Political Hesitations Hinder Syria-Iraq Trade Revival

Syria strives to restore its trade relationship with Iraq, but political hesitance in Baghdad creates frustration. Despite fulfilling border security requirements, Iraq refuses to open border trade fully. Economic cooperation is stymied by the lack of banking channels and security issues, though limited private trade persists. Historically, relations have been affected by political conflicts, impacting trade significantly.

Syria is endeavoring to revive its erstwhile robust trade relationship with Iraq; however, political hesitations in Baghdad are causing significant frustration among businesses. Despite Syria’s compliance with essential border security and customs measures, Iraq exhibits reluctance in re-establishing trade ties. Ibrahim Shalash, from the Syria-Iraq Business Council, noted that the Syrian side has been prepared to welcome Iraqi vehicles for over two weeks, yet Iraqi authorities have not reopened the border.

Iraq’s insistence on waiting for Syria to achieve political stability before formalizing trade agreements remains a fundamental challenge. The lack of official banking channels, restrictive trade policies, and security apprehensions impede extensive economic cooperation. In the meantime, private businesses continue to engage in limited exchanges. Iraq exports items like dates and industrial products to Syria, while Syria provides Iraq with a range of goods, including sweets and medical supplies, although these exchanges are considerably reduced from previous levels.

Shalash highlighted that Syrian exporters contend with challenges posed by economic sanctions, such as the Caesar Act and various US and European restrictions. He emphasized that the absence of banking cooperation significantly complicates trade with Iraq, compelling traders to utilize informal market methods. Historically, Iraq has been a vital trade partner for Syria, representing roughly 22.7% of its exports in critical sectors prior to the civil war.

Historically, trade ties between Syria and Iraq have fluctuated due to political tensions. The two countries enacted a free trade agreement with Egypt and Libya in 2001 to promote economic collaboration. Iraq became one of Syria’s principal trading partners by 2010, but relations soured following the 2003 US invasion. Tensions escalated as Syria was blamed for aiding insurgents entering Iraq. Diplomatic relations suffered until security cooperation over ISIS ignited a partial re-engagement in 2014.

While Iraq maintained ties with Damascus throughout the Syrian civil war, the fall of President al-Assad’s regime in late 2024 ushered in new uncertainties. While Iraq forged connections with Syria’s transitional government, concerns related to security and financial instability stymie prospects for a full-scale trade revival. Syrian officials maintain that they have completed all necessary measures to reopen trade routes, yet Baghdad remains unresponsive.

Shalash stressed the potential of Syrian industries, stating their products are often of superior quality compared to their competitors. Iraqi Trade Ministry spokesman Mohammed Hanoun, however, confirmed that the government will not initiate formal trade with Syria until the latter demonstrates political stabilization and completes necessary committee meetings. Even if trade were approved, the lack of structured banking mechanisms presents another obstacle, forcing businesses into the black market where exchange rates inflate costs unrealistically.

Syria’s pharmaceutical sector, crucial to its trade with Iraq, has notably suffered; previously, it accounted for 70-80% of Iraq’s medical imports. The Iraqi Ministry of Health has forbidden new Syrian pharmaceutical companies from registration for security and quality reasons, impeding further trade growth. Currently, only existing Syrian factories with local representatives can operate in Iraq, leaving many new exporters in limbo.

Syria regards Iraq as a cornerstone of its economic recovery agenda. Plans are in place to boost exports and restore trade to pre-2011 levels while enhancing logistical infrastructures. Hassan Al-Sheikh, the head of the Iraq-Syria Business Council, indicated that Iraq awaits Syria to complete a fully integrated border post to deter smuggling. Those conditions need to be agreed upon before substantial trade progress can occur.

In summary, the revival of Syrian-Iraqi trade faces considerable hurdles including political instability in Syria, security concerns in Iraq, and the absence of formal banking relations. Despite ongoing efforts at the business level to maintain exchanges, substantial impediments remain that continue to limit trade potential. The future of economic collaboration hinges on Iraq’s decision to ease restrictions and acknowledge Syria’s readiness for cooperation.

Original Source: shafaq.com