About 13 years ago, when Iraq was liberated from Saddam Hussein and after more than a decade of heavy sanctions, a miracle of the Iraqi economy was revealed. How did its people keep going for so many years without so many products and spare parts for cars? How did they go on with stingily rationed electricity and generators that harked back to World War I?

“Nothing here goes to waste,” a garage owner in Baghdad told me. “Take a walk through the streets and you won’t find a crooked nail or a piece of rusty wire. Everything gets recycled. We use everything,” he said, his pride undisguised.

To demonstrate what he was saying, he raised the hood of an antique American car and pointed out the parts as if he were teaching mechanics. “The carburetor is from a Ford, the clutch is from a Fiat, the tires are from four different cars, the handbrake cable is made out of iron wire for the construction industry, one fender has been cut and soldered and was originally a tin sheet from a chicken coop,” he said. “We’ve become wizards in this country.”

Syrians have also mastered this wizardry in recent years. I’ve seen a report on a new method for producing diesel fuel from old plastic bags and containers. These are boiled for 12 hours, filtered and distilled – and in the end a fluid resembling diesel fuel is used to propel cars and tractors as well as fire up cooking stoves. The stoves, meanwhile, are made out of scrap metal; all you have to do is get hold of some flour to bake pita bread for the family.

At a hospital in Aleppo the production of electricity is more sophisticated and relies on solar panels donated by an aid NGO – which can provide electricity for an entire wing of the hospital.

Iranian businessmen abound

Petroleum and petroleum products have become very rare and expensive in Syria. Until February, Iran was delivering about 2 million barrels of oil to Syria every month, paid for by a $3 billion credit line from Tehran. But these deliveries were halted at the beginning of March. Syria said the reason was technical – a malfunction in the pipeline in Iran that would be repaired in the near future.

“The near future” lasted more than three months and the real reason emerged, insofar as one can trust reports in Syria: a dispute between Damascus and Tehran over investments in the Latakia area in northwest Syria. Tehran and Iranian businessmen are not confining themselves to military aid to Syria and the dispatching of forces to put down opponents of the regime. They’re also deeply engaged in business and investments in Syria, in changing the demographics of neighborhoods and towns, and in buying up real estate that’s cheap and very available.

Damascus has granted Iranians many incentives for purchasing properties in Syria, and in the past three years special laws have been passed that let Iranians circumvent the cumbersome Syrian bureaucracy and transfer into their names land in areas controlled by the regime. For the most part the purchases are made through Syrian nonprofit and aid groups, which also receive Iranian government guarantees that the payments for the acquisitions will be made.

In tandem with the legal measures, the Iranian forces are taking over entire neighborhoods in the major cities like Homs and Aleppo. Some of the cities that the Iranians control have been totally destroyed, and in others they’re forcing property owners to sell. They’re expelling business owners and taking on the completion of government construction projects that had been suspended because of the war.

According to reports on opposition websites, the Iranian government has granted huge sums, estimated in the billions of dollars, to Shi’ite businessmen from Kuwait, Bahrain, Iraq and Iran to buy land and buildings in Syrian cities to settle Shi’ite citizens of those countries there. Syria reportedly has granted citizenship to some 200,000 Shi’ites from those countries so they can settle in Syria legally and increase the percentage of Shi’ites in the country.

The ISIS angle

This is thus considered a long-term investment whose aim is not only economic but also political and demographic. Not only Iran but also the Iraqi government has granted about $20 million in recent months to top-echelon Syrians – sometimes at Iran’s demand – with the aim of strengthening loyalty to Iran.

This collaboration apparently went awry in the coastal area of Latakia and Tartus amid a disagreement between local businessmen close to the Assad regime and Iranian officials. The details of the disagreement are not entirely clear, but they led to the “punishment” of Syria and the cessation of the oil deliveries, which have only just recently been renewed.

To offset its energy deficit, Syria, whose oil production has plummeted this year to 2,300 barrels a day, used to buy petroleum from oil fields where the Islamic State is now in control. But with the stepping up of the war on ISIS and the direct hits on the drilling rigs in the area of Raqqa and Deir el-Zour, the supply from this source has shrunk and Damascus has had to drastically reduce the hours of electricity supply – not only in the provincial areas under its control but also in Damascus.

Now the Syrian regime is hoping that after its occupation of Raqqa, and some time soon the toppling of Islamic State control in the Dir el-Zour area, it will retake its oil fields. But the Syrian Kurds, who are shedding a lot of blood in the war on ISIS, might have claims on those fields.

Still, even if the dispute over control of the oil fields is resolved, it will be a while until the drilling rigs are repaired and able to return to previous production levels. Until then, the Syrians will apparently continue to hoard plastic bags for producing diesel fuel.