* Assad feels tide is turning in his favour
* Change in Egypt doesn't imply decisive change on the ground in Syria
* No sign Assad loyalists can totally defeat rebels, regain control
* Fight against Iran's influence outweighs distaste for Brothers
By Samia Nakhoul
BEIRUT, July 10 The fall of the Muslim Brotherhood in Egypt has put a new spring in the step of Bashar al-Assad, who sees it as a sign that Islamists - including those spearheading the Sunni-dominated rebellion against him - are in decline.
Exuding confidence after a recent successful army counter-offensive, and speaking as the Egyptian army was deposing Islamist president Mohamed Mursi, Assad said "what is happening in Egypt is the fall of what is known as political Islam."
"After a whole year, reality has become clear to the Egyptian people. The Muslim Brotherhood's performance has helped them see the lies the (group) used at the start of the popular revolution in Egypt."
The Syrian wing of the Muslim Brotherhood was all but destroyed by Assad's father Hafez al-Assad. Membership became a capital offence in 1980 and an Islamist insurrection in 1982 drew a ruthless response. That defeat seemed to mark the end of the Islamic movement as a political force in Syria.
But the past two years have brought a reversal. The Brotherhood is influential in Syria's opposition in exile, mainly because of its ability to channel money and arms from countries including Qatar and Turkey.
The roots of the enmity between Assad's Baath Party and the Muslim Brotherhood are ideological.
The Baath Party is secular, nationalist and led by the minority Alawites, an offshoot of Shi'ite Islam, whom the Brotherhood and other conservative Sunni Muslims view as heretics. The Brotherhood considers nationalism to be un-Islamic and religion to be inseparable from the politics of government.
The end of Brotherhood rule in Egypt coupled with fierce opposition to the Brothers' brand of political Islam in Gulf power Saudi Arabia may change the regional equation. Recent victories on the battlefield have increased Assad's confidence.
"Assad is basically saying the Islamists are now in retreat and the military are on the offensive," says Fawaz Gerges, head of the Middle East Centre at the London School of Economics.
The Brotherhood's fall in Egypt, the land of its birth in 1928, means the Islamist narrative has all but collapsed, so the reasoning goes. The Brotherhood is in decline and the secular Arab nationalist narrative Assad purports to embody is on the rise.
"He is saying if the mother organisation fails, the Muslim Brothers in Syria have no future" and their sponsors such as Qatar are in retreat, Gerges says.
None of this, however, implies decisive change in the balance on the ground in Syria where, even with support from Shi'ite Iran and its Lebanese paramilitary proxy Hezbollah, there is no sign Assad can regain control of a fragmenting country.
The government holds the capital Damascus and other cities while the largest areas under rebel control are to the north and east of Aleppo and down the centre of the country between Idlib and Hama. Aleppo remains divided.
After making early military gains, the rebels now find themselves short of the weapons they need to take on Assad's armour and air power.
While Assad is not capable of snatching total victory by delivering a decisive blow to Sunni rebels, he believes he is winning because he has been able to survive for the past two and a half years, Gerges argues.
But Assad must still contend with two uncomfortable facts: outside support for the rebels is not going away and Islamist fighters in their ranks are likely to harden their attitudes following what they see as a military coup against Mursi.
Observers such as Tarek Osman, an Egyptian political economist and author of "Egypt on the Brink", doubt that support for Syria's rebels will start melting away because the desire of Sunni Gulf Arab states and the West to maintain their opposition to Assad's ally Iran more than outweighs their distaste for the Brotherhood.
"For almost all major regional players, the fight against Iranian influence in the eastern Mediterranean has a higher level of urgency and importance than their positions regarding political Islam," says Osman.
He also points to "a sense of defiance already setting in among Arab Islamists" because of the way Mursi was bundled out of office despite having come to power through the ballot box. That will harden their attitudes in Syria and in other Arab states facing difficult transitions.
"For the jihadist groups fighting the Assad regime in Syria, this defiance could mean increased ferocity: a sense that their 'cause' now is under attack."
The hardening of Islamists' position can be seen in their Internet chatter where some describe the military move to force Mursi to step down, as a "conspiracy against Islam".
"The military is the enemy of Islam, this is a fact. The armies in the Arab world were built to reject Islam. That is why we saw the army here killing Muslims and the same in Egypt, they are showing their real face," said Abu Omar, an Islamist in the northern province of Idlib. (Additional reporting by Mariam Karouny; Editing by Giles Elgood and Janet McBride)