Courtesy of The Wall Street Journal, an interesting report on Syria and western investors’ increasing interest in the country.  As the article notes:

“…As Syria emerges from its diplomatic isolation, it is receiving emissaries from a surprising locale: Wall Street.

Late last year a group of big-name investors—including Bill Miller of Legg Mason Capital Management and Barton Biggs, managing partner of Traxis Partners, a New York hedge fund—spent a week in Syria and Lebanon. They met with top political leaders, local businesspeople, and were feted with elaborate dinners with the cream of society.

Traveling to far-flung corners of the world to get an early look at a promising markets has long been a staple of global investing. But Syria—until recently a pariah state in the eyes of the U.S.—proved irresistible, drawing an unusual array of money managers.

Long isolated from international finance, Syria is one of the last remaining investment frontiers. It has a sizeable economy, an educated populace, and, lately, a new degree of openness to foreign investment.

“This was not a group of naive investors, and [I] have to say it opened all our eyes,” said Steven Galbraith, a partner at Maverick Capital, a $11 billion hedge fund. Half his friends thought he was crazy for going, Mr. Galbraith said; the other half wondered why they weren’t invited.

Spearheaded by Mr. Biggs and Wafic Said, a wealthy Syrian-born industrialist who lives in Europe, the trip drew money managers from Citigroup, Morgan Stanley, and a number of hedge funds; a senior executive from Temasek Holdings, Singapore’s state-owned investment arm; and a strategist from the Abu Dhabi Investment Authority, one of the world’s largest sovereign-wealth funds.

The scouting mission came amid efforts by the Syrian government to open the country to foreign investment, and signals from the U.S. that it will rebuild diplomatic ties

At the top of Syria’s agenda: bringing in private capital to collaborate on infrastructure projects. Some other steps under discussion, according to those who traveled there, include a potential bond offering by the country on international markets, and the creation of an investment fund aimed at attracting foreign capital.

The U.S. withdrew its highest diplomat in 2005 to protest the assassination of the then-prime minister of Lebanon, which many blamed on Syria (it denies any involvement).

Many hurdles remain. Syria still faces sanctions from the U.S., including a ban on receiving nearly all U.S. exports.

For the investors who traveled there, Syria was an economic and technological throwback to a different time: a place where their BlackBerry devices didn’t work and where only 12 companies are listed on the stock exchange, which trades less than 10 hours a week.

South of Turkey and west of Iraq, Syria is a little larger than North Dakota but has a population of about 20 million. Its economic output, based around energy and agriculture, is estimated to touch $61 billion this year, according to the International Monetary Fund.

Several investors said Syria reminded them of former Eastern bloc countries like Poland, Hungary, and then-Czechoslovakia just after the collapse of the Soviet Union. “It’s super-early days,” said one investor with decades of experience in emerging markets who was part of the group. “There’s very little to do there, but there will be.”

One early dividend from the trip is a change in perception. While some presentations by government officials were “pretty pathetic,” says Mr. Biggs, the group came away with the opposite impression of Syria’s President, Bashar Assad, and its deputy prime minister for economic affairs, Abdullah Dardari.

Mr. Assad provided direct and open answers to their questions, the investors said, and talked about the need to raise incomes, build infrastructure, and ease the government’s grip on the economy.

This was “a fairly cynical group,” Mr. Biggs says. But “he blew them away.”

Before arriving in Damascus, the group spent four days in Lebanon, where they met with the country’s new prime minister, Saad Hariri, the head of the central bank, and several heads of local banks.

Unlike Syria, Lebanon is a comparatively open and sophisticated market, despite its troubled history. Some parts of Beirut feel like Miami’s glamorous South Beach, said Mr. Galbraith, while other buildings are still scarred by mortar blasts from the country’s civil war. And Lebanon’s banks, while small by global standards, could represent interesting opportunities.”