Syria and Iran Sign 'Strategic' Economic Agreement

Syria and Iran signed 11 agreements and memoranda of understanding late Monday, including a "long-term strategic economic cooperation" deal aimed at strengthening cooperation between Damascus and one of its key allies in the civil war that has torn the country apart.

The agreements covered a range of fields including economy, culture, education, infrastructure, investment and housing, the official Sana news agency reported.

They were signed during a visit to Damascus by Iran's First Vice President Eshaq Jahangiri.

Syrian Prime Minister Imad Khamis said it was "a message to the world on the reality of Syrian-Iranian cooperation", citing "legal and administrative facilities" to benefit Iranian companies wishing to invest in Syria and contribute "effectively to reconstruction".

The agreements included two memos of understanding between the railway authorities of the two countries as well as between their respective investment promotion authorities.

In relation to infrastructure, there was also rehabilitation of the ports of Tartus and Latakia as well as construction of a 540 megawatt energy plant, according to Khamis.

In addition there were "dozens of projects in the oil sector and agriculture", he added.

The civil war has taken an enormous toll on the Syrian economy and infrastructure, with the cost of war-related destruction estimated by the UN at about USD 400 billion.

Iran will stand "alongside Syria during the next phase that will be marked by reconstruction", Jahangiri promised.

Iran and Syria had already signed a military cooperation agreement in August while Tehran has supported Damascus economically during the conflict through oil deliveries and several lines of credit.

The new agreements come against the backdrop of fresh US sanctions against Iran, while Syrian President Bashar al-Assad's regime and several Syrian businesspeople and companies are already on US and European blacklists.

They also come as Israel has repeatedly pledged to keep arch-foe Iran from entrenching itself militarily in Syria, where the war has already claimed more than 360,000 lives and displaced several million people.

Photo Credit: IRNA

Eyeing Reconstruction, Russia, Iran Take Centre Stage at Syria Expo

Companies from dozens of countries are showing their wares at the Damascus International Fair this week, but those from two in particular are getting special treatment—Russia and Iran.

Firms from the top two wartime allies of Syria's government are set up in an entirely separate building, hinting at the preferred status they hope to enjoy as the country tries to transition into reconstruction.

Packed pavilions feature Iranian cars and carpets, Russian wires and cables—and translators ready to help Syrian businessmen connect with potential foreign partners.

A flatscreen television in the Russian wing plays a sleek advertisement for Libena Agro Build, a metalworking company that produces farming equipment and grain silos.

“Foreign companies are scrambling and competing to invest in Syria, but Russia's got preference," says its regional representative, Lebanese-Russian national Leba Shehadeh.

"We were the ones defending Syria politically and militarily, so we expect the lion's share of the economy and of the reconstruction phase."

He flips through a pamphlet of irrigation products, metal recycling services, moulds, and more.

"Syria needs all this equipment," Shehadeh tells AFP, saying Libena Agro was aiming for large-scale deals with Damascus.

"We're here so that, together, we can draw the plan for rebuilding this country."

Seven years since war first broke out, President Bashar al-Assad has managed to recapture around two-thirds of Syria, with help from both Tehran and Moscow.

Iranian "military advisers" and Tehran-backed militias have supported troops on the ground, and Russian warplanes have battered rebel targets from the sky for the past three years.

’Attractive for Investment'

But fighting has left Syria in ruins, with the United Nations saying 
destruction has cost the country close to USD 400 billion. 

Assad has pledged to make reconstruction his top priority, saying Syria's "allies" would be the only ones allowed to take part.

Even during war, Russian companies have invested in Syria's oil, gas and mining sectors and won contracts to build flour mills and water-pumping stations. 

Syrian state companies have also issued tenders open exclusively to Iranian companies, according to the economic magazine Syria Report. 

Just last month, Tehran and Damascus reached a deal for Iran to rehabilitate Syria's defense industry. 

And on Friday, at the fair's opening, the Russian and Syrian ministries of industry inked a memorandum of understanding on future cooperation.

The Russian ministry had organized a delegation of investors to attend the fair, including representatives of Romax, a firm that produces storage silos and is involved in transportation and shipping. 

