Iran Private Sector Eyeballs Investment Projects in Post-War Syria

EghtesadOnline: As the bloody seven-year-old civil war in Syria winds down, the monumental task of rebuilding the country’s infrastructure is, and will be for a long time, the top priority in Damascus.

News ID: ۷۸۴۴۴۲

31 December 2018

Iran, one of the main supporters of President Assad (besides Russia) during the ruinous conflict, is now keen on doing its fair share in Syria’s post-war reconstruction and help it return to normal.

A high-ranking delegation of Syrian trade officials and business representatives (the second delegation in three months) headed by Syria’s Minister of Economy and Foreign Trade Mohammad Samer al-Khalil met on Sunday in Tehran with private sector leaders and the  Minister of Roads and Urban Development Mohammad Eslami. On the agenda was putting in place an economic roadmap for Iran's role in Syria's reconstruction.

Addressing the meeting held at Iran Chamber of Commerce, Industries, Mines and Agriculture Khalil invited Iranian businesses to visit Syria and partake in projects he estimated to be between $200-400 billion, Financial Tribune reported.

"Today we reached a long-term strategic agreement [for expanding economic cooperation] that incorporates banking, financial and economic sectors and reinforces earlier economic agreements between the two countries," he said.

Iran's road minister told the meeting that a delegation from Iran headed by First Vice President Es'haq Jahangiri will visit Damascus next month to finalize the trade agreement.

Iran and Syria signed a free-trade agreement in 2011 that apparently never came to fruition because of the war.  According to Khalil, import tariffs for many Iranian goods is now 4% and hoped that, as part of the new agreement, 88 items that fall under a high-duty category would move to the low-tariff group.

"Syria annually produces five million tons of black cement but soon we will need double that amount. This is where Iranian companies come in," the minister told the high-profile meeting.

"We also had five flour factories that have been destroyed.''

He said that as part of the new agreement, Iranian companies will receive preferential treatment for exports to Syria or taking part in state or private sector projects. He added that Syria is a low-cost country for investment and offers tax exemption and other incentives to Iranian firms willing to work in the country.

Aware of Challenges

The enthusiasm among Iranian businesses for investment and reconstruction projects in Syria notwithstanding, they are mindful of the real challenges that lie ahead.

US sanctions that have targeted both Syrian and Iranian banks make normal financial transactions almost impossible between the two sides. A representative from Iran Khodro, the country's biggest carmaker, said obstacles to money transfer and   transport (presently possible only via the sea) could bring the automaker’s operations in Syria to an end if not addressed promptly.

Iran Khodro last month reopened its assembly plant in Syria last month and is manufacturing its Peugeot 207 there. The company says its Syrian plant is the company’s biggest in the Middle East.

Gholam Hussein Shafei, ICCIMA president welcomed the opportunity for Iran's private companies to foster ties with the "brother" country and suggested that Iran's Bank Maskan could act as lender for opening letters of credit, the Bank of Industry and Mine for financing Syrian projects and the Export Development Bank of Iran be in charge of credit lines to Syrian businesses.

Iran's effort to gain an economic foothold in Syria is likely to face rivalry from other regional players as Tehran seeks to repeat the Iraqi model in that country. Although Iraq emerged as Iran's main trade partner by dethroning China in October, many Iranian businesses complain that the government should have done more to avail itself of investment opportunities in neighboring Iraq.

The Syrian government recently scored several military victories that reinforce hope for the country's future. Donald Trump last week suddenly announced a rapid troop withdrawal from Syria, shocking most observes plus his own generals in the Pentagon and diplomats. Last week, the United Arab Emirates reopened its embassy in Damascus, which it had closed as part of a campaign of Saudi-led pressure against the country. Tiny Bahrain followed suit and other countries, including Kuwait, are expected to restore ties in the coming months. The Arab League is reportedly poised to re-admit Assad’s Syria, seven years after expelling it due largely to Saudi policy to isolate the government in Damascus.