Economic Relations Between Iran and Syria

Numerous analyses have been conducted regarding the geopolitical, strategic, and military connections between Syria and Iran. However, the changes in economic relations between Tehran and Damascus have received less attention from political analysts, scholars, and the media. This is while the changes in the economic relations of the two countries can have long-term effects on Iran's economic and geopolitical influence in the region. Financial, military, and weaponry assistance, as well as Iran's support to Syria in the form of energy and investment, have mostly taken the shape of credit lines and loans. But if the Alawite government of Syria is removed from power, how will Syria repay these loans and credits? Tehran's plan is a long-term one that guarantees that whether the Assad regime remains in power or is ousted, these loans will be repaid in some manner. This situation can be compared to Iran's economic strategy in Iraq after the U.S. invasion. The fundamental difference, however, is that Iran is currently buying land in Syria. Some Syrian residents have reported that in certain areas, Iran has purchased entire neighborhoods. Such a situation will lead to Iran's strengthening and influence in Syria in the long run, even if Assad is removed from power. Another fundamental difference is that investments in Syria are not solely conducted through Assad. Iran carries out some of its investments through Shiite groups based in Syria. Even assuming the end of the war, Iran will still be the only major economic player in Syria. The Syrian government, which has been isolated due to international sanctions, is increasingly dependent on Iran. In other words, Iran guarantees the economic survival of Syria. After the onset of the crisis in Syria, the volume of free trade with Tehran has increased, and customs costs have seen a 60% reduction in favor of Tehran. For instance, despite international sanctions against Syria, Iran's crude oil sales to this country surpassed a record of 125,000 barrels per day in March 2015. This volume is likely to increase further with the lifting of sanctions against Iran. On the other hand, Iran and Syria have recently signed multiple agreements regarding investment in oil, electricity, energy, and other industrial sectors. The two countries have also engaged in discussions on ways to enhance cooperation. Before the lifting of sanctions, Iran's trade and investment in Russia amounted to over $9 billion annually. It seems that after the signing of the JCPOA, this figure could increase to $15 to $20 billion per year. Iran's non-military trade with Syria is still one-fifth of its trade with Iraq, which is debatable due to Syria's involvement in the crisis. Before the onset of the Syrian crisis, trade and investment relations between Tehran and Damascus were balanced as both countries were in a position of equal power. However, after the uprising in Syria, contrary to popular belief, Iran's economic position towards Syria, its level of investment in this country, and trade with Damascus witnessed a significant increase, leading to Syria's increased dependency on Iran and its interests in this country. The signing of the JCPOA undoubtedly helped increase Iran's economic power. The JCPOA was able to enhance Iran's economic influence in Syria and also proved profitable for the Assad regime. It seems that larger investments and major infrastructure projects have been prioritized compared to before. Almost every year, Iran is signing a new contract to open a credit line for Syria. These contracts could raise the annual trade level between the two countries to $5 billion. Aladdin Boroujerdi had previously stated that the new agreements are a crushing response to the United States and its Western allies, who are attempting to change the political structure of the Syrian government. Iran also currently has a dominant role in the Syrian economy due to the reduction of Syria's trade with Turkey and other regional players. Even during the Syrian civil war, contrary to expectations, Iran's economic influence over Syria has increased. In the long run, whether the Syrian war ends with Assad's presence or absence, Iran will continue to play the most prominent economic and geopolitical role in Syria. This situation necessitates that, for the reasons stated, Iran cannot accept any peace plan that leads to the removal of the Alawites from power.