Iranian Supreme Leader Ayatollah Ali Khamenei (R) meets with Syrian President Bashar al-Assad in Tehran, February 25, 2019. (AFP)

February 22, 2020

Since the beginning of 2012, the Syrian war has represented an opportunity for Iran to spread and deepen its influence in Syria and among Syria’s allies. This has been driven by Syria’s strategic importance, its role in ensuring the continuity of the land corridor from Tehran to Beirut, and its access to the warm waters of the Mediterranean shores.

Iran has harnessed all of its financial and military capabilities to protect the head of the Syrian regime, Bashar al-Assad, and to implement agreements guaranteeing its interests in Syria for decades to come.

The scope of Iranian support grew even with the worsening of the Syrian war, with advisory support turning into financial and economic support, as Tehran put it.

At a time when the people of Iran are dying of starvation and poverty, this being emphasized most recently by a wave of protests in Tehran and several other cities that were widely covered by domestic and international media, the Iranian government seeks to extend a helping hand to the Syrian regime to ensure its survival. This poses the questions: How much is Iran spending in Syria? And what is the size of Iran’s revenues from Damascus?

A study by the International Institute for Strategic Studies shows that Iran attaches more military and strategic importance to its militias deployed in the region than it does to its missile and nuclear programs.

The study, entitled “Iranian Infiltration Networks in the Middle East,” estimated Iran’s total expenditure for its militias’ activities in Syria, Iraq, and Yemen at around US$16 billion, while the Iranian regime spends around $700 million annually on Hezbollah militias in Lebanon.

Iranian officials and other experts say that the country has spent colossal amounts — up to US$30 billion so far, according to the website and magazine Foreign Policy.

One of Iran’s expenses in Syria has been the delivery of oil and petroleum products to Assad’s forces. This is done within the framework of a “credit line” opened by Iran for Syria, which, according to Iranian media, ranges from between $2 and $3 billion per year, while also granting a total credit line amounting to $6 billion per year, including food and medical supplies, set by Iranian Foreign Minister Mohammad Javad Zarif at about $2.5 billion per year.

Economist Samir Tawil told IranWire: “Many say that the size of Iranian spending in Syria amounts to more than $80 billion. What is certain is that in 2015, Iran supported the al-Assad regime with $900 million cash following the regime’s loss of its monetary reserve. This is in addition to the credit line between Tehran and Damascus, which is estimated at $12 billion.”

He added: “With the recent economic sanctions imposed by Donald Trump on Iran, this line no longer exists, as Iran no longer dares to supply oil or gas to the Syrian regime because its shipments would be targeted.”

Jessie Shahin, the spokeswoman for the United Nations (UN) Special Envoy to Syria, Staffan de Mistura, revealed that the UN’s estimates concerning average Iranian spending in Syria amount to the equivalent of $6 billion annually. By way of comparison, this means that Iran assisted the Syrian regime with an amount equalling half of its internal price support budget annually. If Iran spent this amount annually across the six years of the Syrian war, this would mean that it has spent $36 billion, which is three times its annual defense budget.

Among other estimates regarding the cost of Iran’s role in Syria include that of Syrian affairs researcher Dr. Nadim Shehadeh, who estimates that between 2012 and 2013, Iranian spending amounted to between $14 and $15 billion following Bashar al-Assad’s government’s loss of all its revenues, according to the BBC.

Shehadeh told BBC Persian: “The estimate is based on evidence that confirms the introduction of several groups funded by the Iranian Revolutionary Guards, including groups from Iraq and Afghanistan.”

Shehadeh estimates that Iranian spending is close to the figure declared by the UN ($6 billion annually).

According to Tawil, following the economic sanctions on Syria, Iran and Hezbollah have financially held up the Syrian regime’s economy over recent years through Iran’s assistance with imports, and Lebanese Hezbollah’s assistance with Lebanese banks, which have been the economic lifeline of the Syrian regime, through their financing of imports, especially oil derivatives.

Iran’s Gains in Syria:

Iran played a modest economic role in Syria before the outbreak of protests. However, its role has increasingly evolved over the last few years, driven by its economic interests. Following the war’s destruction of a large part of Syria’s infrastructure and production sectors, Iran —  unlike other countries in the region — has entered into many agreements and economic contracts with the Syrian regime in order to rebuild such sectors, which include infrastructure, electricity, health, mills, food production and supply, and finance.

Loan agreements were also reached in 2013 to finance imports, on the condition that a large proportion would come from Iran and through Iranian companies. In July 2013, Damascus exempted an Iranian food export company from all fees and taxes when bringing goods into Syria.

Samir Tawil explained to IranWire that Russia’s control of the ports and its exploration for oil, phosphates, gas, and minerals has prompted Iran to focus on the electric power sector, noting that the Syrian electricity network has been severely damaged and needs at least $7 billion to restore it.

Tawil added that Iran’s military and financial support of the Syrian regime does not come for free, requiring sovereign guarantees ensuring its rights. Therefore, Bashar Al-Assad has given Iran a hand within Syrian territories to control the health sector through its well-known businessman, Samer Al-Fawz, as well as having roles in the education sector and in infrastructure projects, including roads, bridges, and transportation, linking countries and cities to each other through a system of trade routes that facilitate trade operations.

According to the Syria Daily News website, the Iranian trade balance has been positively tipped by trade relations with Syria during the period of war, specifically in terms of exports, with the value of Iranian trade increasing from $361 million in 2011 to around $869 million in 2017. This increase in Iranian exports to Syria has led to a steady transformation of Syria into a market for Iranian products, and Iran becoming Syria’s premier trading partner.

The value of Iranian goods exported by Iran to Syria from 2012 to August 2017 amounted to $313 million.

However, when looking at Iran’s imports from Syria during the same period, these did not exceed $91 million, meaning that the trade balance between the two parties largely leans in Iran’s interests.

If we assume that Syria covered the value of some of its imports from Iran by exporting Syrian goods to it, the rest would still be considered debt for Syria.

This was affirmed by Samir Tawil, who stated that Syria does not have the money to pay its debts, and therefore Iran has almost taken control of the reconstruction sector, buying real estate through its representative in Syria, Abdullah Nizam, while also taking control of the Al-Qadam, Al-Qusair, and Al-Zabadani regions, not to mention its control over the metal and automobile sectors.

Habib Abbaspour, Assistant Director of Tabriz Equipment and Machinery Production Company, announced the signing of an agreement with Syria to export equipment and machinery worth $26 million, which will be added to $10 million worth of other equipment for export, according to Al-Alam TV.

Iranian companies have also contributed greatly to trade exhibitions held in Damascus for the purpose of reconstruction, signing important contracts in this field, with the financial value of contracts signed between the Iranian Mabna Group and the Syrian Ministry of Electricity in 2016 amounting to around 1 trillion Syrian pounds (SYR).

Iranian official Mehrdad Falah stated that in 2016, the value of Syrian import of Iranian goods reached nearly $2.5 billion.

The exports of Iranian goods to Syria in 2017 also previously recorded a growth of 80 percent and 6.53 percent in weighted value, according to Qasioun News.

Iran Wire

About Track Persia

Track PersiaTrack Persia is a Platform run by dedicated analysts who spend much of their time researching the Middle East, in due process we fall upon many indications of growing expansionary ambitions on the part of Iran in the MENA region and the wider Islamic world. These ambitions commonly increase tensions and undermine stability.