Syria-Iraq trade stymied by US border presence

Syria in recent weeks laid the groundwork for a resumption of badly needed overland trade with Iraq, with an eye on restoring billions worth of trade lost during the eight-year war.

On April 10, Iraqi Minister of Trade Mohammed Hisham al-Ani visited Damascus to seal a wide-ranging protocol with his Syrian counterpart. The agreement entailed broad cooperation in the spheres of energy, water and transportation, as well as commerce, investment and banking.

Syrian Prime Minister Imad Khamis, whose cabinet is currently grappling with unprecedented energy shortages, stressed to the Iraqi trade minister the importance of resuming land transport between Syria and its oil-rich neighbor.

Ani, in turn, promised to open the border “soon.”

The protocol notably included “important steps” for reopening border crossings between the two countries, according to Syrian sources quoted by Syria’s Al-Watan newspaper. 

Eye on Al-Qaim

The key crossing to watch is Al-Qaim (Albu Kamal on the Iraqi side), the only one along Syria’s 600-kilometer border with Iraq that is controlled by the Syrian government.

Just week’s before Ani’s visit to Damascus, Iraq’s chief of staff, Major General Uthman al-Ghani, made a similar visit, pledging to specifically reopen the Qaim crossing.

The critical crossing, which links the eastern Syrian province of Deir Ezzor to the western Iraqi province of Anbar, came into the spotlight in a dramatic moment in late 2017, when Syrian troops and their allies linked up for the first time in the war with their Iraqi allies. 

After years under ISIS control, the desert border region was finally connected – or so it seemed.  

To date, there has been no movement through the crossing. The unspoken assumption is that US political pressure is preventing the Iraqi government from reopening this vital land border.

Despite valid security concerns of lingering ISIS pockets, the connection is logistically and diplomatically feasible.

The suspicions of US intervention come against the backdrop of similar allegations of pressure on Jordan. Last month, reports emerged that officials from the US embassy in Amman had warned Jordanian businessmen against investing in the Syrian market and moved to block shipments of oil products from Jordan to Syria. Such pressures could explain why the reopening of the Nassib border crossing with Jordan has reaped only meagre benefits for both countries to date.

But unlike Amman, Baghdad maintained good political relations with Damascus throughout the years of the Syrian conflict. Iraq on many occasions called on the Arab League to lift its suspension on Syria, while top Iraqi officials continued to frequent Damascus. Relations between Iraq and Syria may have even reached historic heights during the war, compared to past decades of mutual suspicion and overt hostility. 

As the Trump administration waffles over its troop commitment to the strategic border region, Damascus and Baghdad are preparing for the future.

$3 billion exports

Before the Syrian conflict erupted in 2011, Syria’s trade with Iraq alone was valued at $3 billion. By 2016, Syria’s total exports to the world had fallen to $700 million from $12 billion in 2011.

According to the latest Syrian government figures, Iraq receives 15% of Syrian exports, worth $100 million, and remains the country’s fourth-largest trading partner. These exports include agricultural produce, foodstuffs, cosmetics, medication and textiles. Syrian exports to Iraq, however, remain a mere drop in the bucket when compared to Iraq’s annual imports, which are worth $30 billion.

These weak figures can be attributed to the continued closure or non-access to the three official border crossings. While Al-Qaim is firmly shut, the Yarubyia (Rabia) crossing to the north is controlled by the Kurdish-led Syrian Democratic Forces, and the southernmost crossing Al-Walid (Tanf) is held by the Syrian opposition factions – in both cases backed by the US military. 

With overland travel unavailable, Syrian goods have to be shipped on airplanes traveling between Damascus and the Iraqi cities of Baghdad and Najaf in the south. Air transport is costly and can only carry a fraction of potential Syrian exports to Iraq.

The resumption of overland trade would help Iraq diversify its exports, access Syria’s Mediterranean ports and furnish its markets with premium Syrian goods – namely agricultural products.

For Syria, the stakes are much higher. Syrian businesses are salivating over the lucrative Iraqi market. In June 2017, months before the Syrian-Iraqi border was secured from both sides, a joint Syrian-Iraqi chamber for trade and industry was formed in Baghdad. More than 250,000 Iraqis visited the Syrian wing at the 2018 Baghdad International Fair last November, and the merchandise the Syrians had brought with them sold out just a few days into the fair.

With the majority of Syria’s oil fields under the control of the SDF, and with American and European Union sanctions stifling maritime imports, overland oil shipments from Iraq (and Iran) could meanwhile help Damascus overcome a suffocating energy crisis.

Reinvigorated overland trade with Iraq would also see hundreds of millions of dollars in export revenues flow into the Syrian economy. This would help bridge Syria’s growing trade deficit (estimated to have reached $4 billion in 2017) and shore up a depreciating Syrian pound.

For Iran, the opening of Al-Qaim would allow it overland access to Syria for the first time since 2011, enhancing economic ties.

Syria, Iraq and Iran have ambitious plans for future cooperation. In 2017, the three nations signed an agreement to connect their electricity grids and expressed hopes to establish a railway network extending from Damascus to Tehran through Baghdad.

Apart from its economic potential, the Americans and their allies in the region have long worried about the geopolitical implications of such a linkage. 

Despite pledges by US President Donald Trump to pull out of Syria, his national security adviser John Bolton and top diplomat Mike Pompeo have increasingly signaled that Iran is a significant reason to maintain its military presence in the northern and southern parts of the Syrian-Iraqi frontier. 

For now, geopolitical complexities have rendered the “line in the sand” France and Britain drew between modern Iraq and Syria in the 1920s the most insurmountable barrier in the region. That has not halted planning for the day after.