“The Syrian market is attractive for investment," says its representative at the fair, Aron Levashov.

"We're finding a window, a gate for Russia towards the Mediterranean sea, and from there to Europe and Africa," he tells AFP, speaking in Russian through an interpreter.

He says Russia's "familiarity with the situation on the ground, the markets, the depth and scope of destruction" gave it a better understanding of Syria's economic needs. 

"Russia proved herself with a show of force in the air, and it's continuing its political support. We should take advantage of the space afforded to us to crystalize our economic role," Levashov tells AFP. 

'Like Brothers'

Companies from 25 countries, as well as officials from another 23 are taking part in the fair, Syrian state media said.

Around 50 Russian firms are being represented, and Iran has made an equally strong showing. 

Mohammad Reza Khanzad, who runs the Iranian pavilion at the expo, says the wing "includes 50 Iranian companies, among them 32 firms specialising in reconstruction"—compared with 31 firms in total last year. 

"The rest are in various industries like car production, homeware, programming, reconstruction materials, handmade carpets and agriculture," he says.

At a nearby table, Iranian businessman Mehdi Qawwam, 38, is smoothly pitching his construction firm Maskan Omran to three Syrian entrepreneurs in Farsi through a translator. 

"After Syria's war, the market will need companies specialized in construction and will benefit from Iranians to rebuild an even stronger market," he says.

Dressed in a grey suit, Qawwam concludes his sit-down and tucks newly acquired business cards into his suitcase.

"We reached some preliminary agreements to facilitate the entry of Iranian goods exclusive to our company into Syria, and in the coming phases we'll have meetings in Tehran or Damascus to confirm those deals," he says.

Strolling through the expo, he waves to friends and rivals alike.

"Syria is one of the few countries that accepts our products in the wake of the US sanctions" reimposed by Washington last month, he says.

"These sanctions must not affect us, because the relationship between our two countries is like one between brothers."

Photo Credit: EPA

Iran's Zarif Says EU Efforts to Save Nuke Deal 'Not Sufficient'

Iran's Foreign Minister Mohammad Javad Zarif said Sunday that European efforts to save the nuclear deal after the exit of the United States were not sufficient. 

"The cascade of decisions by EU companies to end their activities in Iran makes things much more complicated," Zarif told reporters. 

He spoke after meeting with EU energy commissioner Miguel Arias Canete, who has been on a two-day visit to Tehran—the first by a Western official since Washington announced its withdrawal from the 2015 nuclear deal earlier this month.

"With the exit of the United States from the nuclear deal, the expectations of the Iranian public towards the European Union have increased... and the EU's political support for the nuclear agreement is not sufficient," Zarif added in comments carried by state broadcaster IRIB.

Several foreign firms have already halted their Iranian operations while they wait to see how talks within the EU will play out.

French oil major Total said last week it would abandon its $4.8-billion investment project in Iran unless it was granted a waiver from Washington. 

Another French energy giant, Engie, said Saturday it would cease engineering work in Iran before November, when US sanctions are due to be reimposed.  

"The European Union must take concrete supplementary steps to increase its investments in Iran. The commitments of the EU to apply the nuclear deal are not compatible with the announcement of probable withdrawal by major European companies," Zarif said.

Canete said he recognised that time was short and that clear measures were needed from Europe to protect investments and oil purchases.

Iran has threatened to resume industrial uranium enrichment "without limit" 
if its interests are not protected.

Photo Credit: Fars

Iran Economy a Mess Even Before Trump Verdict

Renewed nuclear sanctions would certainly cause severe problems for Iran's economy, but much of the damage has already been done by the uncertainty created by the US and myriad home-grown problems.

It was awkward timing for the annual International Oil Show in Tehran this week, which opened just two days before US President Donald Trump was due to make his decision on whether to rip up the 2015 nuclear deal and reimpose sanctions on Iran. 

"The atmosphere was grim," said a European consultant who attended the conference on Monday. 

"There were fewer foreigners, the stands were smaller, it was depressing."

Organizers admitted that foreign guests were down by a third compared to last year, according to the Hamshahri newspaper. 

