Economic Lifeline Provided by Iran Under Strain
Syrian trade officials say they are worried the economic lifeline provided by Iran is under strain from plunging oil prices, Reuters reported. Iran’s hard currency revenues have been cut by nearly 50 percent due to falling oil prices, and Iran needs hard currency to maintain its aid to Syria.
“If it had not been for Iranian support we could not have survived the crisis,” a senior Syrian trade official said from Damascus. (Reuters, 19 December)
Iran granted Syria $4.2 billion credit facility in July 2013 to buy oil and non-oil products, the officials at the time had told Reuters. Since then the Islamic State insurgents have taken control of all Syrian oil production facilities, and Iran has become Syria’s sole source of imported oil, forcing Iran to increase its line of credit to Syria.
The Syrian pound, which fell around 70 percent since the civil war began in 2011, lost another 10 percent over the past fortnight alone. Reuters, quoting two senior Syrian bankers, reports that Iran deposited $500-$750 million in Syria’s Central Bank more than a year ago to help stabilize the pound. It is believed that Iran needs to deposit millions of dollars more in light of the country’s growing currency crisis in the past few days.
Iran is also heavily involved in a military campaign in Syria; supplying missiles, weapons and ammunitions to the Syrian military, as well as paying for the salaries and operations of thousands of Shia militias fighting on the side of the Assad regime. Iran’s Quds Force officers, and those from other branches of military and intelligence agencies, are also deployed to the country to advise and assist the Syrian military and to lead the Shia militias in their fight against the opposition. Iran is also believed to be paying for thousands of deployed Lebanese Hezbollah fighters in Syria. A military campaign at this magnitude would cost Iran billions of dollars a year.
The economic aids, like granting an ever growing line of credit to the Syrian government, and the military campaign are costly undertaking by Iran, mostly requiring hard currency to be paid for. And since June, Iran is involved in another major military campaign in Iraq, costing billions of dollars above and beyond its commitments to Syria.
Hence, the worries of Syrian officials in light of Iran’s recent financial woes, fearing that 50 percent cut in Iran’s oil revenues could break its back financially. However, the Iranian officials have told their Syrian counterparts not to worry.
“Iran’s economic support for Syria will continue incessantly,” said Iran’s Vice president Eshagh Jahangiri in Tehran after his meeting with visiting Syrian Prime Minister Wael Al-Halqi on Tuesday. (IRNA, 16 December)
The Syrian PM was in Tehran to seek Iran’s continued support. The Syrian chamber of commerce officials have told Reuters that the prime minister was particularly asking for Iran’s help to send them bigger quantities of petroleum products, which has become in perilously short supply in the country.
ISIL’s control of some of the border crossings between Syria and Iraq has also complicated the situation for the Syrians, disrupting the flows of tens of thousands of barrels of crude from Iraq that were delivered overland by oil tankers, making Iran the only remaining supplier. Four Iranian tankers have discharged cargoes of gasoline and other petroleum product by the sea to Syrian ports recently, but they did not end acute shortage, Reuters reported.
File photo: Iran's oil exporting terminal at Kharq island (Getty Images)