Iran's Economic Gains in Syria

Over the course of the war, the Assad regime suffered major economic blows, with a European Union boycott on Syrian oil, the capture of oil infrastructure by Sunni groups, and the significant decline in Syrian foreign exchange reserves. Iran allowed its ally to mitigate these pressures. First, Iran extended a line of credit worth hundreds of millions of US dollars to bypass sanctions and began to sell Syrian oil as Iranian. However, these efforts ended after a few months when they were exposed in the media.

From 2014, the Iranians have aided Assad through two main channels. First, it extended two lines of credit for the import of Iranian goods (including arms), totaling around USD 2 Billion. Second, Iran transfers around 70,000 barrels of oil per day to Syria, making up two-thirds of the Syrian consumption at the accumulated value of over 6 billion USD. All in all, in the past three years, Iran has provided approximately 8 billion USD in direct economic aid to Syria. This estimate does not include hundreds of millions of dollars per year in direct military support.

Iran demanded Syrian economic concessions in return for its support. Most importantly in a strategic sense, Iran has received the right to construct a sea port in Syria, ostensibly for commercial, but also for military use.

Several other examples show Iran's stringent demands regarding the Syrian economy. The two governments signed five major trade deals in January 2017. As part of these deals, a subsidiary of the Telecommunication Company of Iran (TCI) was given the rights to become a mobile service provider in Syria, relegating the Syrian owned network to a mere 20% stake. TCI is owned by the IRGC and the Supreme Leader. Control over mobile networks also carries security implications.

The new contracts granted Iran with 5,000 hectares of land in the coastal region for the construction of oil and gas terminals; and an additional 5,000 hectares of farming land and Syrian government owned livestock.

Iran has also expressed its wish to help with the reconstruction of reconquered areas of Syria. In this regard, the “Iranian Reconstruction Agency” has already declared its first initiatives, most prominently the renovation of 85 schools across the city of Aleppo and its surroundings.

Iranian involvement in the reconstruction of Syria means financial profits for Iranian companies, the acquisition of land and properties and the chance of establishing military infrastructure within the rebuilt cities. 

In summary, over the past few years, Iran has strategically positioned itself as the lynchpin of the Syrian economy, by providing the regime with a lifeline of goods and sources of energy. In return, it has taken control of key parts of controlling stake in the economy.