The years following the collapse only saw the situation worsen with the election of Boris Yeltsin to the presidency. His disastrous economic policies of transitioning to a market economy turned an already weakened nation to the worst economic depression ever seen in a major industrialized country. Following the advice of Western economists to liberalize the economy, Yeltsin reduced industrial subsidies and took off price controls. The net effect of these decisions caused hyper-inflation that sent GDP down by over fifty percent. New Russian arms production came to a halt as Research and Development funds dried up. The disastrous war Yeltsin waged in Chechnya did little to encourage Syrian relations and actually drew the support of Israel. His anti-Semitic reforms began the foundation for renewed ties with Russian Jews who had committed Aliya to Israel. The destruction of the Russian economy and military production capabilities under the Yeltsin administration gave no reason for Assad to like the Russian Federation since they did little for Syria. The slaughter of so many Sunni Muslims in Chechnya did not win any support either. Under the Yeltsin regime, both the Russian and Syrian militaries were left to rot. With the death of Hafez Assad and the removal of Yeltsin from power, a new day for Russia and an uncertain road for Syria began with the arrival of Vladimir Putin.
When Putin came to power in 1999, Syria owed Russia over $12 billion from the Soviet era. Russia had virtually frozen cooperation over the debt issue, but relaxed their stance when Assad came to Moscow with money in hand. During the years of 2000-2003 there were many visits between foreign ministers from both Syria and Russia. Putin had yet to visit the country but did meet with Syrian Vice President Abdel Halim Khaddam in 2003. Syria boycotted a Middle East peace conference held in Moscow in 2000. In March of 2002, Russia voted for the co-sponsored UN Security Council resolution 1397 calling for a two state solution that recognized Israel. In 2003, Syria and Russia found common ground in opposing the American invasion of Iraq. After the invasion of Iraq, Syria found itself in a precarious position. The Russian daily Kommersant reported that “Although Syria is not a member of the American “axis of evil” and, unlike Iraq and Iran, does not have reserves of oil or other strategic raw materials, it is considered the most likely candidate for the role of the next fall guy.” With the threat of a possible US invasion, Syria was desperate to acquire modern weapons. In 2004 and 2005 there was a media buzz about Syria buying Iskander-E ballistic missiles and S-300PMU2 air defense systems. Russian Foreign Minister Igor Ivanov responded to the accusations “We have no talks with Syria about such missiles. There are no negotiations under way with Syria. We are already used to having such information pop up before visits to Russia by Mid-East leaders.” The World Tribune reported that “Neither Russia's state-owned arms export agency Rosoboronexport nor the Foreign Ministry confirmed plans to sell military systems to Syria. But the ministry said Moscow maintained the right to trade with countries such as Syria, which has not been under United Nations embargo.” In the same interview, Ivanov made special consideration to Israel "In our export policy we give special attention to prevention of sensitive arms getting into the hands of international terrorists, and the Israeli leadership knows this." There were many issues from the time when Putin came to power up until 2005 in which Russia and Syria were not on the same page. The settlement of the debt seemed to be the biggest sticking point in their foreign relations as Syria was not able to acquire the systems in a time facing a possible US invasion. The Russian stance on a two-state solution certainly did not advance relations. The Second Chechen War and the Dagestan War drew relations closer to Israel with intelligence sharing but did nothing to ease the mind of Syria.
In 2005, Russia decided to write off seventy-three percent of the $14.5 billion dollar debt and to reschedule payment for the rest. With this development, the uncertain relations between the Russian Federation seemed to shore up any doubts of the two’s cooperation. In the same year, the Russian company Tatneft signed a memorandum of understanding to explore Syrian gas and oil fields which Syria desperately needed for its economy. It was the first such agreement in a decade. The engineering and construction company Stroytransgaz entered into the first contracts with the Syrian Gas Company in December 2005. Stroytransgaz has concluded many deals since then and cooperation remains strong. “In December 2005, Stroytransgaz concluded its first contracts with the Syrian Gas Company (SGC) to build oil and gas projects. As early as January 2008, our company completed (ahead of schedule) the 319-kilometer Arab Gas Pipeline. Work on another contract with SGC, concluded in 2005, is currently in full swing: the company is developing three fields in Palmyra, a new Syrian gas production province, and is building a gas processing plant as well as gas pipelines and related infrastructure. In the spring of last year, yet another contract was signed with SGC, this time to construct a gas processing plant, “North Palmyra.” The work is to be completed in mid-2009.” They are also building a $2.7 billion petro-chemical plant and oil refinery in the Syrian province Deir el-Zour. The plants will put over 2000 people to work but most of them will be Russian for the near future. “The Minister said Syria's share of the profits will be 15 % in the first 10 years, 30 % in the next five years, 45 % in the next five years and 60 % in the next five years. The whole project will be transferred to Syria after 25 years of investment.” The terms of the agreement are heavily one-sided and border on the edge of exploitation. Russia employs thousands of workers drawing in most of the profit while Syria gets only a small share. Completion is due in 2010.
