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Syria Looks to Iraq for an Economic Boost

DAMASCUS -- Syria, suffering from dwindling oil revenue and a sluggish, state-dominated market, is banking on an economic boost from an unlikely source: Iraq.

A recent thaw in the countries' political relations is raising hopes in Damascus of an increase in trade.

Syrian Minister of Economy and Trade Amer Hosni Lutfi said during a recent trip to Iraq that he hopes to more than triple bilateral trade, now estimated at $800 million, far behind Syria's biggest trade partners, China and Turkey, at $2 billion each.

Syrian officials also have said that a railway line from the coastal city of Tartous to Umm Qasr port in southern Iraq is opening this month. The railway promises a faster and cheaper route to the Mediterranean for regional goods typically shipped through the Suez Canal.

Syria's economic ties with Iraq were stronger in the past. Syrian exports to Iraq in 2007 were valued at $641 million, compared with about $2 billion before the U.S. invasion in 2003, according to official Iraqi figures.

In late April, Syrian Prime Minister Mohammad Naji al-Otri paid his first visit to post-Saddam Hussein Iraq. During the trip, officials from the two sides held high-level talks over some 20 trade deals. The meeting was a watershed event for bilateral economic ties, said Adnan al-Sharify, commercial attaché at the Iraqi embassy in Damascus. "Economic ties were at a low level, and they needed a political decision to reactivate them," he said in an interview.

The rapprochement comes amid a recent rehabilitation of Syrian President Bashar Assad on the world stage. The U.S. in May sent two high-ranking envoys to Damascus to discuss support for a new push for Arab-Israeli peace, along with security measures along the Iraq-Syria border.

Damascus says it thinks it can use its ports on the Mediterranean to build an important trade route between Iraq and Europe. Iraq's population of 28 million promises a booming market for Syrian and other foreign goods.

Baghdad and Damascus already have agreed to reopen the Kirkuk-Banias oil pipeline, which extends from oil fields in northern Iraq to the Syrian port of Banias.

The two countries also have held discussions about building a natural-gas pipeline from Iraq's Western Akkas fields to Syria, which could be an attractive transit point for gas-starved Arab and European markets.

Printed in The Wall Street Journal, page A10

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