January 17-2014
Syria announced last month that it plans to import large quantities of food—with Iran paying for it all.
Syria said it would be using a credit line from the Export Development Bank of Iran (EDBI). It did not say how big the credit line was. However, in recent years Iran has announced credit lines for Syria of $1 billion for buying power generating products and $3.6 billion for buying Iranian oil products. Reuters reported several weeks ago that Syria was negotiating a low interest of $2 billion for other purposes.
The big credit line of $3.6 billion is to be repaid by giving Iran equity stakes in investments in Syria. That means Iran not only has a political interest in seeing Syrian President Bashar al-Assad win the civil warm, but an economic interest as well. The loans would not likely to be repaid if he loses.
Syria’s General Foreign Trade Organization is seeking to buy 150,000 metric tons of sugar, 50,000 metric tons of rice, 25,000 metric tons of flour and a range of other foods using the credit line from Iran, Reuters quoted traders as saying.
Syria, like Iran, is under heavy sanctions, but those sanctions exempt food. Intricate banking restrictions make financial transactions complex and a deal that involves both Syria and Iran will likely be even trickier.
“The tender says there must be a written declaration by the bidder to say they are fully briefed on the Iranian credit line agreement between Syria and Iran and that they accept all the contents of the terms and conditions,” another European trader said.
A former US Treasury official told Reuters it was feasible that Syria could set up a payment mechanism using Iranian funds held in various bank accounts abroad. Such funds have been used by Tehran to pay for its own food deals in recent months.
“Iran has so much money outside of the country held in accounts that I suspect can be used to finance purchases and keep the money flowing to Assad,” said the former official, who now advises companies on sanctions.
A spokeswoman for the American-based commodities group Cargill said Cargill “does sell agricultural commodities to Iran and Syria as food is specifically excluded from the sanctions.”