Iran, Syria Strike Deals to Advance Economic Cooperation

EghtesadOnline: Syria and Iran signed on Monday 11 agreements, memoranda of understanding and an executive program to boost bilateral cooperation in the economic, cultural, scientific, infrastructure, services, investment and housing fields.

News ID: ۷۴۶۵۹۰

30 January 2019

The signing ceremony was held at the conclusion of the 14th session meetings of the high-level Syrian-Iranian committee held in Damascus, the Syrian Arab News Agency reported.

The committee, co-chaired by Iran’s First Vice President Es’haq Jahangiri and Syrian Prime Minister Imad Khamis, was organized for expanding sustainable economic cooperation between the two countries and encouraging the Iranian private sector to engage in the reconstruction of Syria, IRNA reported.

Iran’s Minister of Roads and Urban Development Mohammad Eslami, other government officials and representatives from Iranian businesses also attended the event, Financial Tribune reported.

Long-Term Strategic Economic Cooperation

The most prominent document was the one on "long-term strategic economic cooperation".

The Syrian premier described the agreement as “unique”, saying it includes industrial, trade and agricultural cooperation, Reuters reported.

Other agreements covered education, housing, public works, railroads and investments.

Iran has reached “very important” banking agreements with Syria, Jahangiri said.

The Syrian premier said it was "a message to the world on the reality of Syrian-Iranian cooperation", citing "legal and administrative facilities" to benefit Iranian companies wishing to invest in Syria and contribute "effectively to reconstruction", AFP reported.

According to the news agency, agreements signed between the two sides included two memorandums of understanding between the railroad authorities of the two countries as well as their respective investment promotion authorities.

The two sides also discussed infrastructural projects such as the renovation of the ports of Tartus and Latakia as well as construction of a 540-megawatt energy plant.

In addition, there were "dozens of projects in the oil sector and agriculture", he added.

Reconstruction Phase

The civil war has taken an enormous toll on the Syrian economy and infrastructure, with the cost of war-related destruction estimated by the UN at about $400 billion.

Iran will stand "alongside Syria during the next phase that will be marked by reconstruction", Jahangiri promised.

Iran and Syria had already signed a military cooperation agreement in August while Tehran supported Damascus economically during the conflict through oil deliveries and several lines of credit.

The new agreements come against the backdrop of fresh US sanctions against Iran, while Syrian President Bashar al-Assad's government and several Syrian businesspeople and companies are already on US and European blacklists.

The war in Syria has already claimed more than 360,000 lives and displaced several million people.

Now as President Assad has reclaimed most of his country, the Syrian authorities are engaged in rebuilding the country.

In January 2017, the Syrian government and Tehran signed a memorandum of understanding to cooperate in a phosphate mine in Syria’s Al Sharqiya, one of the largest in the country, located 50 kilometers southwest of the ancient Syrian city of Palmyra.

The contract allows Iranian companies to undertake phosphate exploration, extraction and investment for the next 50 years. Its current output is unknown, but in 2009, its total production capacity reached 800,000 tons.

In September last year, Syria and Iran signed several agreements worth $142.5 million. During a visit to Tehran, the Syrian electricity minister signed two contracts and a memorandum of understanding with his Iranian counterpart. When the deal is implemented, Iranian companies would be involved in the restoration of more than 2,000 MW of power production capacity.

Iran's Rail Link to Syria via Iraq

The state-owned Islamic Republic of Iran Railroads revealed details on Nov. 12 about its project to build a railroad connecting Iran's Shalamcheh border crossing to the port of Basra in southeast Iraq, the Al-Monitor reported

Maziar Yazdani, IRIR's deputy head of infrastructure and technical affairs, said the Shalamcheh-Basra leg of the project will require more than 32 kilometers of new track at a cost of about $52,000.

Following the addition, the rail system will span Iraq to reach Syria's Mediterranean port city of Latakia.

The idea has been kicked around for years, and in August, Iran and Syria expressed their willingness to build a railroad connecting the two countries, along with Iraq, to counter the western sanctions on Iran and boost economic cooperation.

The railroad is part of Syria’s reconstruction deal, which grants Iran additional economic and trade privileges and the opportunity to contribute to the transportation sector, thus promoting religious tourism among Iran, Iraq and Syria.

According to Iranian Deputy Minister of Roads and Urban Development Amir Amini, the Asia-Pacific Economic Cooperation has consented to the project.

The first high-speed rail line in Iraq, which connects Baghdad to Basra, began operating in 1967. Although war damaged the railroad, Iraq resumed operations following the 2003 US invasion.

Amer al-Jabiri, media director of the Iraqi Ministry of Transport said Iraq is enthusiastic about any project that promotes cross-border transportation, which would promote its economy and make it easier for citizens to move from one country to another.

“The railroad line connecting Iran, Syria and Iraq will ensure an outlet for Iraq via the Mediterranean ports and Iranian ports as well,” he said.

Iran is motivated in part by the opportunity to establish ports on the Syrian coast.

Back in April, Syrian Transport Minister Ali Hammoud stressed the importance of reactivating land transportation between Syria and Iraq.

The ministry said the railroad is part of a program to rebuild the country’s infrastructure, which the war has ruined, including some 1,800 kilometers of Syria’s railroad, a large part of which stretches to neighboring countries.

“The Syrian part of the project includes building 32 kilometers of railroads, while Iraq will build the rest, which will stretch deep into Iraq to connect Baghdad to Karbala [in central Iraq] and Karbala to Syrian territory. This will facilitate the movement of individuals and goods among Iran, Iraq and Syria,” he said.

"The railroad is part of a project linked with the Central Asian networks which, in turn, are connected to the Chinese and Russian railroads," the email continued, referring to Syria's role in the new Silk Road, also known as China's Belt and Road Initiative.

Abdul Sattar Mohsen, media director for the state-run Iraqi Republic Railroads Company, emphasized that the railroad connecting the three countries is part of the Transport Ministry’s strategies.

"Iraq’s political circumstances, however, were behind the delay. Following the damage caused by the [self-styled] Islamic State [terrorist group], the ministry rehabilitated a railroad [connecting Iraq] to Syria. This railroad system, which connects Tikrit, Mosul, Fallujah in the northern and western parts of [Iraq], is 121 kilometers long. These lines are also connected to the southern parts of the country and to Syria,” he said.

According to Iraqi Republic Railroads Company, the Shalamcheh-Basra line is part of a regional railroad network that includes the Musayyib-Karbala line. Future railroad plans call for connecting Iraq not only to Iran, but also to Syria, Jordan and the Persian Gulf via Kuwait.

Salam Smeasim, an economist and adviser to the Iraqi Private Banks League, noted that the railroad project's political dimension pertains to the US withdrawal from the nuclear deal with Iran and devaluation of Iran's currency.

The project is expected to provide an economic and trade outlet toward Syria and help promote religious tourism.

"This is true particularly since there are many religious sites, especially the Shia shrines in the three countries," she said.

Smeasim also noted that US sanctions will hurt the project’s economic revenues.

The railroad connecting the three countries—where wars and armed groups wreaked havoc and disrupted trade activities among them—will be impressive and productive, as long as no political obstacles stand in its way.