The only major oil deal that Iran has landed since the nuclear deal was a USD 5 billion exploration agreement with France's Total and China's CNPC last year, but its future hangs in the balance as executives wait to see what Trump will do. 

Foreign banks remain terrified of touching any transaction even cursorily linked to Iran, even after they have been encouraged by their respective governments to facilitate trade and investment. 

"We went to the French ministry of economy and they gave us a list of all the banks that would agree to work with Iran. But when we called them, every single one said no," said French entrepreneur Amaury de la Serre when he opened a branch of the high-end Sushi Shop restaurant in Tehran last summer. 

Investment Halted

Iran has piled up promises of investment with foreign firms, but many have held back on actually moving money into the country while they wait to see if US sanctions will return. 

The World Bank says only $3.4 billion actually showed up in 2016—a far cry from the $50 billion Rouhani said he was targeting in the deal's first year.

The nuclear deal has been "a genuine disappointment", said Ardavan Amir-Aslani, an international lawyer with an office in Tehran who has written several books on the region.

"They're able to sell oil, OK, that's just enough to pay civil servants and maintain infrastructure, but it hasn't attracted even a fraction of the investment needed," he said. 

"Our business has reduced to a trickle. All foreign investment has come to a halt. The meagre amounts promised have been put on hold."

Meanwhile, Iranians are scrambling for the lifeboats. One wealthy family said they had moved their entire fortune out of the country this week ahead of the Trump decision. 

They had already lost millions thanks to the crashing Iranian rial which has lost a third or more of its value against the dollar this year. 

The numbers are hard to verify but analysts and officials have said between USD 10 billion and USD 30 billion has left the country in recent months. 

Home-Grown Problems

Iranian officials say all this amounts to a flagrant violation of article 29 of the nuclear deal, which committed the US to ensure "the normalization of trade and economic relations with Iran". 

The US counters that it never promised to lift non-nuclear sanctions related to issues such as human rights and Iran's missile program, which were already complicating trade before Trump came to power. 

And many of Iran's problems have nothing to do with Trump. Iran's private sector is starved of investment, its banking system is crippled by bad loans, and record levels of unemployment mean a third of under-30s are out of work. 

President Hassan Rouhani has tried to foster transparency and investment, but protests in December and January revealed the depth of anger at his limited progress.

"Much of the blame for Iran's lacklustre performance belongs to Rouhani's economic team, which has proved no match for the economy's mounting problems," Djavad Salehi-Isfahani, an economics professor at Virginia Tech in the US who specializes in the Iranian economy, wrote in an article for Project Syndicate. 

He said Rouhani's efforts to move Iran towards a market-friendly, world-facing economy were now at risk of coming "to a grinding halt", to be replaced by his conservative opponents' preference for a tightly-controlled, inwardly-focused "resistance economy".

"The conservatives are not willing to negotiate on the missile issue or acknowledge their presence in other Middle Eastern countries so even if Trump stays in, there will just be four more months of negotiations with the Europeans that will lead nowhere," said Amir-Aslani. 

"Inflation is ramping up, job creation is declining. At the end of the day it's an economic debacle."

Photo Credit: Wikicommons

Iran Signs Deal with China to Connect Key Port to Rail Network

China will build a train line connecting the Iranian port of Bushehr to the rest of the country's railway network under a $700 million deal signed on Wednesday.

The agreement was inked in Tehran in the presence of Iranian Transport Minister Abbas Akhoundi and officials from China Machinery Industry Construction Group.

It will see the group build a 400-kilometre (250-mile) railway between the Gulf port and the southern city of Shiraz, IRNA state news agency cited officials as saying without specifying when construction would get underway. This would complete the "North-South Railway Corridor" in line with Iran's goal of becoming a transport hub for goods between the Gulf, the Indian subcontinent, Russia and Central Asia.

Products arriving at Bushehr, Iran's second biggest port after Bandar Abbas, also on the Gulf, currently have to be transported by road.

The Bushehr-Shiraz rail project is one of seven the government is working on totaling 2,300 kilometers in tracks, according to IRNA.

China is Iran's biggest economic and trading partner. In September, the Asian giant granted lines of credit worth $10 billion for five banks financing infrastructure projects.

Photo Credit: IRNA