Bank, insurance company and free zone; Iran seeks more influence in Syria

A press conference by Iranian Foreign Minister Hossein Amir Abdollahian and his Syrian counterpart Faisal Mekdad in Tehran after the visit of a Syrian official delegation - July 31, 2023 (AFP)

A press conference by Iranian Foreign Minister Hossein Amir Abdollahian and his Syrian counterpart Faisal Mekdad in Tehran after the visit of a Syrian official delegation - July 31, 2023 (AFP)


Enab Baladi – Muhammed Fansa

Tehran announced the establishment of a joint Syrian-Iranian bank and insurance company, with plans to establish an Iranian free zone in Syria after the abolition of customs tariffs between the two countries, which raised speculations about the reason for the increase in Iranian economic activity in Syria.

The economic announcements came after the Syrian-Iranian exchange of government visits, starting with the first visit of the Iranian President, Ibrahim Raisi, to Damascus last May, followed by the frequent visits of Iranian government ministers and, most recently, the visit of the ministerial delegation of the Syrian regime’s government to Tehran.

During the Syrian delegation’s visit, which lasted for several days, the Iranian Minister of Economic Affairs and Finance, Dr. Seyed Ehsan Khandozi, announced in early August the establishment of a bank and a joint insurance company between Iran and Syria.

Khandozi said, after meeting with the Syrian Economy and Foreign Trade Minister, Mohammad Samer al-Khalil, and the Minister of Communications, Iyad al-Khatib, that these two institutions come as a result of the agreements signed during Raisi’s visit to Damascus, which amounted to 16 cooperation documents between the two countries, according to what was reported by the Iranian News Agency (IRNA).

During the Iranian President’s visit to Damascus in early May, the “Syrian Presidency” Facebook account revealed the economic steps agreed upon during the visit, including “accelerating the bilateral procedures required to establish a joint bank with the aim of facilitating trade exchange.”

The joint insurance company will be an “alliance” of Iranian and Syrian insurance companies. In terms of the joint bank, Iran will contribute 60% of its assets, while 40% are the Syrian side’s shares, according to the Iranian minister’s statements.

He indicated that these two institutions were licensed to act as “engines” that motivate investment between Iran and Syria.

In his turn, Mehrdad Bazarbash, the Iranian Minister of Roads and Cities Building, and the head of the joint economic committee between Iran and Syria, announced that the commercial tariff on all goods agreed upon between Iran and Syria has reached zero.

Speaking about the results of the talks, Bazarbash indicated that the joint Iranian-Syrian bank will begin its activities in the coming weeks and that two Iranian companies for the car industry, previously established in Syria, will resume their activities “with the help of the Syrian side.”

The activities of the Iranian car manufacturing company “Saipa” in Syria began in 2004 with the establishment of the “Siveco” factory for the production of cars, then the “Siamco” company was established in 2007 to produce the “Sham” car, but the production of the two companies stopped due to quality and safety standards.

More influence 

In May, Iranian Deputy Foreign Minister Mehdi Shushtari told Iran’s Fars news agency that “Syria is not a poor country and has many resources and capabilities,” stressing that “no kind of cooperation that we identified in the commercial and economic field between the two countries was free of charge in any period of time.”

The Minister of Economy, al-Khalil, said during his latest visit within the Syrian delegation to Tehran that “banking cooperation and the establishment of the guarantee company, tourism, transportation, and free trade were among these agreements that have borne fruit.”

This was confirmed by Fahd Darwish, head of the Syrian-Iranian Joint Chamber of Commerce, who revealed to the state-run Tishreen newspaper on August 6 about the existence of a plan to establish an Iranian free zone in central Syria “to support the economic relationship between the two countries, and with the aim of creating an Iranian investment environment in Syria.”

Before 2011, Iranian investments in Syria were estimated at about $400 million, while the volume of trade exchange between the two countries reached $1.88 billion in 2022, and Iran’s exports to Syria of non-oil commodities in 2021 amounted to about $218 million, and $243 million in general, according to the commercial attaché of the Iranian embassy in Damascus.

Manaf Quman, an economic researcher at the Omran Center for Strategic Strategic Studies, told Enab Baladi about the impact of establishing a joint bank and insurance company in Syria on its deteriorating economy, that the economic crisis in Syria is too great to be resolved or positively affected by the establishment of a bank and company, and even commercial dealings between Syria and Iran will not rise as a result of this bank and company, stressing that this matter “consolidates Iranian influence in Syria.”

Regarding the reason for choosing the location of the joint Iranian-Syrian institutions in Syria only, Quman explained that Iran naturally wants to strengthen its influence in Syria by transferring its companies and trade to it on the one hand, and because Iran has the upper hand over the Syrian regime through the aid it provided to it through in-kind and financial assistance on the other hand.

Dr. Karam Shaar, director of the Syrian program at the Observatory of Political and Economic Networks, posted on the Iranian moves on his X account (formerly Twitter), saying that Iran has begun to reap the price of its support bill for the Syrian regime, especially after the Iranian president’s recent visit to Damascus.

Shaar described the visit of the Syrian government delegation to Tehran as “a visit of implementation, not a visit of planning,” as has been the norm for more than a decade, indicating that Iran is destined to partially or completely take over the telecommunications, aviation, banking, and insurance sectors, and expand in the fields of transportation, navigation, and phosphates.

In an interview with the Iranian Jamaran website on June 2, the Iranian ambassador to Damascus, Hossein Akbari, explained that “Iran welcomed the fact that the Arab League came to Assad, and he did not go to it.”

He stressed that the regime showed that it was with Tehran 40 years ago in the worst conditions, and while it is now in the “best condition,” expelling Iran from Syria “will definitely not happen.”

Locked in papers

Reports about the establishment of a Syrian-Iranian bank are not new. In 2019, the head of the Central Bank of Iran announced the signing of an agreement with the Governor of the Central Bank of Syria to establish, develop and establish banking mediation relations between the two countries and to issue a license to establish a joint bank between Iran and Syria in Damascus and to open an account based on the banking exchange on the basis of the national currency of the two countries and providing the possibility of using bank cards between Tehran and Damascus. However, this agreement was not translated into practice.

The official statement comes back at different times about the establishment of the joint bank without any actual translation.

Analyst Quman of Omran Center believes that Iran’s moves in Syria on the economic level came periodically and with every visit and meeting between the two parties, regardless of the occasion, explaining that many of them remain “locked in papers” in the form of agreements, contracts, and understandings without applying to the ground.

Quman believes that the Syrian investment environment, whether talking about financial or commercial projects, suffers from “great difficulties” that reach the point of not implementing the projects that have been and are still being talked about on the ground, given the sanctions and restrictions imposed on Syria in several respects, based on that most of the investments and projects agreed upon between Syria and Iran have not succeeded or been implemented.

According to a study by the Syrian Dialogue Center, Iran has taken a series of steps to dominate the economy in Syria, with varying success and failure, and came in the sectors of animal husbandry, agriculture, and agricultural trade, in addition to seizing agricultural lands.

It also included underground wealth and extractive industries, attempts to control phosphates and oil and gas fields, and refining petroleum materials, which were met with a prominent Russian presence and a strong competitor in general in these areas.



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