Iran grants Syria $3.6 billion credit facility to buy oil products

AMMAN Wed Jul 31, 2013 8:33am EDT

A man selling petrol and gas waits for clients in Ain Tarma neighbourhood, Damascus January 23, 2013. REUTERS/Goran Tomasevic

A man selling petrol and gas waits for clients in Ain Tarma neighbourhood, Damascus January 23, 2013.

Credit: Reuters/Goran Tomasevic

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AMMAN (Reuters) - Syrian authorities and Iran signed a deal this week to activate a $3.6 billion credit facility to buy oil products with long term payment terms, officials and bankers said on Wednesday.

The deal, which was agreed last May between the two allies and will allow Iran to acquire equity stakes in investments in Syria, was part of a package to extend Iranian aid to President Bashar al Assad's government, its main political ally.

Another $1 billion credit line to Damascus has already been extended to buy Iranian power generating products and other goods in a barter arrangement that has helped Syria export textiles and some agricultural produce such as olive oil and citrus, trade officials say.

Syria is short of diesel for its army and fuel to keep the economy running because of U.S. and European Union sanctions imposed after a crackdown on pro-democracy protesters. Its main supplier of petroleum products by sea has been Iran.

Despite political support from China and Russia, which have blocked U.N. draft resolutions which could have led to further sanctions on Syria and opposed military intervention to end the conflict, Assad's fuel and cash lifelines have all but dried up

Iran has steadily expanded economic ties with Syria to help it withstand Western economic sanctions and sealed a free trade deal that granted Syrian exports a low 4 percent customs tariff.

Last January, Tehran agreed during a visit by Prime Minister Wael al-Halki to deposit $500 million in Syria's central bank vaults, banking sources say.

(Reporting by Suleiman Al-Khalidi; editing by Keiron Henderson)

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Comments (1)
ChangeIranNow wrote:
It’s clear if Iran has $3 billion to throw around, it’s certainly not suffering from sanctions. One of the mistaken beliefs on sanctions is that they are directly responsible for much of the hardship ordinary citizens are experiencing. It’s important to understand how international currency swaps, trading and reserves work within the sanctions framework. The sanctions are specifically designed to inhibit the Iranian regime’s ability to use earnings from foreign sales and thereby using the hard currency from those sales to use for purchases of prohibited industrial equipment that would benefit Iran’s nuclear program and military. Iran still possessed substantial currency reserves from its oil sales, which the sanctions have not fully halted, but the leadership chooses to use those reserves to back credit facilities for its allies such as Assad in Syria and Hezbollah, as well as to support its military. Because it makes that choice, it denies its use for consumer goods which are not prohibited such as medicine and agricultural goods. By making specific policy decisions about its priorities, the regime has clearly decided that its people are back of the bus. It’s a mistake to think sanctions in and of themselves are aimed directly at the Iranian people. They’re not, Khamenei has opted to use his funds on his foreign adventures at the expense of his own people. Thinking that lifting sanctions would alleviate the Iranian people’s suffering is the ultimate trap and a fallacy.

Aug 05, 2013 12:39am EDT  --  Report as abuse
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