During his economic-focused visit to Syria, Iranian President Ebrahim Raisi signed around 15 long-term cooperation agreements with his Syrian counterpart Bashar Al-Assad. These agreements covered areas such as agriculture, oil, energy, reconstruction, communications technology, roads and infrastructure, and the construction of commercial areas within Syria. Notably, the Iranian president’s visit to Damascus in early May was the first of its kind since the onset of the Syrian crisis in 2011. Hence, the timing of the visit has a wide range of political and economic implications, which we will examine in this article.
Timing and Implications
While Raisi’s trip to Syria was ostensibly for business purposes, it also cannot be disentangled from the global geopolitical shifts that the world has witnessed in the Syrian file over the past few years. Consequently, the context that led to that visit can be described as follows:
• Restoring Iran-Gulf Peace: The Iranian visit to Damascus followed the resumption of diplomatic relations between Saudi Arabia and Iran in March of last year as part of a settlement reached through Chinese mediation. The Chinese-brokered agreement also referred to activating the 2001 security cooperation agreement, which includes combating terrorism and monitoring maritime borders and territorial waters between the two countries, as well as the 1998 General Agreement for Cooperation in the Fields of Economy, Trade, Investment, Technology, Science, Culture, Sports, and Youth, which focuses on facilitating joint investments and exchanging trade delegation visits. The timing of the Saudi-Iranian reconciliation makes it clear that it took place in response to the worsening of the economic crises that Iran was experiencing, which were exacerbated by the local currency’s devaluation to about IRR 501.300 against the US dollar in February 2023 and the increase in inflation rates to 45.8% over the course of the year ending in March, as well as the economy’s slowing rate of growth and the outflow of investments from abroad. In addition to its economic woes, Iran experienced escalating protests in late 2022 after the murder of Mahsa Amini.
According to remarks made by Iranian Foreign Minister Hossein Amir Abdollahian in March 2023, Iran is in talks with Bahrain to repair bilateral ties, and the UAE reinstated its ambassador to Tehran in August 2022, six years after it was expelled. It can be argued that the easing of Iran’s relations with its neighbors provides it with an opportunity to rebuild its image locally and internationally in order to attract economic support by expanding economic, trade, and investment cooperation between the two sides, thereby allowing it to break the international isolation imposed on it and reducing Western sanctions on its economy.
• Desire to Contribute to Syria’s Reconstruction: Raisi hopes to play a significant role in Syria’s reconstruction through his trip to Damascus, as confirmed by Kiwan Kashfi, a board member of the Iranian Chamber of Commerce, who stated that Tehran is looking for the right mechanism to enable it to assist in Syria’s reconstruction, which is expected to cost hundreds of billions of dollars. The cost of rebuilding Syria, according to Ahmed Aboul Gheit, secretary general of the Arab League, is unprecedented in modern times. In this regard, Iran seeks to compensate for the costs incurred as a result of its participation in the crisis on the side of the Syrian government. According to a report by the US State Department, Tehran invested over $16 billion in Syria between 2012 and 2020.
• Syria’s Re-Entry into the Arab League: The conclusion of Raisi’s trip to Damascus coincided with the 7 May decision by the Council of Arab Foreign Ministers to reinstate Syria as a member of the Arab League and invite it to the Arab summit in Riyadh scheduled in May. This can be attributed to Iran’s desire to demonstrate that the Arab-Syrian rapprochement will have no impact on its influence in the country, particularly in light of the Syrian foreign minister’s April visit to Riyadh. Amman also hosted a meeting at which the foreign ministers of Syria, Jordan, Saudi Arabia, Iraq, and Egypt discussed methods for the return of Syrian refugees from neighboring countries and the expansion of Syrian state’s control over its territory. After a lengthy hiatus, these quick actions raised Iranian concerns about an Arab-Syrian reconciliation that would cause a rift between the two strategic allies and undermine Iranian calculations in the Syrian file.
