By Oxford Business Group
Improving political and business ties with former adversary Turkey have had a positive impact upon Syria’s trade volumes this year, contributing to the latter’s rise as a regional and international player. The warming of relations has culminated in plans for a free trade zone that is expected to dominate regional economic cooperation.
Bilateral trade between Syria and Turkey is expected to this year exceed $2 billion in 2010, a 162 percent rise from levels in 2006. This figure is expected to rise next year, particularly if a free-trade zone between Turkey, Syria, Lebanon and Jordan is launched in early 2011 as planned.
“This free trade area will surely help remove obstacles to trade and further develop multi-faceted economic ties in our region,” Turkish Foreign Minister Ahmet Davutoglu told OBG in an interview. “These agreements enable businesses to acquire capital, fueling production and fostering the development of new industries … This is a win-win scenario for peoples of our countries.”
The four nations agreed in June to launch the zone, which is expected to be officially unveiled in January as the leaders of the quartet gather for a summit in Istanbul.
“Enhancing economic integration and mutual interdependence among the four countries [in the new trade zone] would facilitate an optimum use of collective resources, promoting mutual trade and investments, and accelerating the economic liberalization processes,” added Davutoglu.
Apart from progress on the free-trade zone, Turkish Prime Minister Recep Tayyip Erdogan hailed advances in bilateral ties when he met with Syrian President Bashar Al-Assad in October. “Syria and Turkey are brother countries bound by historic and deep-rooted relations, and they have passed very important stages in political, cultural and economic domains recently,” said Erdogan in Damascus.
In the same month, Syria’s finance minister, Mohammad al-Hussein announced on the sidelines of a Syrian-Turkish conference in the Mediterranean resort of Latakia that Turkey would be extending $247 million in loans to its southern neighbour. The loan will be accessed on a project-by-project basis and partly directed towards urgent infrastructural upgrades. It comes after a raft of trade deals were signed by the countries in recent years. In 2007, the two countries signed a free trade agreement, while in 2009 visa requirements were scrapped and some 50 bilateral agreements were signed.
Also in Latakia, Syrian Economy and Trade Minister Lamia Assi said Turkey and Syria have agreed on the principles for establishing a joint bank and setting trade standards, as well as for establishing a trade arbitration centre to deal with commercial disagreements and support land, naval and air transportation. Minister of Transport Yarub Suleiman Badr also called for an increase in daily flights between the two countries – the number of Turkish tourists visiting Syria increased by 170 percent between January-July 2010 compared to the same period of 2009, according to Syrian tourism officials.
The thawing of relations with Ankara alongside cuts in custom tariffs has also boosted Syria’s ties with Europe and regional countries. Customs fees have fallen from 35 percent to 13.5 percent over the last decade, helping Syria’s export earnings increase by an average of 16.8 percent in the last five years, reaching S£720 billion ($15.9 billion) in 2009. The EU and the Arab states now account for almost 80 percent of Syria’s exports, but it is trade agreements with the latter, as well as Turkey, that have recently topped the agenda.
Syria had traditionally eyed its powerful neighbor to the north, which ruled the country during the Ottoman Empire, with suspicion. While Syrians now see Turkey – with its Islamist-leaning government and modern outlook – in a new light, Turkish officials are looking beyond Syria’s past support of Kurdish rebels.
“There are deep-seated, inter-related, and multi-dimensional problems in the Middle East. I believe that we can only solve these problems through a paradigm change, in which a stronger sense of regional ownership should prevail,” Davutoglu said in his interview with OBG.
Dubbed by the Economist as the “China of Europe” Turkey is emerging as a regional powerhouse, with the OECD projecting its economy will grow 6.8 percent this year and 4.5 percent in 2011. The country’s young population – with a median age of 29 – is set to expand to 82.6 million by 2015, according to UN figures.
Syria’s economy is also showing signs of progress, with the country’s non-oil trade deficit falling to S£107 billion ($2.3 billion) by 2008 from S£190 billion ($4.1 billion) in 2004, and the Exports Development and Promotion Agency, in its 2010 strategy paper, targets a trade surplus by the year 2015.
Syria may well use its trade ties with Turkey as a template for links with other countries. The Exports Development and Promotion Agency noted in its 2010 strategy paper that Syria expects to sign free trade agreements with Iran, Russia, Belarus, Azerbaijan, Malaysia, the Mercosur countries, Switzerland and Sweden over the coming months.
