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Syria Seeks Iraqi Economic Ties

Klaas Glenewinkel
As Syria battles with domestic economic difficulties it is gearing up to dramatically expand economic ties with Iraq in the hope of profiting from new opportunities linked to Iraqi redevelopment.
4.06.2009

“The current value of bilateral trade is US $800 million,” said Syrian Minister of Economy and Trade Amer Hosni Lutfi on a recent trip to Iraq. “We are supposed to expand bilateral trade so that it will hit US $3 billion within two years.”

Officials from the two countries say that Syria could become Iraq’s main trading partner in the very near future.

“Syria can be the biggest beneficiary from the Iraq market,” said Adnan al-Sharify, Commercial Attaché at the Iraqi embassy in Damascus. “I expect that in the coming two years Iraqi-Syrian trade will be higher than all other neighboring countries. We hope to reach a trade exchange equal to US $10 billion.”

Although the two countries endured poor relations during the 1980s, Syria became a key trade gateway for Iraq during the 1990s as it faced international sanctions. But ties soured once more following the US-led invasion of 2003. Syria voiced opposition to the occupation causing a breakdown in political and economic relations and Syrian exports to Iraq were valued at just US $641 million in 2007, compared to US $2 billion immediately prior to the invasion.

However, in late April the Syrian Prime Minister, Mohammad Naji al-Otri, paid his first visit to post-Saddam Iraq, signaling a new rapprochement. During the trip the two sides held high-level talks looking to sign 20 trade deals.

The improvement in relations comes as Syria faces a pressing need to expand economic ties. The country’s economy is under severe strain as a result of the world economic crisis, dwindling oil reserves, U.S economic sanctions and an on-going drought.

At the heart of the new trade relationship is the expectation that Syria’s direct borders with Iraq and the Mediterranean Sea will allow it to become the key transit route between Europe and Iraq.

Already the two sides have agreed to reopen the Kirkuk-Banias oil pipeline which extends from oil fields in northern Iraq to the Syrian port of Banias. The pipeline, shut down since 2003, has a capacity to carry 300,000 barrels of crude oil per day. The two countries are also talking about building a natural gas pipeline from Iraq’s Western Akkas fields to Syria.

New train routes between the two countries will open soon, including a goods line running from the Syrian coastal city of Tartous to Umm Qasr port in Southern Iraq. A direct road is also planned between Tartous and Baghdad.

If these plans are realized Tartous would effectively became a second port to Iraq, channeling all of its Western trade at great profit to Syria.

Meanwhile, Syrian traders are casting keen glances over Iraq’s reconstruction process and the untapped economic potential of a population of more than 28 million people. If a semblance of normalcy returns to Iraq, Syrian goods and services are expected to flourish as a result of the geographical proximity of the two countries.

“Iraq needs everything now and we are ready to meet this need,” declared Bahaa El Din Hassan, a prominent Syrian businessman and vice-president of Damascus’ Chamber of Commerce. “This will open a huge market for Syrian businesses.”

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