Iranian Business Sector Loses Hope on Entering the Syrian Market

Iranian businesses were entering the Syrian market at a modest rate in the decade preceding the 2011 conflict as the two countries aimed to improve their economic ties in line with their enhanced political and military cooperation. This, albeit limited, involvement slowed significantly in the first years of the conflict. As the war raged, many existing businesses—Iran-affiliated or otherwise—were shutting down and exiting.

After the Assad regime recaptured key opposition strongholds from 2016 to 2018 (the Ghouta suburbs and parts of Aleppo and Dara’a) and the war swung in Assad’s favor, there was a proliferation of newly established Iranian-linked entities starting in 2019. This was accompanied by public statements from Iranian officials expressing hope for expanding their business footprint in Syria by motivating the private sectors in both countries to cooperate. In December 2018, the Iranian Deputy Minister of Roads and City Building, Ameer Amini, said that the two countries were preparing protocols, and memorandums of understanding, to pave the way for Iranian investments in Syria. 

Looking into the backgrounds of most Iran-affiliated companies—defined as Iranian companies with branches in Syria plus Syrian companies with at least one Iranian owner—established during the spike in 2019–2021 suggests they are mostly independent of IRGC’s influence. IRGC carved out its own economic space in sectors such as phosphates, electricity, and telecommunication, and was more concerned with enhancing its strategic position and recouping the costs of its military intervention on Assad’s side.

More importantly, the companies established then are mostly dormant at the moment. The decline in new business incorporations after 2021 further conveys the lack of private-sector involvement. Why did the interest of Iranian private investors in Syria run out of steam?

The hopes of Iranian businesses in Syria came crashing down under the pressure of multiple factors, with both economies struggling under the weight of additional sanctions, escalating Israeli airstrikes against targets linked to Iran in Syria, and the financial meltdown in neighboring Lebanon. Potential Iranian investors—along with their counterparts in Russia, China, etc.—might have expected Syria to stabilize following regime-allied military advances.

Instead, they faced a Syria divided amongst multiple countries and armed groups and characterized by lawlessness, a free-falling economy, and uncertainty. All these factors weighed on the Syrian economy, as reflected by the Syrian pound’s sharp depreciation that rose by nearly 300% between the end of 2021 and the beginning of 2024.

Aside from the sharp drop in Iranian-linked company incorporations, another indication of the poor economic relations between the two countries is the dismal state of trade. According to data from the Syrian Bureau of Statistics, from 2011 to 2022 Iran was Syria’s 19th export market and 12th source of imports, lagging far behind regional countries (Iraq, Saudi Arabia, Lebanon, Egypt, the UAE, Türkiye, Jordan) as well as China, Russia, India, and Ukraine. 

The Iranian private sector’s poor engagement with Syria has been underscored by a number of comments from Iranian officials. Iranian Minister of Industry Ridha Fatimi Ameen said in December 2021 “Despite extremely strong cultural ties, our economic relations with Syria are very weak and need improvement.” This has also at times generated some frustration, with deputy head of the Iranian–Syrian Chamber of Commerce Ali Asghar Zbrdast saying that “economic benefits in Syria go to Russia, and other countries, while our trade and economic relations with Syria are slow.”

On a more fundamental level, economic relations between the two countries are likely to remain poor because neither country’s private sector has what the other needs. Iran’s oil and Syria’s phosphates remain firmly in governmental hands. This is an issue that no amount of positive statements and free trade agreements can resolve.