One of Russia’s primary goals with Syria was to forge a profitable relationship in which they could gain a “paying customer.” Syria is not rich in fossil fuels like many of her Arab neighbors so the situation has to have Russian strategic interest in mind. Syria provides a possible solution to one of Russia’s most strategic problems. Russian access to the Mediterranean Sea has been an ongoing problem for centuries. With the annexation of the Crimea in Ukraine, the Russian Empire and the later Soviet Union had a base for the Black Sea Fleet in Sevastopol. With the independence of Ukraine, the Russian naval base there has become a hot button issue. There are constant sovereignty issues that the Ukrainian government raises with Russian use of the facilities. The lease for the naval base is set to expire in 2017, but the constant pressure of Ukraine by raising the lease rent and NATO expansion has made that date even less likely. The Syrians have a solution that could work in the Russians favor two-fold. By moving the Black Sea Fleet to Tartus Syria, the Russians could not only get out of Ukraine, but avoid crossing the Dardanelles with Turkey. The Convention of Montreux (1936) governs the access of the Black Sea and is controlled by a NATO member. This is unacceptable to Russia as she would not be able to move her ships during wartime and cannot move capital ships of a certain tonnage which would include aviation and heavy cruisers. If she could base them in Syria, all of these problems could be avoided and the Russians would have unhindered access to the Mediterranean Sea. This would benefit the Syrians as they would get Russian protection of the facilities and their naval forces located in the area. Syria would also benefit by getting aid and weapons in the form of compensation for the lease. In 2006, it was reported in the Russian Daily Kommersant that Russia was dredging the Syrian port of Tartus. This has been the historical location of a maintenance station located there since Soviet times. The report said a source inside the ministry confirmed plans “that Moscow wants to form a squadron of ships led by the missile cruiser Moskva that will be a permanent presence in the Mediterranean Sea and take part in naval antiterrorist exercises with NATO members. Thus the facilities being developed in Syria may be needed for the Black Sea Fleet and the Northern Fleet, if necessary, for reinforcement.” The source also confirmed that Russia would station S-300PMU2 batteries, operated by Russians, to protect the base. These SAMs would also cover a large portion of Syrian air space. At the same time as these negotiations, the two countries agreed on S-125 modernization and were working out a deal on Panstir-S1 SAMs. While the S-125 is an old system, it has proven capable of shooting down an F-117 stealth fighter over the Balkans. The Panstir is considered one of the most advanced short range SAM complexes coming on the market. In October of this year, Bashar al-Assad and the current Russian president Dimitri Medvedev met in Sochi. Assad supported Russian actions in both Abkhazia and South Ossetia. It was reported in the UK Guardian that "Israel and the US supported Georgia against Russia, and Syria thus saw a chance to capitalize on Russian anger by advancing its long-standing relations with Moscow." It was officially announced by Russia in September of 2008 that the port of Tartus would be used as a naval base. The claim that Russian SAMs might be based was bolstered when “Assad made a visit to Moscow last month, and before the trip told the Russian business daily Kommersant that Syria was ready to cooperate with Russia in any way, including discussing deploying missile defense systems on Syrian territory.” This puts credence to the claim that S-300PMU2 batteries would be deployed in the area as an ABM version of the missile exists.
In the early years of the existence of Israel, The Soviet Union supported the creation under Stalin. Stalin made available weapons the young state needed in order to defend itself with supplies from Czechoslovakia. With his death, the relationship turned from tacit support to aggressive. The Soviets supported the Arabs in every war against Israel and even threatened to intervene in 1973. In 1967, The Soviets moved to support the Arabs calling Zionism a form of racism. The suppression of Judaism in the USSR further strained relations. Under Gorbachev's "New Thinking", the Soviet's hard stance against Jews committed to Aliya was lifted. The lifting of the restriction lead to 800,000 Jews leaving for Israel in the 1990s. Those immigrants would form the basis of Israeli-Russo relations in the years to come.
The Russian Diaspora in Israel makes up a large segment of the population and is one of the most important swing votes in the country. There is a distinct Russian culture that has taken a life of its own in Israel. They formed a Russian ethnic party called B’aliya under Natan Sharansky in 1996 and won 7 seats in the Knesset. The largest influx of immigrants came in the 1990s and their political leanings are “not yet firmly ideological. It is a floating vote, not linked too closely with any party, which makes them very attractive for all the parties." The Russian-Israelis have their own media outlets, “including four daily newspapers and two radio stations and cultural institutions (such as Gesher, a highly successful Russian theatre group that has taken Israel by storm).” The Russian block has swung some major elections in recent history. In 1996 they elected Netanyahu, Barak in 1999, and Sharon in the special 2001 election. In the 1999 election, both Netanyahu and Sharon went on Russian television and addressed the voters in Israel that watched the Moscow based channel. In the spring of 1999, “With an eye to the Russian vote, Netanyahu and Foreign Minister Ariel Sharon traveled to Russia, giving interviews to Russian television stations that are broadcast on cable in Israel. It was probably the first time in Israeli political history that politicians tried to appeal to ethnic voters by returning to their homeland.” Political pandering became so engendered into the campaign that Netanyahu “declared that May 9, the date that Russia celebrates the Allied victory in Europe in World War II, would become an Israeli holiday -- with its own postage stamp. He also announced new benefits for the 40,000 Russian war veterans in Israel.” The major political power Russian Jews carried was noticed by Putin and he took advantage of it. In the November 27, 2000 edition of ITAR-TASS in a general interview on the Middle East, Putin made an overzealous statement for his concern of the Israeli citizenry,