher. That meant it often made sense to invest any spare cash, rather than try to pay off your debt. But now the cost of borrowing is increasing. Today, that's got mortgage rates jumping again, even after last week. All too familiar. Stepladder upwards of the bank's interest rates, the driver behind more expensive mortgages. And many people who fixed their mortgages when rates were low are coming to the end of that term.

11:19So there's a question. Should you continue to invest elsewhere or start to pay down your mortgage? Lots of mortgage holders today might have agreed their mortgage when interest rates were a lot lower than they are at the moment. Josh Roberts is our Capital Markets correspondent. Interest rates were very low, near zero for much of the 2010s, and they went even lower in 2020 and 2021 during the COVID pandemic. But there's a wrinkle because in a lot of the world, Britain, large parts of Europe, when you agree a mortgage, you only fix your interest rate for a relatively short period. you might only agree it for one to five years.

12:01So those low rate mortgages are rolling off now. And a lot of mortgage holders are looking at their interest bills going up quite a lot. Josh, I was brought up to pay off my debts as soon as possible. Is that not the right advice? Well, for the generation that brought you up, it probably was exactly the right advice. In the 1970s, and particularly in the 1980s, interest rates were an awful lot higher than they are now. They soared into the double digits. In some places, they were as high as 15%. And if your interest bill every year is 15 % of what you've borrowed, it's quite clear that you should pay back what you've borrowed as soon as you can so that you can spend your money on other things rather than just the interest.

12:41But after the 1980s, interest rates started falling, and then they kept falling. And actually, for much of the intervening period, they kept getting lower and lower. And in the 2010s, interest rates were very low indeed. They then hit near zero during the Covid pandemic. So for current generations of borrowers, it's not as clear as it was for their parents that they should repay their debt because the cost of servicing it is so much lower. And you're suggesting that's now changing? It has. Since the Covid pandemic, interest rates have been climbing again. Now, they're nowhere near where they were in the 1980s.

13:15But once again, borrowers are seeing their interest bills going up. And in some places, they're going up enough to suggest that you should be repaying your debt rather than using spare cash for anything else. So you're saying that mortgage holders need to make an assessment of do they pay off their debt or should they invest in the stock market, say? That's exactly the sort of decision they might be making. Now, there's an even simpler example than that. For many people, for example, who agreed a mortgage in 2020 or 2021, they might have got a fixed rate that was around 1%. And over the past couple of years, they might have looked at savings accounts that actually paid them much more than 1%.

13:55You know, in a savings account in the UK at the moment, you can get maybe 4%. So if I can put my money in a savings account and be paid 4%, or if I can use it to repay my mortgage and save 1 % of interest, obviously I'm going to put it in a savings account because I would actually get more interest from saving it than I would save by repaying the mortgage. Now, if you think not of a savings account as the alternative to repay your mortgage, but of investing in the stock market instead, the difference is even starker. So during the 2010s, when interest rates were really low on the mortgage, the returns available on shares were incredibly high.

14:33Between 2009 and the end of 2022, the value of the stock market multiplied by six or seven times, depending on where you were. Compare that to the 1 % interest you might have been saving on your mortgage. And again, it's quite clear you should have been investing in the stock market, not repaying the mortgage. Now, though, that interest rates have gone up and the stock market has risen so much already, the calculation has flipped. Okay, so Josh, how do we navigate this to pay or not to pay off? What do people need to take into account? It's hard to know what stock market returns are going to be like in the future.

15:08In fact, nobody knows what stock market returns will be in the future. But there are lots of reasons to think that they'll be lower than they have been for the past few decades. You should think of stock market returns as ultimately coming from companies' earnings. And basically what's happened over the past few decades is that share prices have risen much faster than companies' earnings have risen. And when that happens, what you're basically doing is you're bringing forward future returns to now. So you can interpret the stock market having gone up so much as basically meaning that future returns have already been booked.

15:43And that means that the returns you might get from investing in shares now are lower than they have been in previous decades, at the same time as interest rates on mortgages have gone higher. So that's why I say the calculation has now flipped. And for the first time in a long time, it makes sense to pay off your mortgage rather than investing. Josh, thank you so much. Great to talk to you. Thanks for having me.

16:22A spy satellite is essentially a flying telescope, but it's just one that looks down rather than up and out at the universe. Tim Cross is our senior science writer. The sort of military ones that people like America fly can get very, very high resolution, very sharp images, but they're very, very expensive. We don't know exactly how much they cost, but the best estimates are several billion dollars for each satellite. But now, though, there's a new company that reckons it can make spy satellite-grade images available to almost anyone commercially and can do it much more cheaply than the government could.

