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Iranian-Syrian free trade agreement

January 2012 - Business Features



On December 13, in an attempt to diminish the effect of economic sanctions imposed by the US, the EU and some members of the Arab League, Syria signed a free trade agreement with Iran, Syria's official news agency SANA reported.

According to the agreement, trade will be liberalised between Syria and Iran within the next five years. The two countries also agreed to form four committees to discuss means of enhancing economic, trade and investment cooperation.

Syria has decided to reduce customs fees on Syrian goods exported to Iran by 60 percent in a bid to boost bilateral trade. "The road to Iran has always been paved for the two countries," Minister of Economy and Trade Mohammad Nidal al-Cha'ar said at the Syrian-Iranian committee meeting on December 14, SANA reported. He added that both countries would develop their economic ties via Iraq, which had already announced that it would not implement the Arab League's sanctions.

"This is the first agreement of its kind signed by Iran with other countries in order to provide the necessary conditions for developing exports and economic cooperation in both countries," Commercial Attaché of the Iranian embassy in Damascus Abdul Redha Qassemian told Syria Today. "The deal would pave the way for the two sides to increase their annual trade volume to USD 5bn," he added.

In spite of their strong political ties, Syria and Iran have traditionally had very limited economic links. Syria's exports to Iran, including olive oil, plastics, textile yarn, and iron and copper, amounted to only USD 29m in 2010. Iran's main export to Syria is engineering services, Qassemian said, amounting to USD 389m during the same year. However, in the last few years, links between the two countries have been strengthened due to several contracts awarded by the Syrian government to Iranian engineering firms for the construction of power plants, cement production lines, water networks silos and cars.

The establishment of the trade agreement between the two countries was discussed for years before being approved through a decree from the Syrian president on August 3. However, it took effect only last month, after the Iranian Parliament approved a bill for that purpose.

Syrian business operators face growing difficulties in trading internationally because of the restrictions on dollar transactions imposed by the American Administration and the difficulty of sourcing foreign currencies through the Central Bank. "The agreement is very important for Syria, as it opens a new market for its products," a professor in the Faculty of Economics at the University of Damascus who requested anonymity told Syria Today. However, he added that it is important to avoid the mistakes of previous free trade agreements which flooded the country with foreign goods and damaged national industries. "We are still awaiting more details on how this agreement would be implemented. Equivalence and equity between exports and imports are the only standards by which to evaluate the success of the agreement," he insisted.

For his part, the Iranian commercial attaché stressed that the new economic alliance would not be shaken by security issues, such as the kidnapping of a group of eight Iranian engineers on December 20. The engineers were on their way to work on the Jandar power plant in the central province of Homs.

While calling on the Syrian government to do its best to determine the fate of these engineers and to rescue them, Qassemian affirmed that "such an incident would never affect the relations of the two countries, nor hinder the implementation of the agreement."

http://www.syria-today.com/index.php/january-2012/939-business-features/17949-iranian-syrian-free-trade-agreement-

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Iran and Syria - Jubin Goodarzi

* Since 1979, the alliance between Syria and Iran has had significant impact in both shaping Middle East politics and thwarting the regional goals of the United States, Israel and Iraq.

* Syria and Iran are the two parties most responsible for spoiling U.S.-backed peace efforts between the Arabs and Israel in order to promote their own Arab and Islamic interests. For the United States, they were also the most troublesome countries during the U.S. intervention in Iraq because they aided, abetted or armed insurgents.

* The two regimes share common traits. They are both authoritarian and defiantly independent, even at a political or economic cost. Iran is predominantly Shiite. Although Syria is predominantly Sunni Muslim, its ruling family is Alawite, a Shiite sect.

* At the same time, they are odd political bedfellows. Syria’s Baa’thist ideology is strictly secular and socialist. Iran’s ideology is rigidly religious and, in principle, opposed to atheist communism and its offshoots. Yet their common strategic goals have held the alliance together for three decades, despite repeated attempts to rend them apart.

Overview

The Iran-Syria alliance grew out of common cause—and common enemies. Since Iran’s 1979 revolution, the two regional powerhouses have pooled political leverage and military resources to enhance their position, build a network of surrogate militias and frustrate the plans of opponents. Together they ensured Saddam Hussein’s Iraq, which bordered both countries, would not become the predominant regional power. They forced U.S. peacekeepers out of Lebanon in 1984, and thwarted Israel’s effort to bring Lebanon into its orbit during an 18-year occupation that finally ended in Israel’s unilateral withdrawal in 2000. The odd bedfellows together sired or supported Hezbollah, Hamas, Palestinian Islamic Jihad and an array of radical Palestinian groups. All reject peace. And together they have inflicted repeated setbacks on six American presidents.