With such a large economic delegation in tow, it’s safe to assume that the Iranian and Syrian leaders placed a high priority on economic issues during their meeting, which could lead to the following outcomes:
• Cooperation in Alleviating Western Sanctions: The bilateral agreements signed by Syria and Iran can be interpreted with the aim of circumventing Western sanctions imposed on them and mitigating their repercussions, especially in light of them being considered the second and third largest punishing countries around the world after Russia. The number of sanctions imposed on Iran amounts to 4,453 penalties, while Syria came under 2,660 sanctions until April 2023, according to the castellum.ai website. For this reason, officials stressed during the visit that the cooperation of the two countries in the economic aspect could be a strategic step to counter the impact of economic sanctions imposed by the United States and Western countries.
Iran may also help Syria take tangible steps in confronting the dominance of the dollar over the global economy, especially in light of the Syrian call to abandon the US dollar in global transactions while urging the BRICS countries to lead these efforts, stressing the importance of adopting the Chinese yuan for international settlements, which is consistent with the efforts In this regard. Last June, it officially proposed that members of the Shanghai Cooperation Organization adopt a unified currency to facilitate trade exchange between member states in line with the recent international and regional transformations and changes.
• Enhancing Bilateral Relations: The agreements reached between Syria and Iran, along with the establishment of a joint supreme committee, could help to improve the two countries’ economic ties, particularly in light of Iran’s aim to increase trade with Syria to $1.5 billion over the next three years. For this reason, the parties reached an agreement to set up an Iranian Trade Center in Damascus and a joint transportation business between Iran, Iraq, and Syria that will handle the movement of Iranian goods from Iran to Syria. These agreements come at a time when both economies are going through severe and complicated crises as a result of Western sanctions, isolation from the rest of the world, and poor management. These factors have led to record-high inflation rates, the devaluation of local currencies, and the erosion of peoples’ purchasing power. Notably, these agreements were reached after Iranian Minister of Roads and Urban Development Rostam Qasemi announced last year that Iran and Syria had agreed to establish a joint bank in an effort to create a channel for money transfers to Syria that would not be subject to US sanctions, particularly in light of the fact that Iranian and Syrian banks are both subject to sanctions that restrict their ability to conduct business abroad.
• Advancing Road Diplomacy: Raisi’s trip to Syria fits with Iran’s efforts to bolster its “road diplomacy” by urging Damascus to finish the rail link project between Iran, Iraq, and Syria, an idea that has been in the works for more than ten years. Kheirollah Khademi, the managing director of Iran’s Construction and Development of Transportation Infrastructures Company, confirmed in May that the rail link operations will be completed by July 20 of next year, with the goal of establishing a safe land corridor between the Iraqi and Syrian borders and the Iranian borders. Tehran may be aiming to improve its geographic position in the Chinese Belt and Road Initiative as a long-term geostrategic objective.
• Increasing Iranian Influence in Syria’s Phosphate Sector: This May, several days after the conclusion of the visit, leaked secret documents referred to the Iranian Atomic Energy Organization’s request to Syria to purchase 800,000 tons per year of Syrian phosphate extracted from the Uranium-rich Khunayfis mine. This demonstrates the persistence of Iranian efforts to expand its control over the Syrian phosphate industry, which is not only crucial to the country’s nuclear program but also aids in the support of its agricultural sector, which faces which faces a number of fundamental issues, including poor soil conditions, declining seed quality, a lack of skilled farmers, a lack of agricultural inputs, a lack of foreign investment, an excessive use of chemicals and pesticides, an ineffective water distribution system, a reliance on antiquated farming methods, and outdated equipment, in light of successive governments’ interest in the profit-generating energy sector at the expense of the agricultural and food sectors.
In conclusion, although the visit of the Iranian president, the first of its kind in nearly a decade, was primarily economic in nature, it took place in a politically charged environment characterized by relative calm in Iranian and Syrian relations with Gulf States and Arab countries, which may have prompted Iran to assert its political and economic influence in Syria.