17:00So, Tim, tell me about this new venture. It's called Albedo Space, And one of the founders used to work at Lockheed Martin, which is a big American arms and defense company. And he was inspired, in fact, by Donald Trump. In 2019, Trump tweeted a photo of an Iranian missile site where there'd been an accident. And it was met with sort of a mixture of kind of fascination and horror on Twitter because people looked at it. They looked at the angle it had been taken from and concluded that what Trump had tweeted was a raw image from one of these very top secret American spy satellites. And that sparked a sort of big discussion about, look how sharp these images are, look how good they are.

17:41Wouldn't it be amazing if you can get something like this commercially? And that's essentially what Albedo was founded to do. And what's Albedo come up with? Well, so they aren't the only company offering Earth imagery. There are firms like Maxar and Planet and European Space Imagery and so on. But they tend to offer pictures with a resolution that is roughly sort of 30 centimetres per pixel. So each little dot in the image represents something 30 centimetres by 30 centimetres on the ground. So about a foot by a foot in old money. What Albedo wants to offer is 10 centimetres per pixel. So that's something roughly the size of a beer mat would be just about visible from orbit.

18:18And because an image is a two-dimensional thing, if you shrink it from 30 by 30 down to 10 by 10, you actually get a ninefold improvement in resolution. So it's much, much sharper. And there are sort of two big levers you can pull if you want to get your image quality better. You can put a bigger mirror in your telescope, which is expensive and they're hard to grind, or you can just put your telescope slightly nearer the target. And it's that second one that Arbedo are trying to do. They're going to fly ultra low in something called, very prosedically, very low Earth orbit at a height of about 270, 280 kilometers above the ground, which in space terms barely counts as being in orbit at all.

18:56So why can't everyone do that? Well, it's quite an unfriendly place. So the atmosphere at that altitude has a lot of what's called atomic oxygen in it, which is just free-floating oxygen molecules not bound to anything else. And that's sort of really corrosive. It attacks all kinds of materials. So you need special coatings. You need to put quite a lot of engineering in. And then another problem is that the Earth's atmosphere, there's no sort of hard line where the atmosphere stops. It just gets thinner and thinner the higher you go. And in very low Earth orbit, it's still, in relative terms, quite thick.

19:28So if you put a satellite in there and left it to its own devices, it probably wouldn't last more than a few months, maybe a year at most, before the drag from the wispy atmosphere slows it down, makes the orbit decay, and it falls back to Earth. And how do we stop them from crashing to the Earth if they're so low? Two ways, essentially. So one is you build them with aerodynamics in mind. So, for instance, rather than having the sort of standard solar panels, which you hold out from the body of the satellite, that will cause too much drag. So you have to have them flush with the main body of it, which makes the solar panels less efficient, but makes your satellite more aerodynamic.

20:02And then the other way is engines. So the satellites use electric thrusters, basically, which produce only a very small amount of thrust, but they're extremely efficient. So you can run them for months and months and years and years. Even with all that, they reckon that the average satellite will only last about five years in orbit. And so part of the business model depends on the fact that thanks to firms like Rocket Lab and SpaceX, launch costs are now so cheap that you can just replace these things as and when you need to. So where's the money coming from for all this? So we don't know exactly how much these satellites are going to cost.

20:35But the first one, Clarity One, is due to go into space sometime later in March. And given that they've raised$130 million, I think that puts a rough price on what it costs. and that's at least 10 times, maybe even 20 times cheaper than these military grade ones. And what are we actually going to see when we get these images? Well, quite a lot of industries already use this stuff. So in the insurance industry, they use satellite imagery to do sort of risk assessments or to do loss adjustments after big natural disasters. So they're talking about power companies, mining firms who tend to have a lot of infrastructure in remote places and it's not always easy to get a plane over there to do imaging, big solar power farms, precision agriculture, all this kind of thing.

21:16And then interestingly, one line of business that they are interested in is governments. So some of Clarity One's capacity is already reserved for American government use. But interestingly, they told me that due to a change in export rules, they think they're going to be able to sell this kind of imagery to many other foreign governments as well. Presumably not the North Koreans or the Iranians. But if it works, if the company can make this profitable, I think that could be quite interesting because you could have all kinds of governments suddenly given a capability that they wouldn't have been able to afford to build by themselves.

21:53Nothing's top secret anymore. Exactly. Tim, thank you so much. Thanks, Rosie.

22:15That's all for this episode of The Intelligence. We'll see you back here tomorrow.