The alliance also reflects a common need. Together the regimes stand a better chance at survival—without having to accommodate either domestic or foreign demands for change—than they would without each other. Together they also stand a better chance of achieving their long-term goals. Syria wants to regain the strategic Golan Heights, lost to Israel in the 1967 War, and keep its veto power over Lebanese politics. Iran wants to be the preeminent regional player in the Persian Gulf and ensure its allies rule in Iraq. Both also want to protect Arab interests (in the case of Damascus) and Islamic interests (in the case of Iran) throughout the region.

The six phases

Relations between Iran and Syria have has gone through six distinct phases.

Phase 1: The new alliance 1979-1982

Syria was the first Arab country to recognize the provisional government of Prime Minister Mehdi Bazargan after the shah’s ouster, and third overall, after the Soviet Union and Pakistan. Damascus provided invaluable diplomatic and military support to Tehran after Iraq’s 1980 invasion of Iran. The alliance was formalized in March 1982 when a high-level Syrian delegation, headed by then Foreign Minister Abd al-Halim Khaddam visited Tehran and concluded a series of bilateral agreements on oil and trade, and a secret pact on military matters.

Phase 2: The zenith of Syrian-Iranian power 1982-1985

The high point of bilateral cooperation was in the Levant. After Israel’s 1982 invasion of Lebanon and rout of Syrian forces there, Syrian President Hafez Assad enlisted Iran's influence among the Lebanese Shiites to wage a campaign of subversion, terror and guerrilla warfare against their mutual opponents in Lebanon —the Christian-dominated government, Israeli occupation forces and the U.S. and French peacekeeping forces. Together they orchestrated a series of devastating blows: President Bashir Gemayel was assassinated in September 1982. Israeli military headquarters in Tyre were bombed in November 1982. The first modern Muslim suicide bombers hit the U.S. Embassy in west Beirut in April 1983. The barracks of U.S. Marine and French contingents of the Multinational Force were bombed within minutes of each other in October 1983. Israeli headquarters in south Lebanon were again bombed in November 1983. And a second U.S. Embassy was bombed in east Beirut in September 1984. Unable to fulfil its mission, U.S. forces withdrew in early 1984. The 1983 Israeli-Lebanese peace treaty was scrapped. And Israel began a partial withdrawal of its troops from most of the territory it initially seized in 1985.

Phase 3: Alliance tensions and consolidation of the axis 1985-1988

The late 1980s marked the most problematic phase of the Syria-Iran partnership. The Lebanese civil war and the Iran-Iraq War drained their resources and undermined the clout of the Damascus-Tehran nexus. Iran and Syria also developed conflicting agendas in Lebanon, particularly in picking their Shiite allies. Syria backed Amal, the political party and militia that was the longstanding representative of Lebanon’s Shiites. Damascus backed a secular and multi-confessional state that fell within its sphere of influence. Iran backed Hezbollah, the underground extremist movement. Iran favored greater power for Lebanon’s Muslim majority, particularly Shiites, the largest of the country’s 17 recognized sects.

Their rival visions played out on the ground. The Syrians backed the Amal-led siege of Palestinian refugee camps between 1985 and 1987, much to Iran's dismay. Iran tried to mediate a peaceful end to the confrontation. Tehran and Damascus eventually reached an understanding on key issues: Syrian interests took precedence in the Levant, while Damascus would defer to Tehran in the Gulf.

Phase 4: Containment of Saddam Hussein’s Iraq 1988-1991

Cooperation focused on checking Iraqi power and crushing President Michel Aoun’s anti-Syrian revolt in Lebanon in 1988-1989. During the 1990-1991 Gulf War against Iraq, Syria contributed troops to the U.S.-led coalition and Iran remained neutral. Damascus hoped to reap the benefits of having its agenda included in subsequent Middle East peace efforts, while Iran did not try to check the growing U.S. military presence, in hopes it would ultimately weaken Baghdad’s power in the region.

Phase 5: Alliance cooperation in the post-Cold War period 1991-2003

As the Cold War ended and the United States became the world’s dominant power, Tehran and Damascus grew increasingly important to each other. They cooperated in development of ballistic missiles. They collaborated in arming and abetting Hezbollah and Hamas to pressure Israel, as well as to influence events in Lebanon and the Palestinian Authority. Their aid was instrumental in enabling Hezbollah to wage a guerrilla campaign throughout the 1990s against Israel, which opted to withdraw in 2000.

