BEIRUT (Reuters) - Syrian President Bashar al-Assad signed a law ratifying a $1 billion credit line from top regional ally Iran, Syria’s state news agency SANA said on Wednesday, funds which will help ease economic strains from the costly war.
The agreement was between two state-owned banks, the Syrian Commercial Bank and Export Development Bank of Iran, it said. Syria signed a previous $3.6 billion credit line with Iran in July 2013 which has been used up mostly for oil imports, bankers have said.
The new deal was signed on May 19 and approved by the Syrian parliament on Tuesday, SANA said. The money would be used for funding imports of goods and commodities and implementing projects, it said, without giving details.
Tehran’s financial aid has been seen as pivotal to the Syrian government and the economy, which has shrunk by more than a half in the four years since the conflict erupted, researchers say.
Syrian officials and businessmen said in May that Damascus was about to finalize details of a new credit facility.
A Syrian official told Reuters at the time that the new credit line would be used “to secure the flow of essential goods and materials,” for Syria. Top Iranian officials made a series of visits to Damascus that month, expressing support.
The earlier credit line was also used to purchase hundreds of millions of dollars of much-needed Iranian consumer products, from frozen chicken and sugar to electrical goods. They were offered in government-run retail outlets that contributed to stabilizing prices and easing the hardships of ordinary Syrians, businessmen say.
Syria’s economy has been hurt by a depletion of foreign reserves that were estimated at $16 billion-18 billion before the crisis. The country had been earning some $2.5 billion a year from oil exports before the war.
Iran is believed to have sent dozens of military advisers and President Hassan Rouhani has said Tehran will back Assad “until the end of the road”. Several senior Iranian military figures have been killed in the conflict in recent months.
Iran also backs the Lebanese Shi‘ite militia Hezbollah which has become increasingly involved in the war.
Iran and major world powers are in the last stretch of talks to reach a final agreement to end a more than 12-year standoff over Tehran’s nuclear program.
Some diplomats tracking Syria and officials have said the closing of a nuclear deal between Iran and the West could help bring about a solution to the Syrian crisis.
Editing by Ralph Boulton and Digby Lidstone