Enab Baladi – Jana al-Issa
Unexpectedly, the Iranian government has demanded repayment of its debts incurred by the ousted president Bashar al-Assad, in a scene where Iran was one of his main allies alongside Russia.
The Iranian debts include financial loans taken out by al-Assad through credit lines, which were his only source for securing fuel, and part of it relates to investments made through agreements with the previous regime, in addition to military funds provided to support Assad’s regime in its oppression, displacement, and killing of Syrians.
Despite the fact that the new Syrian government can evade these debts according to international law, Tehran has affirmed its desire to recover this money, without specifying the exact amount of the debts.
Legally and diplomatically… no repayment
On December 17, 2024, Iranian Foreign Ministry spokesperson Ismail Baghaei stated at a press conference that the Iranian debts owed by Assad’s regime would be borne by the new political system in Syria, based on agreements and treaties that follow the principle of “succession of states,” a principle recognized in international law.
Baghaei added at the time that the claim of Iranian debts in Syria amounting to about $50 billion is “truly exaggerated,” without disclosing the actual amount of the debts.
In response to the recurring question about whether the upcoming Syrian government would be obliged to pay Iran its debts to Assad’s regime, Dr. Karam Shaar, an economist, stated that the government would not be required to repay these debts based on several legal factors.
Shaar explained in a post on Facebook that there is no mechanism in international law for recovering intergovernmental debts, meaning Tehran cannot legally demand its money from Syria.
Iran will lack diplomatic and economic influence over the new Syrian governments, as these avenues have historically been the only successful ways of repaying debts; for instance, part of Haiti’s debts to Western countries was repaid under the threat of Western sanctions, despite the government’s attempt to evade them after the fall of the Duvalier repressive regime in 1986.
In contrast, China in 1947 and Bolshevik Russia in 1917 refused to pay debts incurred by previous regimes and were subsequently subjected to Western pressures and sanctions that affected their access to global financial markets.
Dr. Karam Shaar, director of the Syrian program at the Observatory of Political and Economic Networks, added that it is difficult to calculate most of Iran’s debts, as most of them have not been officially approved by authorities in Damascus and Tehran, considering that the share approved by the parliament is negligible and only related to some credit lines.
The new Syrian government can rightly claim that the debts were “odious” and instead demand that Iran compensate the Syrians, which is exactly what the interim government in Damascus has begun to do.
Following the Iranian Foreign Ministry’s statement that Tehran’s debts from Assad’s regime would be paid by the new Syrian government, within a week, the Lebanese Al-Modon newspaper reported that a source close to the new political administration in Syria said that the administration is working on a memorandum to present to international courts in this context.
Despite the absence of an official comment on this memorandum, the source stated that the memorandum is set to demand that Iran pay $300 billion in compensation to the Syrian people and the Syrian state for the damage caused by Tehran’s “criminal and arbitrary” policies to the Syrians and the Syrian infrastructure during its military alignment with its militias in support of the ousted president Bashar al-Assad.
Odious debts or conditional negotiation
Dr. Ma’arouf al-Khalaf, a faculty member at the University of Aleppo and a professor of economics and international relations, stated that the issue of recovering debts from Iran involves multiple perspectives. The first perspective relies on international law, which stipulates that the succession of states principle ensures that the new government repays debts through specific legal procedures; however, this applies to debts of ordinary states and not in the context of wars.
In cases of “odious” or “illegitimate” debts, the situation is fundamentally different, as these debts are classified as not serving the people through productive projects that would benefit or add value to the economy. This applies to Iranian debts, as the ousted regime used these funds to finance its military machine, which contributed to the destruction of Syria’s infrastructure, Dr. al-Khalaf explained in an interview with Enab Baladi.
Regarding recovering Iranian debts, al-Khalaf mentioned several possibilities that might be successful, including negotiations between Syria and Iran, especially concerning Iranian investments in Syria, particularly those related to oil, gas, electricity, mills, and others.
It seems that Iran seeks to obtain privileges and investments from these agreements that ensure its presence in Syria in the future; however, this negotiation phase, according to the doctor in international relations, requires a stable condition during the political transition.
These debts can be considered “odious” and therefore may be canceled, according to international law, according to al-Khalaf.
Regarding the memorandum being prepared by the new Syrian administration to demand compensation from Iran, al-Khalaf stated that this memorandum can be regarded, in its current form without an official confirmation from the authorities, as a preliminary step for any Iranian action regarding this matter.
What does the term “odious debt” mean?
“Odious debt” or “illegitimate debt” is a term in international law that refers to a legal theory stating that national debt incurred by a regime for purposes not serving the interests of the nation should not be repaid.
The law considers these debts to be personal debts of the regime, which it bears, and not the state’s. This concept is somewhat similar to void contracts signed under duress.
The term “odious debt” first appeared in 1927 by former Russian minister and law professor in Paris Alexander Nahum Sack.
According to Alexander Nahum Sack’s law, “any authoritarian regime that obtained a loan not aimed at meeting the needs and interests of the state but rather to strengthen this authoritarian regime and repress the population fighting against this despotism means that this debt is considered odious, and is not binding on the state; rather, it is counted against the oppressive regime as a personal debt and therefore falls once it falls.”
The law states that a government can relinquish the obligations of its predecessors because these debts do not meet any of the conditions that define the legitimacy of debts, namely that the borrowed amounts in the name of the state must be used to meet the needs and interests of the state.
Iranian failure in Iraq
According to an economic analysis published by the Iranian site “Amwaj” on December 10, 2024, knowing the actual size of Iran’s debts owed to Assad’s regime depends on the framework agreements each side has made over the years, which can only be known by the relevant authorities, criticizing the lack of transparency in Tehran on this matter.
What complicates matters further is that there are many components to consider when deciphering the economic relationship between the two countries, including Iranian energy exports, sales of other materials, investments, as well as financial flows related to pilgrimage and religious trade, according to the analysis, along with contributions covered by the Iranian military and security budget, under the umbrella of what is called “forward defense.”
The analysis notes that the lack of accountability and transparency in the Iranian political culture has allowed successive governments to continue a policy considered a failure by many, which undermines Iran’s regional and international status and provokes the anger of ordinary Iranians.
From an Iranian perspective, one of the concerns regarding this file is the possibility that developments related to Syria would deprive the weak and fragile Iranian economy of its resources and regional opportunities.
One of the facts that increases the likelihood of further failures in this regard is that Iran has yet to recover its claim for $1 trillion in compensations for the war inflicted by Iraq under former Iraqi president Saddam Hussein between 1980 and 1988, as reported by the analysis.