Both Syria and Iran flirted with the United States during this phase. Damascus participated in sporadic U.S. peace efforts. And under reformist President Mohammed Khatami in the late 1990s, Tehran proposed bringing down the “wall of mistrust.” But neither effort produced any progress.

Phase 6: Reinvigoration of the alliance after the 2003 Iraq war

Cooperation between Iran and Syria increased markedly after the U.S.-led invasion of Iraq in 2003. Both countries welcomed the ouster of Saddam Hussein, their mutual foe. But the speed of the U.S. military victory also initially raised fears that either Iran or Syria might be the next target in the Bush administration's "War on Terror." Both provided significant aid to an array of domestic and foreign forces in Iraq, challenging the U.S. military and the new government in Baghdad.

Their roles in Iraq evolved, especially after the Obama administration announced plans to withdraw. Tehran cultivated ties with major Iraqi political parties and militias, particularly the Shiites, to ensure Baghdad would not again become hostile. And Damascus sporadically limited the flow of insurgents across its border. Neither country wanted Iraq to plunge into anarchy or civil war. But nor did either want U.S. allies in political control of Baghdad.

The balance of power

The balance of power in the Syrian-Iranian alliance has shifted since 1979. Syria was the dominant partner in the 1980s. Iran is the stronger partner today.

From 1976 to 2005, Syria was the more dominant player in Lebanon due to its military presence. But its leverage weakened after Damascus was forced to pull out troops in 2005. Hezbollah, the pro-Iranian party and militia, has since become the most influential ally in Lebanese politics. During the 1980s, Syria's regional role was also magnified when Egypt was banished from the Arab fold after the 1979 Camp David Accords. And both Iraq and Iran were weakened by their costly eight-year conflict. Syria enjoyed the political, military and economic patronage of the Soviet Union until its dissolution in 1991.

The balance of power between the two shifted in part because of arms. Syria was a conduit for arms shipments to Iran during the Iran-Iraq conflict. This was particularly important after Iran’s relations with Moscow deteriorated in 1982 and Washington orchestrated a widespread arms embargo in 1983. Iran responded by developing its own arms industry in the 1980s, and the 1990s it had the lead role in joint efforts with Syria to develop ballistic missile capabilities. Iran now exports arms to Syria and helps finance Syrian arms purchases from Russia, Belarus, North Korea and elsewhere.

Iran needed the alliance with Syria during the 1980s to prevent becoming isolated in the Middle East. But after Iraq's invasion of Kuwait, Iran mended fences with many Arab countries. Despite its uneasy relations with key Arab governments, Iran is more popular on the Arab street. Its position has been enhanced by its posturing on the nuclear issue, relatively high oil prices, and the backlash against U.S. forces in Iraq and Afghanistan.

An enduring marriage

The Syria-Iran alliance has survived in part because it has been primarily defensive in nature. For three decades, it has been aimed largely at neutralizing Iraqi and Israeli capabilities and preventing American encroachment in the Middle East. Defensive alliances which have fixed and limited objectives are often more durable.

Their distinctive ideological differences, ironically, have also helped the relationship endure. Syria and Iraq were intense political rivals, and often came close to military blows, because they shared the same Baa’thist ideology. The political elites in Tehran and Damascus were never competing.

Their respective agendas also have jived: Iran has vied for leadership of the Islamist bloc in the Middle East and beyond, a role in which secular Syria has no interest. Syria has long sought to be "the beating heart of Arabism," a role in which Iran, a non-Arab country, has no interest. Except for a brief period of rival ambitions in Lebanon, the two countries have never been in competition—ideologically, economically or militarily. Neither has tried to upstage the other.

The future

* Despite multiple attempts to wean Syria from Iran, the alliance between Tehran and Damascus remains strong. It would take a major catalyst—such as progress in the Arab-Israeli peace process that addresses Syria’s demands—to seriously undermine their cooperation.

* In part by default, Iran and Syria still have strong influence in the region for several reasons: Their militia allies have become major political players, particularly in Lebanon and the Palestinian Authority. Mideast peace efforts have not produced major new pacts since the mid-1990s. And U.S. attention has been focused elsewhere.

Jubin Goodarzi, a professor of International Relations at Webster University Geneva, Switzerland, is author of, "Syria and Iran: Diplomatic Alliance and Power Politics in the Middle East."

http://iranprimer.usip.org/resource/iran-and-syria